There are a lot of cars on the road — 253 million to be exact. And the more cars there are on the road, the more chances there are for traffic, accidents and pollution. As cities begin to combat automotive saturation with new technology, it’s becoming pretty clear that fewer, yet smarter, cars is a key component of the future of transportation. To embark on a long trip, you could hop in a self-driving car, optimize the route to get to your destination as quick as possible, and also pick up a few passengers along the way. Many of these seemingly far-fetched concepts are already becoming a reality, which our CEO Dan Preston explores in a recent Medium article.
The article highlights the three trends that we are already seeing progress with today: the rise of the ridesharing economy, new insurance models that incentivize driving less and the introduction of self-driving cars. As innovation is used to optimize the number of cars on the road and the way we drive, we should see the positive impact that having fewer, yet smarter, cars will have on our environment, economy and everyday lives. In fact, we recently ran a study with the Jackson Institute for Global Affairs at Yale and found that if everyone in the US reduced their driving by 6%, potential benefits could include saving 2,400 lives and $26 billion in accident-related costs
You can read the full article here, and stay tuned as we continue to investigate the latest trends in which technology meets transportation.
We are hearing more and more about advancements in self-driving car technology and how it will revolutionize the way we get around. But what will the implications be on how (and if) we pay for car insurance? Advisory firm KPMG recently released a report detailing the impact self-driving cars will have on the insurance industry, and whether or not monthly premiums will become obsolete. While they foresee the size of the industry decreasing – as autonomous drivers are expected to be smarter and safer than their human counterparts – they also predict that companies who are positioned to adapt will see much success. As the first-movers in technology that allows segmentation of trips and the ability to base premiums off of exact mileage, we believe we will be one of the select few able and ready to conform to this rapidly changing automotive landscape.
Many believe that the introduction of self-driving cars to consumers will bring about the most significant change to the automotive industry since its inception. One of the main reasons for this is the impact of autonomous car technology on safety. While the concept of self-driving cars may seem far off, we are already seeing early advancements in safety technology. The buzzed-about Tesla S has features such as lane drift detection, where the steering wheel vibrates if the driver changes lanes without signaling, and automatic emergency braking, where sensors will detect if a collision is impending and brake automatically. Tesla also recently rolled out the long-awaited “Autopilot” software, using sensors to keep the car within a lane, maintain a safe distance between cars and even change lanes. While the driver’s hands are still required to be on the wheel, as the efficacy of these innovations is proven, a hands-free future will be imminent. And as these features are vetted and become more accessible to consumers, there will likely be a reduction in accidents and number of claims filed. In fact, the report predicts that if self-driving cars hit the road around 2020, there could be an 80% reduction in accident frequency by 2040.
What about the other 20%? If these self-driving cars are destined to be so smart, what would account for anything higher than zero? The truth is, accidents will never completely go away. It would be great if self-driving cars could prevent themselves from the harm of Mother Nature, but we don’t anticipate that happening anytime soon. And maybe one day they will be able to deter thieves or the damage caused by humans, but again that’s unlikely. Insurance will still be needed, but premiums will likely be lower as the claim frequency will be drastically reduced.
The report suggests that many insurance providers believe the adoption of self-driving cars is far off and are taking a “business as usual” approach, delaying any fundamental changes. But as our CEO Dan Preston says in the report, “nimble companies that offer innovative insurance products that address the needs of consumers in a rapidly changing driving landscape will be best positioned to succeed.” Here at Metromile, we are already able to segment trips for Uber drivers, identifying when they are driving for Uber (and therefore covered by Uber insurance) and when they are driving for personal use. This model is something that could likely be adapted as self-driving cars are introduced to consumers.
So if self-driving cars could be both safer and more affordable (from an insurance standpoint), what’s preventing an earlier introduction to consumers? The report suggests that there are eight key elements that will drive transformation: convergence of new autonomous technologies, capability accessibility, consumer adoption, improved infrastructure, regulatory permission, legal responsibility and mobility services. If you would like to dive in deeper to the elements that could drive change, download the free KPMG report here.
Ever notice your mechanic plugging into that little port under your car’s dashboard? That port is part of the on-board diagnostic (OBD) system, and it is playing a major role in minimizing pollution caused by cars. Devices plugged into the OBD port are also providing important insights and optimizing the driving experience. If you missed our first blog about the history of the OBD port, here’s a quick rundown of why it exists and all of the innovative ways it is being used today.
The OBD system was first introduced in the 60’s as a way to measure a vehicle’s emissions. Decades later, a more robust version known as the OBD-II was introduced, also able to monitor parts of the chassis and body. In 1996, amendments to the Clean Air Act required the OBD-II to be built into all light-duty vehicles (aka all cars available to consumers) as part of the Environmental Protection Agency’s attempts to reduce toxic emissions. If something in your engine malfunctions, your car might run just fine, but you could ultimately face expensive repair costs or unknowingly release toxins into the air like Benzene and Formaldehyde (potential human carcinogens). Because of this regulation, all cars will display a “check engine light” when something is wrong, and mechanics can plug into the OBD-II port to diagnose the problem. So just how bad could things get if we didn’t regulate emissions and monitor engine health? The photo below is not from a horror movie – it’s of LA in the 90’s before OBD ports were standard in all cars and it was hard to detect if an engine was dangerously inefficient.
