LexisNexis Risk Solutions has released an analysis of the relationship between advanced driver-assistance systems (ADAS) features and US car insurance claims, which it says counters common insurance industry sentiment that ADAS repair costs offset ADAS loss cost benefits.
The results are featured in the new white paper ‘True Impact of ADAS Features on Insurance Claim Severity Revealed’, which examines the effect of ADAS on claim severity in a multivariate setting. The findings represent the second half of a two-part study that also examined the relationship between ADAS and claims frequency.
LexisNexis says the combined findings show a minimal change of claim severity in vehicles with ADAS, but the decrease in claim frequency was significant. The study shows an overall reduction in loss cost by coverage, which the company says can warrant ADAS feature-based policy discounts and benefits for drivers and insurers.
John Kanet, Director Auto Insurance at LexisNexis, said the data helps insurers focused on total risk analysis in beginning to understand the safety features on the vehicle in combination with the risk factors associated with the driver.
“Insurance companies can use this new ADAS data as part of their rating segmentation to better meet the expectations of insurers’ customers, who often purchase vehicles with advanced safety features with the expectation that it will help lower their insurance rates,” Kanet said. “US insurers have been trying to get ADAS feature information at a VIN level for years, but many believe technology has advanced too quickly and the expense of repairing these features neutralises the loss cost impact of ADAS.”
Results from the analysis reveal that having at least one core ADAS feature reduced loss cost, which will vary more or less depending on the combination of core ADAS features and how each specific combination of features performs. According to the white paper, having ADAS feature information can result in a 23 per cent reduction in bodily injury loss cost, a 14 per cent reduction in property damage loss cost and an eight per cent reduction in collision claim loss cost in ADAS-equipped vehicles compared to non-ADAS vehicles.
“We find it interesting from an actuarial perspective that all coverages resulted in a decrease in severity in ADAS-equipped vehicles,” said Gabe Hinton, Senior Data Scientist Insurance at LexisNexis. “An educated guess is that the decrease in severity for liability coverages can be justified by the idea that vehicles with ADAS may collide with less force, resulting in less damage to another vehicle (property damage claim) or injury to a third party (Bodily Injury claim). A decrease in collision severity, however, deserved a deeper look. By controlling for common rating variables, we were able to isolate the impact of ADAS. With collision, within a given cluster of values of control factors, there tends to be proportionally lower percentages of high severity claims with ADAS, resulting in an overall lower severity.”
LexisNexis said the level of warranted discount varies based on which ADAS features are present. Understanding which vehicles have which ADAS features, combined with loss cost performance, equips insurance carriers to apply appropriate discounts to the individual and the vehicle, delivering on consumer expectations along the way.