Data tells all: consumers who own and subscribe to vehicles show similar risk profiles
When we sought out to improve insurance premiums for car subscription companies, we combined forces with Clutch Technologies and turned to the only source that could provide concrete answers—the data. Leveraging our roots steeped in risk assessment from an insurer’s perspective, we made a plan, made a model, and got to work.
The disruptor
Vehicle subscription services
As mobility subscription services grow in popularity, insurance carriers face new challenges providing accurate insurance premiums. With no historical data, carriers struggle to measure exposure for this relatively new model.
This lack of understanding can lead to more conservative pricing, which is a challenge for those who are pursuing car ownership flexibility.
Arity worked with Clutch, an Atlanta-based mobility subscription services company, to evaluate driver risk in this emerging space. Could we combine resources to change the way insurers evaluate the risk of vehicle subscription drivers, and potentially reduce the uncertainty in underwriting and pricing?
Putting the hypothesis to the test
Arity experts proposed the driving risk of mobility subscription services was similar to personal auto insurance policies. And to test this idea, we turned to our very own proprietary model, Arity PreQualSM.
PreQual ranks drivers from safest to riskiest, based on the expected relative risk for a driver. The model was developed by analyzing the statistical relationship between a driver’s profile and expected loss.
Clutch, in their Atlanta lab, applied a set of screening technologies during the initial subscription registration process to identify consumers who were more likely to be good custodians of subscription vehicles. The research was then conducted, using our proprietary model, PreQual to score a sample set of 1,456 subscribed drivers across 228,000 driving days of data.
The results
After analyzing the sample set, we found key similarities between the risks that vehicle subscription and personal lines drivers present on the road.
From the study, we learned that …
- The risk profiles of Clutch’s Lab customers and traditional car owners are similar. We found key similarities in their distributions of risk, meaning that these groups may have more in common that we’ve yet to explore. And more to the point, there is an opportunity to keep exploring data that can improve the accuracy of matching premiums to exposures in subscription offerings.
- Commercial and personal lines auto insurance carriers can use PreQual to evaluate driver risk. Using PreQual, we analyzed Clutch’s lab customer standard insurance risk through observed pure premium and exposure. Our model accurately ranked the risk of drivers, meaning it provides accurate insights on driver risk for mobility subscription services and the sharing economy.
Needless to say, these were results that Clutch could immediately put into action.
What’s next
Here at Arity, we’re working with sharing economy companies and insurance carriers to create solutions fit to meet the needs of an evolving transportation industry—and we think the findings discovered through partnering with Clutch is only the beginning!
To dig into the data details and find out what else Arity PreQual revealed about the risk of Clutch’s Lab drivers, download the case study today!
