Many insurers – including some of the biggest brands in the insurance market—are already reaping significant benefits by deploying smartphone telematics to their customer base.

With the ubiquity of smartphones in our everyday lives, we’ve seen a dramatic increase in distracted driving. A sad reality of our world is that many drivers can’t get behind the wheel without continuing to use their smartphones. In fact, 92 percent of U.S. drivers believe that the recent rise in accidents is due to distracted driving (Harris Poll). Even more, recent research from Cambridge Mobile Telematics (CMT) reveals that 75 percent of drivers see other drivers on phones every single day. This dangerous behavior needs to change. In pursuit of a sustainable solution, many insurance companies are turning to the very root of the problem for an answer: the smartphone.

A survey by CMT of U.S. drivers shows that the majority of consumers (73 percent) would like their auto insurance rates to be based on how safely they drive, but only 22 percent of drivers have been offered a behavior-based smartphone telematics program by their insurer. These programs use mobile apps to extract sensor data for gauging driver behavior on contextual speeding, hard acceleration, phone distraction, hard braking, and cornering and provide post-trip feedback to spark improvement and reduce risky behaviors. More importantly, the technology is proven to decrease instances of distracted driving: data from CMT shows that drivers using a smartphone-based telematics program decrease their distracted driving by more than 35 percent on average within 30 days of enrolling in the program, and that this change persists for long periods of time.

In short, smartphone telematics programs are both effective and desired by customers. Some insurers may be concerned about data accuracy and battery efficiency. However, with the advancement in smartphone technology, these concerns have abated: smartphone sensors now work as well or better than traditional OBD-based telematics devices, and the battery impact is typically less than a few percent per hour of driving. In fact, many insurers – including some of the biggest brands in the insurance market—are already reaping significant benefits by deploying smartphone telematics to their customer base. Here are some of the top business drivers for these companies:

1. An active touchpoint with customers: Insurance companies rarely have meaningful opportunities to connect with their end customers. And when they do interact with their customers, the interaction is typically negative in nature—for example, having to discuss a claim or accident, price hike or policy change. As a result, many customers have a less-than-favorable opinion of their insurer. Smartphone telematics gives insurance companies the opportunity to engage with their customers more often, and on more positive topics—such as improvements the customer makes to his or her driving behavior, or the rewards they earn for safe habits directly through their mobile device. Interactions like this help strengthen brand loyalty and customer relationships—an area most insurance companies have struggled with for years. A recent study by JD Power shows that users of usage-based telematics programs are substantially more satisfied with their insurer than other customers.
2. Quick and affordable solution to a costly problem: The best part about smartphone telematics: Almost everyone has a smartphone. All drivers need to do is download a mobile app and bring their phone into the car. This alleviates much of the time, cost and resources concerns insurers typically have when rolling out new technologies. It also makes smartphone telematics an incredibly easy, quick and affordable approach for reducing risky and costly behaviors.
3. Improved driving behavior through constant feedback and behavioral incentives: Leading smartphone telematics programs motivate behavioral change through different approaches. These approaches include: providing post-trip feedback and scores on drivers’ performances, allowing users to compete with family and friends for the safest driving score, earning rewards and incentives, and competing to beat personal streaks. In fact, according to a consumer survey of over 700 U.S. drivers, 59 percent of drivers noted that receiving a reward (such as a gift card or promotion) would encourage safer driving behavior. Whatever the method, there’s ample motivation for consumers to improve driving safety.
4. Better risk stratification: One of the key benefits of gathering smartphone telematics data is improved risk stratification. Once an insurer has accurate data on driving patterns, they can augment traditional risk models with actual behavior and telematics data, leading to smarter and more profitable risk stratification. This is possible because smartphones give access to new risk variables that are not available with other programs, especially those related to distracted driving. For example, data from CMT shows that the least distracted decile of drivers are 7 times less likely to get in a crash than the most distracted decile.

The biggest benefit of smartphone telematics programs, ultimately, is the impact they have on the bottom line by driving a reduction in claims. In addition to 35 percent reduction in distraction cited above, CMT’s analysis has found that on average drivers also exhibit a 20 percent reduction in hard braking within 30 days of enrolling in a smartphone telematics program. With one insurer, where 74 percent of drivers improved, this led to 47 percent fewer claims and 48 less-severe claims. Given recent technology advancements that have reduced previous industry concerns—and the immense benefits and consumer demand for smartphone telematics—the time is now for insurers to capitalize.

Drivers want to become better, and they hate seeing other drivers distracted by their phones. Insurers are in a prime position to help on both fronts, by using smartphone telematics to improve driving and deliver a cure to distracted driving.

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