Root car insurance, a venture-backed startup based in Ohio, offer customers usage-based insurance (UBI), also known as pay how you drive (PHYD). Drawing on today’s hyper-connected environment, Root logs data from an app installed on a potential customer’s smartphone to monitor their driving behaviour and habits. An algorithm is then used to find and reward good drivers with the best rates.
On March 9, Root announced that they will be offering a further discount “above and beyond any good driver discount” for owners of Teslas with Autosteer functionality. Autosteer is the main feature of Tesla’s Autopilot system, enabling the vehicle to steer itself under certain conditions such as highway driving.
Why Do Tesla Drivers Get a Better Discount?
The Office of Defects Investigation (ODI) recently analysed mileage and airbag deployment data supplied by Tesla for all MY 2014-2016 Model S and 2016 Model X vehicles equipped with Autopilot. The National Highway Traffic Safety Administration (NHTSA) subsequently released a report in January 2017 stating that “the data show that the Tesla vehicles crash rate dropped by almost 40 percent after Autosteer installation.” This translates to 1.3 crashes per million miles before Autosteer availability and 0.8 crashes per million miles after.
“Self-driving cars are making our roads safer, and that means less risk and less expense for everyone,” said Alex Timm, CEO of Root. “It’s only fair to pass those savings along to the customers who invest in those self-driving cars.”
“At Root, we’re using technology to reinvent insurance from the ground up to make the whole experience easier and fairer for our customers,” said Dan Manges, CTO of Root. “Our new discount for self-driving cars is just one of many cutting-edge things still to come.”
How Do Drivers Apply for Car Insurance With Root?
- There are no agents and no phone calls involved — customers simply download the Root app to get started. Initial enrollment takes less than a minute, during which time a customer scans their driver’s license. The app requests access to your smartphone’s GPS, accelerometer and gyroscope data.
- After 2-3 weeks, when the customer has likely forgotten about the app and gone back to driving normally, a user profile is created which evaluates driver behaviour and habits on the road. Data such as braking, acceleration, speed, how often they swerve and distance traveled are logged over a 2-3 week period. For drivers of Teslas, Root’s app also records the number of “Autosteer-eligible” highway miles driven.
- Root apparently stop monitoring after the prescribed 2-3 week period. An algorithm then determines the driver’s risk profile — too risky and you won’t be offered insurance at all. Root has so far rejected 30% of applications. If a customer is accepted, they are eligible for a good driver discount in proportion to how safely they drove during the evaluation period. Root sends a push notification to their smartphone to accept the offer of insurance. The customer can then use Apple Pay to make the purchase.
- Drivers of Teslas equipped with Autopilot receive a further tiered discount depending on the overall percentage of “Autosteer-eligible” highway miles driven. Root plan on making this particular discount available to drivers of all self-driving cars “later in 2017.”
At the moment, Root only offers insurance to residents in Ohio, but expects to expand to other states soon. Their unique incentives may well represent a paradigm shift in the way car insurers calculate their premiums. As self-driving technology continues to advance, one can imagine that insurance costs will continue to decrease. If there comes a day when fully-autonomous cars are many times safer than human drivers, just how car insurance companies adapt will be interesting to say the least.
Source/s: Root, NHTSA, Forbes, prweb, Carrier Management.