Fast forward 20 years and the OBD system is proving to be an important factor in reducing the damaging effects of car emissions on our environment. Since the introduction of the Clean Air Act and the OBD requirement, toxic emissions have steadily decreased. Companies are also developing devices to use in tandem with the OBD-II port in all sorts of new and inventive ways. For example, our per-mile insurance customers plug the Metromile Pulse device into the OBD-II port to measure exact mileage. This enables us to provide low-mileage drivers with a more fair insurance pricing model, since their monthly bill is based on the miles they drive, not just on a rough estimate (which other insurance companies sometimes offer a small discount for). (more…)
We recently released a report showing that Metromile test drivers who used our smart driving app to measure mileage and later switched to per-mile insurance ended up driving 6% less after the switch. This seemingly small reduction in driving can actually have a significant impact on our economy and environment, especially if everyone reduced their driving by this amount. To illustrate just how much of a positive effect this could have, we created an infographic to show all of the benefits. Check it out:
The following is a post from Jim Levinsohn, Director, Jackson Institute for Global Affairs, Yale University, and George Mohler, Director of Data Science, Metromile
If you’re like most drivers, the answer seems to be “yes.”
We analyzed 191,699 trips made by Metromile customers who started out on a free test drive program and later switched to pay-per-mile insurance. (Each switcher had at least 30 days of driving before and after the switch). On average these individuals drove 16.4 miles per day before purchasing per-mile insurance. After switching, they drove on average 15.5 miles per day—a reduction of 6%.
What’s going on here? It turns out that economics predicts exactly this outcome. When you buy traditional car insurance, you pay a fixed premium. That means that when you’re deciding whether or not to make a given trip, insurance cost doesn’t enter the calculation since that cost is invariant to whether or not you make the trip. You might consider the cost of gasoline and your time, because those costs increase if you make an extra trip, but not insurance costs. One consequence of traditional car insurance is that drivers with below average mileage in effect subsidize the premiums of drivers with higher mileage (an individual’s risk of an accident in a year increases with miles driven).
But when your car insurance is on a per-mile basis, the equation changes. Drivers with below average mileage start to save money, whereas drivers with above average mileage pay more. The less you drive, the lower your premium, so there’s a clear incentive to reduce your miles driven. In order to achieve the same incentive for reducing mileage, the tax on gasoline would need to be on the order of $0.74 per gallon! This is larger than the state gasoline tax in even the highest tax states. Simply changing the way insurance is priced has significant environmental advantages. (more…)
There’s no denying it – introducing self-driving cars to consumers will spark a paradigm shift in the auto industry. But, as is typical for any groundbreaking innovation, there are some pushbacks that are delaying any “imminent takeover”. The government is slow to pass regulations allowing self-driving cars and consumers are wary of the implications. Are self-driving cars really that safe? And how expensive is a “robotic personal chauffeur” going to be? According to new research from Metromile and The Ferenstein Wire, these cars could save consumers $1,000 in car insurance every year. This might be the motivation needed to accelerate adaptation.
Self-driving cars have a near-perfect driving record thus far, and the few times that they are involved in an accident, it’s typically a human at fault. Once we have welcomed these “futuristic” vehicles into our everyday lives, does the need for car insurance become obsolete? The answer is no, but it will be dramatically reduced. While there will be a near elimination of collision-related accidents (estimated at a 90% reduction), coverage will still be needed for things like break-ins, being hit by an uninsured motorist, and weather-related incidents. Our actuarial team here at Metromile developed an insurance pricing model which predicts consumers will pay an average of $250 per year with an annual savings of $1,000. The model is based on the typical driving record of someone licensed 20 years in San Francisco, driving 12k miles per year, and incorporates evidence from Google’s detailed accident report.
Self-driving cars are still not yet legal for consumers, but you can expect to see some traction as their safety and value continues to be proven. Here at Metromile, we are positioned to adapt our per-mile insurance model as these autonomous cars are introduced to the general public. Because we are able to segment periods of time (like with our Uber partnership where we can identify if a driver is driving for Uber or personal use), we’ll be able to help distinguish between when a car is controlled by a human or a computer. And if per-mile insurance is truly a future-proof concept, why not get started and start saving money today? Learn more at metromile.com/insurance.
You also may have heard of innovative uses of iBeacon technology in the news lately, so what exactly is this technology and how is it being used?
Apple first introduced the iBeacon application programming interface (API) in 2013. With this API, hardware devices (aka “beacons”) emit a unique signal that can be picked up by a smartphone when close by, which then triggers apps to perform certain actions. iBeacon uses a low-energy Bluetooth signal, but it is different than traditional Bluetooth technology where a device and phone sync with each other. The beacon continually sends pings, apps on your phone listen for these signals, and when your phone comes into range the apps will respond to the pings. It’s similar to GPS-based “geo push” technology, but with more precision and less battery usage. Most beacon devices are typically small, low-energy, and powered by coin-cell batteries, making them long-lasting and easy to place anywhere.
As Apple explains, “iBeacon opens a new world of possibilities for location awareness, and countless opportunities for interactivity between iOS devices and iBeacon hardware.” Marketing lingo aside, iBeacon technology is a simple and effective way of triggering location-based actions. A popular use is for retailers wanting to send location-specific messaging. Assuming you have the retailer’s app installed, if you pass a beacon in the shop, a special offer could pop up on your phone (if you’ve opted for notifications). Virgin Atlantic used iBeacon location-aware technology to send messages to customers with electronic boarding passes in London’s Heathrow airport. Target uses beacon technology in their Cartwheel app to offer mobile-only deals to customers shopping in the store. Even McDonald’s has been testing iBeacon functionality in their restaurants. In all these scenarios, the beacon remains at a fixed location, and an action happens when an app user happens to pass by.