Insurance Telematics: Opportunities and Challenges with the Smartphone Solution

Smartphone-based insurance telematics or usage based insurance is a disruptive technology which relies on insurance premiums that reflect the risk profile of the driver; measured via smartphones with appropriate installed software. A survey of smartphone-based insurance telematics is presented, including definitions; Figure-of-Merits (FoMs), describing the behavior of the driver and the characteristics of the trip; and risk profiling of the driver based on different sets of FoMs. The data quality provided by the smartphone is characterized in terms of Accuracy, Integrity, Availability, and Continuity of Service. The quality of the smartphone data is further compared with the quality of data from traditional in-car mounted devices for insurance telematics, revealing the obstacles that have to be combated for a successful smartphone-based installation, which are the poor integrity and low availability. Simply speaking, the reliability is lacking considering the smartphone measurements. Integrity enhancement of smartphone data is illustrated by both second-by-second low-level signal processing to combat outliers and perform integrity monitoring, and by trip-based map-matching for robustification of the recorded trip data. A plurality of FoMs are described, analyzed and categorized, including events and properties like harsh braking, speeding, and location. The categorization of the FoMs in terms of Observability, Stationarity, Driver influence, and Actuarial relevance are tools for robust risk profiling of the driver and the trip. Proper driver feedback is briefly discussed, and rule-of-thumbs for feedback design are included. The work is supported by experimental validation, statistical analysis, and experiences from a recent insurance telematics pilot run in Sweden.