Allstate’s Arity Auto Insurance Forecast for 2022

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Without a doubt, the way people move has changed over the past couple of years. With the pandemic and other economic factors. Mobility trends continue to change as we change the way we live, work, travel, train and play.

With this constant change, it can seem difficult to predict the trends that can shape digital insurance products. But with data from Arity, advanced analytics, and decades of transportation expertise, auto insurance companies can make data-driven decisions that solve real problems for real people.

Based on over 700 billion kilometers of historical driving data, most recently over 32 million active mobile telematics connections, and over a decade of data directly from cars, we predicted three major trends to watch out for. while we are on our way. until 2022 and beyond.

Let’s take a closer look:

1. Auto insurance rates will increase due to major changes in risky driving behavior since the COVID-19 pandemic.
Many drivers will pay more in 2022 for auto insurance as carriers begin to increase rates to cover rising claims costs, which are the highest for 20 years. Part of this increase is due to an increase in mileage driven and also the trend of the pandemic era towards riskier driving and the resulting severity of accidents.

Data shows that at the height of the pandemic, when drivers reached speeds above 80 mph, they maintained those speeds much longer than before. Although these cases of sustained high speeds declined in 2021, the time spent at speed for these trips remains about 10% higher than pre-pandemic levels in 2019. Today, nearly one in 20 kilometers is always driven at speeds above 80 MPH. . And that’s with more traffic on the roads!

Arity analysts report that the number of kilometers driven has returned to expected levels by January 2021, and based on the more current driving behavior trends, December 2021 will see a growth of more than 18% of the kilometers driven by report to December 2019.

2. Driver’s ratings will be used to price new personal auto insurance, much like credit ratings are used today.
Even though most of the major operators now use telematics, the driving data of policyholders is generally only used for the renewal of a policy. Indeed, carriers do not have driving data at the estimate stage for new business. Instead, these carriers offer all customers the same discount upon signing up, typically between 5% and 10%, regardless of their actual risk of driving. Only after the monitoring period, at renewal, can they re-evaluate a new price or discount based on the telematic driving behavior they have collected. With increased driving risk pressures and rising claims costs, carriers need better telematics information on new business to more effectively match price to risk.

A personal driving score at the time of quote for auto insurance eliminates this long time to collect driving information about a customer. And, now that this driving data is available, we expect more insurance companies to embrace the price with this data to help them manage their goal of profitable growth. This is particularly critical in this time of risky driving and rising claims costs.

However, consumer sentiment for fairer and more transparent car insurance pricing is another major force in driving data usage.

3. The increased use of driving data by insurance companies will allow more fair and transparent pricing for consumers.
More and more insurance companies are looking to leverage driving data to price auto insurance coverage based on individual driving behaviors, going beyond demographics, location and credit score. traditional. There are two big reasons for this: consumer awareness and demand for individuals, relevant prices are increasing, and state insurance regulators are looking at traditional rating variables, including credit.

Consumer demand for fairer and more transparent auto insurance pricing is on the rise. In the first half of 2021, Arity surveyed nearly 2,000 U.S. consumers adults on their thoughts on auto insurance and have found that the majority of consumers want their insurance pricing to be more closely tied to the way they drive rather than who they are or what they look like.

When we asked them which factors should be most important to the price of their insurance, people pointed out:

  • What is their previous driving record
  • How many kilometers do they travel
  • How safe are they currently driving

As a result, more and more carriers will offer telematics-based auto insurance (UBI, pay per kilometer) to attract new customers and keep the ones they have. And, with the driving scores available at the time of quote, insurers will be able to provide auto premiums based on actual measures of risk, not proxies such as credit, income levels, or level of income. education. In 2022 and beyond, this will be a competitive imperative, especially as state DOIs reassess the use of traditional rating factors.

How will auto insurance companies react to these three predictions?
As driving data and analytics are more available to insurers than ever before, even mid-size and regional carriers will have the opportunity to leverage telematics to assess drivers. This will give these insurance companies the ability to compete with the larger carriers that have already implemented telematics programs.

But the advantage of telematics in new business will be appreciated by early insurers – large or small – who capitalize on the availability of data on driving behavior at the rating point. This will allow insurers to better match price to risk and grow profitably, especially during this period of increased risk driving behavior and rising claims costs. And, ultimately, consumers will benefit as well, with more fair and transparent auto insurance pricing.


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