AA Launches Driver Behaviour Based Insurance

Former Contributor
Fri, 10 Feb 2012

The AA has today launched its first technology-based insurance product: AA Drivesafe, which uses telematics to track the driver's performance, on which premium adjustments are made. It is likely to appeal most to those who currently pay very high premiums, for example young and inexperienced drivers.

AA Drivesafe tracks driving behaviour using a small electronic 'Drivesafe Box'. The box, about the size of a packet of playing cards, is discreetly installed in the car and it measures speed, types of road travelled on, time of day and night, braking and cornering.

The data can be presented to users Online in a way that will help them improve their driving safety and, in so doing, can lead to lower insurance premiums.

Simon Douglas, director of AA Insurance says: "It is likely to appeal to inexperienced drivers as well as parents, whose youngsters have their first car. Parents know driving behaviour is being tracked by a system that also provides crash, breakdown and theft alerts."

Compared with standard inexperienced driver policies, premium savings of up to £850 could be achieved, the AA says. (2)

It is available direct from www.theaadrivesafe.com (3) AA Insurance has chosen to use three underwriters, although Mr Douglas says that more will be added, which will make AA Drivesafe more competitive.

AA Drivesafe is launched at a time when young drivers have been facing sharp rises in the cost of car cover, according to the AA's benchmark British Insurance Premium Index, with premiums for those aged 17-22 having increased by an average of 39% since April 2010. (4)

"The system provides a genuine opportunity for users to improve their driving safety and so reduce the cost of their cover by proving themselves to be responsible drivers," Mr Douglas says.

"It's designed to encourage users to anticipate road conditions and drive in a way that properly reflects a lowered risk of having an accident.

"Safer drivers could see their premiums fall after just 60 days, but those who take frequent risks, typified by exceeding speed limits, cornering sharply or braking heavily and frequent driving late at night, are likely to see their premiums go up."

In the event of a breakdown or a crash, or if the car is stolen, the AA can also identify exactly where the car is.

Website 'dashboard'

Users log on to a secure website 'dashboard' to find out how they are performing under four separate categories:

* Speed
* Anticipate traffic (smooth deceleration / braking)
* Follow landscape (cornering)
* Where and When (types of roads and time of day)

Separate reports are provided for overall scores; monthly mileages, daily mileages, journey lengths and road type usage. Useful alerts can be added such as service intervals, MoT test dates and so forth. In addition, the system offers tips on driving style and alerts to offer advice on improving drivers' scores.

Mr Douglas believes that the majority of drivers will find the system helps to highlight driving styles that could be improved, which in turn may influence premium reductions. (5)

While AA Drivesafe will be especially attractive to young and newly-qualified drivers, it could benefit anyone who suffers from particularly high insurance premiums.

"Most people can improve their driving standard and Drivesafe can help them to do that," Mr Douglas says. "I believe that in time, systems of this type will become increasingly widely used by drivers of all ages."

Gender neutral

AA Drivesafe is being launched during the year when a ruling by the European Court of Justice (ECJ) will outlaw use of gender to calculate insurance premiums after 20th December.

"After this, I believe telematic insurance technology will come into its own," Mr Douglas says. "And young and inexperienced drivers stand to benefit most.

"At present, young women can expect to pay up to 40 per cent less than their male peers for car insurance. Although young men are statistically more likely to have a serious crash than women, that doesn't mean that all men drive aggressively. Similarly, some young women also take risks when they're behind the wheel.

"AA Drivesafe will identify the safest drivers and reward them. Equally those most at risk can be identified and free 'Drive Smart' tuition may be offered through the AA's Charitable Trust."

Online application and feedback

Application for AA Drivesafe, which uses a panel of insurers, is at present (6) only available online at www.theaadrivesafe.com . Installation of the Drivesafe box, the cost of which is included in the annual
premium, can be carried out at the user's home or work place and the system 'goes live' within 24 hours.

Although the user must have an Online computer to operate the system and run the 'dashboard', which provides performance data after a lapse of up to 48 hours, a free AA smart phone App has also been launched.

The App displays dashboard data and information relating to driving performance.

Payment is by direct debit and premium adjustments may take place throughout the year, typically after three months (5)

Mr Douglas says: "Although the initial premium may be little different to a conventional policy, the safest drivers could see their premiums fall quickly. As with standard polices, no-claim bonus applies and any premium reductions for risk-averse driving are in addition to that.

"A new driver with their first car could see premiums fall faster than the 30 per cent or so they might expect from their first year's no-claim bonus alone, after a year."

(1) The Drivesafe Box is about the size of a pack of playing cards and discreetly hidden within the vehicle and connected to the car's 12-volt electrical system. It transmits data via satellite to the AA.

(2) "Save up to £850" based on 30% of drivers aged under 30yrs achieving an average saving of £850 compared with conventional insurance, from a sample of 1,000. Source: AA/Premium Research, Dec2011

(3) AA Drivesafe is only available online from www.theaadrivesafe.com . It is also available via www.confused.com

(4) Current average Shoparound premiums for drivers aged 17-22, January 2012:

* Male: £3,163 (April 2010, £1,887)
* Female: £1,799 (April 2010: £1,054)
* All: £2,497 (April 2010: £1,540)

(5) Premium adjustments are triggered by consistent improvement or deterioration at 20 point intervals. At inception, users are assumed to be an average driver providing plenty of scope for performance improvement. Payment is by direct debit and premiums are adjusted up or down.

(6) AA Drivesafe will be available on the price comparison site Confused late February 2012. Other insurers will also be added to the panel