Cellphone data lets insurer be a high-tech backseat driver
In the auto insurance world, Gary Hallgren is Big Brother, watching more than a million drivers every day to determine who is likeliest to have an accident.
Hallgren is president of Chicago-based Arity, a year-old Allstate tech startup that uses smartphone apps and add-on devices to track every move drivers make behind the wheel.
The result is a real-world safe driver score — think credit score — that Hallgren says more accurately assesses insurance risk.
Launched in 2010, Arity spun off last year from Northbrook-based Allstate and moved to the Merchandise Mart, where about 400 employees have eyes on drivers across America.
Arity currently provides telematics — transmitted mobile data — for Allstate and co-owned Esurance, monitoring about 1.1 million drivers who’ve opted into the program in return for an upfront insurance discount and potential lower rates for demonstrated safe driving.
Allstate says on its website that participants in its Drivewise program who fall short will not be penalized with higher premiums.
The plan for Arity is to expand its client base to other auto insurance providers and a range of transportation companies. National General Insurance and three as of yet unnamed shared transportation services already have signed on.
A veteran telematics executive, Hallgren, 49, joined Allstate in 2015 from Telogis.
The following interview has been edited for length and clarity.
Q: What is Arity primarily tracking in drivers?
A: We’re monitoring the aggressiveness of their driving.
Q: How do you see that from collected data?
A: It’s acceleration and it’s braking speed, and there’s an element of time with it. There’s also location. Someone driving on the interstate in dry weather in the middle of the day is a different level of risk than someone driving in downtown Chicago in the snow at night, headed to a bar.
Q: Why would anyone sign up for this?
A: The initial pushback is that it’s Big Brother. But the reality is it’s actually based upon your driving. It’s a more accurate way to identify risk, and it gives customers control over their driving, which fundamentally I think people are going to embrace and like.
Q: How does this benefit the insurance companies?
A: We’re collecting about a billion miles of driving data a month, and we’re able to match that exactly with the claims of the losses that people have incurred. It just gives us a very unique insight on understanding driving risk, which is fantastic for insurance companies.
Q: You’ve already signed up three shared transportation companies. What’s in this technology for them?
A: Whether I use Lyft or Uber, I want my shared mobility driver to have four stars because that individual is indeed a good driver and not just that his car didn’t smell and he gave me a mint when I got out.
I think the consumer cares, and I think this is a big shift for the shared mobility industry.
Q: Does being monitored change driver behavior?
A: There is a great opportunity to provide coaching so that people understand what they could do to become a better driver. Risk is going to be more quantified, and people are going to start making better decisions based upon that.
Q: Why would an inveterate lead-foot have any incentive to share his or her driving habits with an insurance company?
A: I’m sure a lot of people that have signed up believe they are the best drivers, and there’s people that haven’t signed up that think they are crappy drivers. I am certain we will find people that think their level of aggressiveness is high that are actually very safe, while there’s ones that think they’re safe that actually are not. That’s why you’ve got to run the test.
Q: Beyond aggressiveness, what other bad driving habits do you monitor?
A: Distracted driving is a very real phenomenon. I think when people look, driving down the road, and they see people next to them focusing on their cellphone and focusing on texting – you know that that is unsafe. And what is really different now is we were able to quantify just how risky that behavior is relative to not performing those behaviors.
Q: How big can this monitored driving technology get?
A: Ultimately, all people will have their driving monitored based upon these technologies.
I believe that someday we’re going to look back in disbelief that people did not monitor your driving risk based upon your driving. It doesn’t make any sense to me as to why on earth it should be odd to monitor driving to understand driving risk.