Modern Insurance Magazine


Motor pricing shifts up a gear with ADAS data


Motor pricing shifts up a gear with ADAS data

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Advanced Driver Assistance Systems (ADAS) in cars are fast becoming ubiquitous, and U.K. insurance providers are under increasing pressure to understand exactly how these safety features impact claims and, in turn, could influence motor pricing. Based on our analysis of more than 2.7 million vehicles across Europe, there are eight safety features per vehicle on average in the U.K. car parc[i], making the U.K. the leader in the adoption of automated vehicle safety systems in Europe.

The increasing penetration of ADAS in the U.K. car parc, along with predictions that Connected and Autonomous Vehicles (CAVs) could prevent 47,000 serious accidents (2019-30) and save 3,900 lives[ii], underline the value adding ADAS data to the risk assessment process for pricing and underwriting.

However, bringing ADAS data into motor insurance workflows has been easier said than done. We needed to start with the creation of a common classification of ADAS features and behaviours from millions of lines of car manufacturers’ data, so that the features of a car and their relative performance can be understood and used by insurance providers at a Vehicle Identification Number (VIN) level. VIN level is crucial given that some ADAS features are offered at purchase as optional extras.

Insurance providers also need to know how the feature behaves and how it performs, whether its purpose is to avoid a collision or reduce the severity of a collision, or to sustain safe driving conditions, for example. It is only with that understanding that you can begin to build insight on how these features work together or in isolation to reduce claims frequency.

To answer these questions, a huge ADAS data analysis project has been conducted across Europe over the past year, working with insurance providers and car manufacturers, looking at the presence and performance of ADAS and the impact that a combination of these features had on insurance claims for 2.7million vehicles. The ADAS classification system we had already developed provided the foundation for this work.

As a result of this extensive analysis, ‘core features groups’ have been identified of the ADAS features fitted to a vehicle that are found to deliver a reduction in claims frequency. In fact, 64% of the cars analysed in Europe were equipped with one of these core safety features and are therefore less likely to have an insurance claim[iii]. Crucially it’s not just the number of features on a vehicle, it’s how they work when combined that we found was important in reducing the likelihood of a claim. This kind of insight simply hasn’t been available to the insurance market before now.

In order to make this intelligence really workable as part of the quote and pricing process, the next step was to develop a scoring or rating system from 0-5 to provide an immediate indication of the performance of ADAS in reducing claims frequency based on all the features – standard and fitted as optional extras – on a specific vehicle. This led to the development of a Rating Indicator as part of our new ADAS data solution – LexisNexis® Vehicle Build. The higher the number, the better the performance of the ADAS fitted to that specific car, in reducing claims frequency.

As a further demonstration of the value of this data in insurance pricing, 57% of vehicles analysed in Europe had an ADAS rating indicator of 1 or higher. We also found a 14% reduction in loss ratio when the vehicle had an ADAS rating indicator of 1 or more[iv].

It has taken several years and tested the metal of some the insurance market’s leading data scientists but insurance providers can now start to add ADAS data into the quoting processes to deliver fairer pricing and to improve their loss and expense ratios. The more insurance providers can understand about ADAS today, the more prepared they will be for the ongoing development of car safety technology and increasing levels of vehicle autonomy in the future.

Carla McDonald, senior vertical market manager at LexisNexis Risk Solutions


[i] LexisNexis Risk Solutions Internal Analysis

[ii] SMMT and Frost & Sullivan report, 2019: Connected and Autonomous Vehicles: The Global Race to Market

[iii] LexisNexis Risk Solutions Internal Analysis

[iv] LexisNexis Risk Solutions Internal Analysis