Zendrive! How's My Driving?

Automotive insurance is fundamentally flawed built as it is, by necessity, on broad assumptions about drivers and driving behavior.  Even more flawed than auto insurance overall, however, is usage-based insurance - which depends on a device attached to a car.

The ultimate failure of usage-based insurance became obvious to me when I considered the cooperative agreement between Progressive and GM's OnStar division.  Under this plan, a driver can instruct GM to share his or her OnStar data with Progressive in order to obtain an insurance quote.

The problem with this offer as well as every other black box-style usage-based insurance offer is that there will be multiple drivers of the same car.  I have listened to multiple experts talk about the ability to distinguish different drivers based on their driving data - but color me skeptical.

Even if it is possible to distinguish different drivers by their driving behavior or destinations the invasion of privacy inherent in the exercise renders it unpalatable to the average customer.  The insurance company should not be in the position of trying to "figure out" who the driver is based on the extracted vehicle data. 

For this reason, monitored UBI solutions for vehicles with multiple drivers simply won't work.  The insurer will more often than not get aggregated driving data from multiple drivers.  The blending of the driving data and driving scores undermines the basic assumptions of the program.

The only way usage-based insurance can see wide adoption among all drivers is if drivers can get direct, real-time feedback on their individual driving behavior and guidance on how to improve that driving score.  In other words, nothing less than complete transparency is required to make UBI work.

Complete transparency means a drive-by-drive evaluation with guidance for making corrections.  The problem resides with any car that has multiple drivers.  All drivers of the insured vehicle have to agree to care about their driving behavior and their desire to improve it or simply accept the insurance company evaluation of the blended driving score - dragged down as it will be by the inferior drivers sharing the vehicle.

What struck me about the Progressive/OnStar relationship was that the program did not offer any means to discriminate between drivers.  It is quite likely that GM/OnStar was resistant to take this step toward an invasion of privacy.  But even if GM/OnStar had been willing to collect driver-independent data and share it with Progressive, it is not clear that Progressive would have been in a position to do anything with it.

This conflict was made most clear to me when I visited the Website of Zendrive and spoke with senior leadership at the company.  Zendrive, among other things, provides individual driver scores for fleet drivers.

If you visit the Zendrive Website and watch the video you will immediately grasp the power of the individual driver evaluation along with its real-time scoring and feedback.  Zendrive is focused on transportation network companies (TNCs) such as Lyft, Redcap and HopSkipDrive - in fact, it is already serving more than 50 of them.

Zendrive is applying its scoring algorithm to individual drivers creating a de facto driver certification proposition that can be applied throughout the burgeoning TNC industry.  This driver scoring can ultimately serve as a tool to empower drivers while also instilling confidence in clients.

But the headline is the insuring of the individual driver.  In today's personall lines market the focus is on insuring the vehicle AND the potential drivers.  In the commercial insurance market, the ability to certify a driver's abilities will alter the underwriting environment.

And the real-time scoring and driver feedback creates an opportunity for driver education and training.  This is another missing element of personal lines UBI programs.

The assumption behind any insurer's UBI plan is that there is a single proper way to drive.  If insurers are going to directly promote a particular way of driving - for which a "perfect" score would be given - drivers need more feedback and a process for improving their score.

Zendrive provides the feedback and is already partnered with organizations - like edriving - capable of providing the training necessary to improve a score.  This model is already working in the commercial lines space, but it's very existence undermines the credibility of personal lines UBI programs.

Zendrive is pointing the way toward a new insurance paradigm based more on the driver than the car.  But beyond that, Zendrive is pointing the way to other forms of more personalized life and health insurance based on the voluntary sharing of personal data along with coaching and support to facilitate score maintenance or improvement.

In the meantime, cars that are subject to usage by multiple drivers will remain difficult to accurately insure.  But the increasing availability of driver detection and biometric devices in cars will open the door to broader personal lines adoption of UBI if consumers are willing to cross that threshold.