New Phone App Can Cut Your Insurance Premiums

Peter Händel,   of Signal Processing

Peter Händel, of Signal Processing

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Automobile insurance companies have long used statistics to help set premiums, but variables such as age and place of residence aren’t very precise in forecasting who is likely to file a claim. Now KTH researchers have released to insurers a mobile phone app that keeps track of factors much more closely related to risks in traffic. They say setting premiums according to actual behaviour can lead to big savings for careful drivers.

"I find it remarkable that insurance premiums still aren’t based on how much risk a driver  takes, but simply on age and where you live," says Peter Händel, Professor of Signal Processing at KTH. "If you’re a good driver, of course you should pay a lower premium."

Händel and his team have developed a mobile phone application that uses GPS information and smartphones’ motion sensors to create a picture of driver behaviour. Now, with about a year’s work put into commercialising the innovation, the group has signed an agreement with a large Scandinavian insurance company for an initial launch in Sweden. If all goes well, Händel says it could spread to millions of potential customers across the region.

"Drivers who install and activate the app will be offered a discount on their insurance. It could be as much as 50 per cent," Händel explains.

The GPS tracker shows where the car is driven, time of day and distances. Through the phone’s accelerometer, Movelo also picks up signs of unsafe driving such as sudden braking or rapid acceleration. Drivers who only use their cars occasionally will be charged less than those who rack up more miles and run more risk of being involved in accidents.

The idea isn’t to punish anyone, the developers say, but to give direct feedback that encourages safer, more fuel-efficient driving. The Movelo system can also gather data for use in transportation research and traffic planning.

"It’s better to use carrots than sticks to make traffic safer. Tolls and congestion charges aren’t the only tools we have," says Händel.

Over time, Movelo could help researchers find ways to cut down on costly, frustrating traffic jams. Swedes spend an estimated 350,000 hours a week stuck in slow-moving traffic.

"Movelo is a system where there should only be winners. Motorists can save money, insurance providers gain by being able to set more accurate premiums, and researchers get data they can work with," Handel adds.

There’s one more dimension to this novel app: a built-in game lets users score points, earn gold stars and compete with friends for rankings on a leaderboard. Händel says the game was added as an incentive for users to download and use Movelo.

By Peter Larsson

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