Swiss Re Builds Risk Scoring System, Aiming to Reward Safe Cars with Lower Premiums

A car owner should be able to pay lower insurance premiums for driving a car with safety features, such as automated braking that stops the car when the driver is distracted or lane keep assist systems that help prevent a collision if a car enters a driver’s blind spot.

Unfortunately, premiums don’t always match safety performance.

Enter the team at Swiss Re P&C Solutions, which is assessing vehicle safety features with its Automated Driver Assistance Systems (ADAS) Risk Score, so safe cars can be rewarded with lower premiums.

The ultimate goal is to improve road safety worldwide, said Kim Nielsen, senior product and partnership manager at Swiss Re. “There are many of these systems, and they’re increasingly being fitted into vehicles today, essentially assisting the drivers in critical traffic situations [and] making cars safer today than ever before,” he said during Swiss Re’s Media Day webinar in June.

However, the performance of these safety systems varies widely—not only from brand to brand but also from model to model within the same brand, said Nielsen. To tackle this problem, Swiss Re began working with BMW in 2018 to build the Swiss Re ADAS Risk Score, which was introduced last year.

Nielsen said the scoring system is built on three pillars: claims data, live vehicle testing and simulations.

Claims Data. “By working with car manufacturers, we are actually using technology already fitted into vehicles and combining that with data, mainly claims data,” he said, explaining that the claims data of vehicles fitted with automated driver assistance systems is being matched against vehicles that don’t have these systems. While this analysis provides comprehensive knowledge, Nielsen said, claims data only works retrospectively for cars that have already been on the road for two to three years.

Live Vehicle Testing. The performance of the safety systems is tested in cars that are on the road. “By doing this, we can see the true performance of these systems,” said Nielsen.

“One of the benefits of working directly with car manufacturers is that we get the chance to test the vehicles even before they enter the road,” he said, noting that, as a result, the ADAS risk score is always up to date.

Simulations. The final pillar of the ADAS risk score is simulations, Nielsen said, explaining that this pillar is necessary because in certain traffic situations or conditions, it is not feasible to use live vehicle testing with high-speed maneuvers, for example.

“By combining these three pillars using robust statistical methodologies, Swiss Re can determine how much safer a vehicle is due to its fitted, automated driver assistance systems equipment,” Nielsen said.

And finally, each vehicle is given an ADAS Risk Score. “Simply put, the higher the score, the safer the vehicle. This score is available globally through an online platform,” he added. “[B]y sharing this score with insurers, we allow them to reflect the technology already fitted into cars into their underwriting activities” and premiums.

Eric Schuh, who recently stepped down as global head of P&C Solutions, described ADAS as an intermediate step toward the day when there are fully autonomous vehicles. “If you buy a better, more ADAS-equipped car in the future, hopefully you will see the benefits with more and more insurance companies in terms of lower premiums,” he said during the webinar. Schuh, who also spoke at the Media Day webinar, will be leaving Swiss Re later in the year to take a role outside the company.

The Swiss Re score is “very much in line with the aim of my team to stay ahead of the curve and to contribute to road safety on a global scale,” Nielsen said.

(Swiss Re set up P&C Solutions in 2017 to help clients improve profitability by enabling them to make better underwriting and pricing decisions using various tech and data analytics tools. Read more about P&C Solutions in related online article, “Not Every Insurtech Is a Startup: How Swiss Re Delivers Tech Solutions.”)

This article first was published on Aug. 3 in Insurance Journal’s sister publication, Carrier Management.

Topics Auto Claims Tech Property Casualty Swiss Re