Car Insurance Firm Uses Analytics to Set Premiums

Car insurance firm insurethebox is using a business analytics appliance to analyse drivers' habits and set insurance premiums based on how safe they drive using telematics.

The company targets young drivers to encourage safer driving and help reduce the cost of their car insurance. It places a telematics device slightly bigger than a mobile phone under their dashboards and connects it to a GPS and other sensors.

IBM analytics technology is being used to capture the data from these devices and it analyses key aspects of their driving, including how, where, when, and for what duration, the car is being driven.

"Our customers purchase an annual 6,000 mile insurance policy that can be topped up if they run out of miles," said Mike Brockman, CEO of insurethebox.

"Customers who drive well at responsible speeds and who take breaks on long trips can earn extra miles and apply them to their policies."

The firm launched its product on a price comparison site in June 2010 and has now sold more than 65,000 policies.

Data on driver activity from the car device is captured in real-time along with demographic customer data. Key statistics on driver journeys are then fed back to individual customers on their online portals. Customers can monitor how well they have driven throughout the month and check the number of bonus miles earned.

One insurethebox customer said she was in a small collision and was called by insurethebox within an hour of the car having the impact, to acknowledge that some form of collision had happened and to see if she was okay and whether she wanted to make a claim.

The IBM Analytics appliance is based on IBM BladeCenter Technology and is optimised for specific industry needs.

The Co-operative Insurance group has a similar product for young drivers, where a telematics solution is used to help adjust premiums depending on driving behaviour.

Endsleigh Insurance recently deployed a cloud-based web analytics tool from IBM to help give it greater visibility of online customer behaviour.

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