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October 14, 2013

Influencing Driving Habits With Analytics

Several drivers in Massachusetts are about to take part in a big data analytics program that aims to study their driving habits, and get a handle on things that can be done to change them.

The new three-year pilot, administered by the Massachusetts Department of Transportation (MassDOT), aims to use telematics data collection devices to measure the impact of financial rewards in motivating people to adjust the amount, location, and timing of their driving.

The study will leverage an automotive analytics package by Agnik, LLC, called Vyncs, with a telematics device that plugs into the on board diagnostic (OBD) port in most modern cars. Approximately 3,000 Plymouth Rock auto insurance policy holders in 164 Massachusetts communities will be randomly selected to participate in the program. Each selected driver will be given a device which will wirelessly send data over the Sprint network into the Agnik cloud, where it will be stored for further analysis.

The study, which is being coordinated by the Conservation Law Foundation Ventures (CLFV), will look at how financial incentives might change the driving habits of individual policy holders. Using money from a $2.1 million grant from the Federal Highway Administration’s Value Pricing Pilot Program (and a $450,000 in-kind contribution from the Plymouth Rock Assurance Corporation, a local insurer), special offers will be extended to a mix of policyholders, with per-mile rewards paid out to them for reducing mileage over the course of the study.

The result will be the creation of what they say will be a publicly available data set that will give insights on the behavioral impacts of these incentives on driving, with the aim of giving states and insurers a data-based footing on different ways that they can impact driving habits.

While programs like this could be seen as creepy, programs like this are beginning to take root as insurance companies move to get a handle on all of the data that is floating around in hopes of gaining a competitive advantage. Voluntary programs such as Allstate’s “Drivewise,” and Progressive’s “Snapshot,” offer users the opportunity for discounts for installing these types trackers into their vehicles.

While the programs are currently mostly voluntary, with discounts being the incentive, some observers believe that these kinds of programs will eventually become standard for auto insurance companies, theoretically making roads safer. “The data is compelling,” says Andy Napoli, President of the Consumer Markets Division at The Harford auto insurance company in a SAS whitepaper. “This capability has really redefined the way we think about pricing auto insurance. Carriers that don’t use telematics to price auto coverage will eventually attract poor drivers who were turned down for coverage by the insurers that do.”

While the insurance companies look for ways to use emerging technologies to create more profitable margins, the program launching in Massachusetts has an entirely different goal in mind: reducing driving altogether.

“CLF strongly believes in market-based approaches to addressing environmental problems,” said John Kassel, president of CLF. “For more than 15 years, we’ve championed innovative methods to reduce driving as a way to achieve real environmental benefits. This study is an important next step in providing the data policymakers and insurance companies need to design effective voluntary programs that encourage reductions in driving on a large scale. We need to pursue every option available to reduce greenhouse gas emissions in order to meet Massachusetts’s – and the region’s – climate goals.” 

The new program will begin starting tin 2014

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