Unlike the UK, where 40% more drivers opted for usage-based insurance year-over-year, according to the British Insurance Brokers' Association, U.S. consumers have been reticent to adopt the product. But new initiatives from automakers may make the value easier to communicate and deliver, industry experts say.

The Wall Street Journal reports that General Motors, Toyota and Volkswagen are among multiple automakers experimenting with new “driver state sensing systems”, developed by startups Eyeris Technologies, Harman International Industries and auto parts supplier Delphi Automotive PLC. The software analyzes facial expressions to detect signs of exhaustion and road rage, differing from current data insurers collect such as, how far customers drive or how often they brake and accelerate. Delphi’s driver monitoring system is expected to be installed in two vehicles to be sold in 2017.

“Insurers need to think of telematics data in three parts, the dongle, smartphone and the car itself. They cannot afford to sit on the sidelines on this,”  said Donald Light, director of Celent Research’s North America property/casualty insurance practice.  “This is a flashing light for the insurance industry that it needs to get in front of what automakers are doing with connected cars.” 

These monitoring systems are likely to aid insurers in tapping into driver behavior and vehicle performance. But, the validity and power of the information compared to existing data in use depends on how data scientists evaluate it, Light says. In order to obtain the new information, insurers will likely offer discounts on premiums to customers in return for the data, which is only accessible through a court order or direct permission from the driver.

“Insurers will want access to see how much of a difference this data source can make in their ability to prevent major accidents,” he said. “It could be as low as one percent or it could be that 33 percent more accidents can be prevented. It’s up to the actuaries to determine that.”

As the industry gets closer to self-driving cars, automation becomes another key issue for insurers, automakers and policyholders going forward, Light says. Technologies in place now, such as automatic breaking, forecast a heavy leniency on the part of drivers on technology that could ultimately fail.

“Drivers may already not be paying attention to how quickly they should be breaking when they approach an object because they expect the car to do it for them autonomously,” he said. “The danger lies in driver complacency and lack of control.”

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