Automotive Insights

How Insurance Providers are Working in Practice with this New Resource: Vehicle ADAS Data

insurance vehicle
Risk Solutions

This Q&A interview with Yon Munilla, Managing Director, Spain, LexisNexis Risk Solutions first appeared in Inese and is reproduced with consent.

Q: How does LexisNexis Risk Solutions expect to revolutionise the Spanish and European auto insurance market?

A: LexisNexis Risk Solutions is a multi-national that belongs to the RELX Group, with a presence in the Spanish market for four years. Our strengths are data analytics, technology and a deep knowledge of the insurance business. Through these capabilities we provide innovative solutions to the insurance sector.

Thanks to our close relationship with car manufacturers in Europe, we have managed to create a data source that is capable of providing detailed information on the Advanced Driving Assistance Systems (ADAS) that were included in the manufacture of a particular car, both for standard model types and options. In other words, based on the VIN of a vehicle, we can provide the list of standardised ADAS functions, normalized across brand names and precise hardware types, as well as a Rating that classifies the vehicle based on its ADAS equipment.

We have empirically verified what common sense tells us. Cars with more ADAS functions should be safer and have fewer accidents. In the insurance sector, this translates into lower claims frequency. Knowing this information in advance, at the time of pricing or underwriting the risk, will provide a competitive advantage to those insurance companies.

You may ask yourselves what does ‘normalized’ mean? We have been studying this type of system for a long time and we know that we can find hundreds or even thousands of different ways to call the same ADAS function in different manufacturers. This is where one of the key capabilities of Lexis Nexis Risk Solutions comes into play, through machine learning techniques we manage to standardise these denominations and make them ‘digestible’ for insurance companies. In this way, and together with advanced web-service technologies, we can make this information available to companies in terms of less than one second.

Q: Exactly what does it offer to the insurance industry? What are your short-term goals?

A: Insurers can start testing this innovative data source that contains standardised ADAS data to be used in quotes, allowing companies to make a better selection of risk.

Let me give you an example that’s easy to understand, even for those of us who are not technical. We have been able to verify that there are ADAS functions that produce a reduction in claims frequency of up to 30%. We have done this, thanks to a study of more than 10 million insurance claims in the US that we have subsequently validated in other tests with European insurers.

For the technicians, I can say that we have confirmed through tests with Spanish and European insurers that cars with at least one high-performance ADAS function (‘ADAS Core’) achieve a loss cost relative frequency improvement of 10% compared to cars without them.

Q: How many solutions do you have and how are they offered to the insurance industry? What advanced data analytics technology does LexisNexis Risk Solutions offer and use?

In our organisation there are 130 data scientists who apply the latest technologies in data analytics globally to each of our data sources. For example for normalization, classification and back-testing (also called Retros or retrospective testing of actual insurance data) are used to analyse the impact on claims frequency and severity of the different attributes and available sources, with elements of machine learning for model building techniques, as I mentioned before.

We will launch our first product in Spain for auto insurance companies in the first quarter of 2021. When we have consolidated the use of LexisNexis Vehicle Build, we will be in a position to explore the interest from auto insurers in new products that are emerging from our relationships with the car manufacturers.

In this area I am talking about the products that are emerging from the connected car ecosystem, such as vehicle mileage in real time, vehicle history or vehicle recall services, on-demand driving scores, FNOL (First Notification of Loss) and products in the service of claims automation. However, we know that these building blocks and these parts of the connected car infrastucture will take more time. This is why we are participating in the European Commission initiative, Horizon 2020, in the SmashHit project for research and development of the consent management platform for the connected car. LexisNexis Risk Solutions is participating in SmashHit together with other organisations such as Volkswagen Group and recognised research and university institutions.

Q: Right now what is it that insurance companies demand from you the most?

A: Insurers need to better understand the safety technology that is being incorporated into cars, and how the data is interpreted, in order to compare it and see the impact on the technical result. It is clear that the objective of this technology is to reduce accidents and we are at the start of a long journey where automation and ‘active’ vehicle features will take over more of the driving. Therefore it is logical to expect that ADAS will have a positive impact on improving road safety for a long time to come. Insurance providers are intent on understanding the business impact of these technologies in detail. This is growing, both as a competitive advantage for improved pricing/underwriting and for helping to educate drivers about the assisted driving technologies and the machine-to-human interface of these advanced cars.

We have been able to verify the details of this classification with the tests that we have carried out with Spanish and European insurers. It is an ongoing project as new ADAS features continue to come into the market.

Q: In Spain, how many companies do you currently work with?

A: We work with half of the top 20 auto insurers in Spain. Today almost all the insurers recognise the business value and have registered interest in this new product. Half of the top ten have tested or are testing our ADAS classification with their own customer profiles and their own claims history. Several of them, after verifying the high discriminatory power of this information, have expressed their interest in incorporating this source of information into their listing and quoting processes for 2021.

Q: How has the coronavirus crisis in 2020 impacted your business?

A: Like to everyone else, it has meant a very important change. Our organisation has basically switched to working from home almost completely, avoiding unnecessary risks, although employees who want to, or need to, are allowed to go to the office. At a technology level and in terms of our risk preparedness and emergency response, we already did our homework many years ago. Our group was already used to tele-working, counting on a large group that could develop their work from home.

This has been facilitated with the creation of some ad-hoc processes and new tools, the purchase of necessary material such as monitors or office chairs for employees who do not have these facilities at home. Within RELX Group there are support activities for employees, creating a psychological and legal support programme that makes it easier for employees to adapt and manage personal situations in this time of uncertainty. As an employer based on values of wellness and sustainability, all staff have access to numerous activities oriented towards personal well-being and mindfulness, especially during the current times of confinement.

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