LexisNexis Risk Solutions, a provider of data and analytics for the insurance and automotive industries, and IMS, a global connected insurance technology company, have integrated the LexisNexis Drive Metrics scoring model into IMS EdgeSDK for US auto insurers.
The smartphone-based telematics solution lets drivers share driving information with their insurers while processing behaviour data directly on the device.
The companies are targeting insurers launching usage-based insurance programs as well as carriers seeking to lower the operating cost of existing UBI products.
Traditional smartphone telematics programs often send large volumes of driving data into cloud infrastructure for processing and storage. The new setup moves much of that work onto the policyholder’s smartphone, removing associated cloud processing and storage expenses.
LexisNexis and IMS estimate insurers using the EdgeSDK and Drive Metrics configuration could reduce UBI operating expenses by 50% to 80%, depending on the existing program and technology structure.
IMS said the broader on-device approach offers potential savings of 50% or more compared with conventional telematics infrastructure.
Driving behaviour information remains on the user’s smartphone while the software produces scores and risk attributes for insurance workflows. Insurers receive the outputs required for pricing and underwriting rather than moving the same volume of raw driving information through external cloud systems.
The structure addresses two recurring issues in telematics programs: infrastructure expense and consumer concerns over how driving information is stored.
Keeping more processing on the smartphone reduces external data movement while giving insurers access to standardised driving scores.
IMS EdgeSDK is designed for incorporation into an insurer’s existing mobile application. Carriers without their own app infrastructure also have access to an IMS white-label application using the same technology.
This gives insurers a route into smartphone telematics without building an entire mobile data collection and scoring system internally. Existing programs use the software as another processing layer within their current insurance apps and underwriting workflows.
The integrated product generates scores and driving attributes through a single execution point on the smartphone. Those outputs follow the same Drive Metrics methodology used across other LexisNexis telematics products, giving insurers a more consistent basis for comparing driving behaviour across different data sources.
LexisNexis developed Drive Metrics specifically for auto insurance risk assessment and pricing. The company says its scoring model has produced a 79% additional predictive lift above standard rating factors in its testing.
Earlier LexisNexis research also reported an 8.7x difference in claim frequency between the highest- and lowest-risk scoring deciles (see report: Usage-Based Auto Insurance Programs Have a Dramatic Increase). The company designed the model for use alongside an insurer’s existing rating variables rather than as a standalone replacement for conventional underwriting factors.
Bringing that model onto the smartphone changes where the analysis takes place. Instead of sending raw telematics information to remote infrastructure before receiving a risk score, EdgeSDK performs more of the processing locally and passes the resulting attributes into the insurer’s systems.
LexisNexis said the arrangement supports more precise segmentation and personalised auto insurance pricing.
The same scoring structure also gives insurers information for policy management beyond initial underwriting, covering stages between quotation and claims.
Jeffery Batiste, senior vice president and general manager for auto and home insurance at LexisNexis Risk Solutions, said the combination brings smartphone driving information together with vehicle telematics and the company’s insurance risk and claims data.
He said using those information sources together gives insurers a wider view of individual driving risk and supports underwriting decisions across the policy lifecycle. The company also sees the model as a way to reduce operational work associated with maintaining separate telematics scoring environments.
IMS CEO Paul Stacy said embedding the scoring mechanism within insurance applications already used by customers gives a larger group of drivers access to personalised pricing based on their own behaviour.
For insurers, the technical change is aimed at lowering one of the main economic barriers around UBI. Collecting continuous smartphone telematics information traditionally generates cloud computing, transfer and storage costs that increase as an insurer adds more participating drivers.
On-device processing changes that cost structure because raw information doesn’t need the same level of central processing. The companies argue this makes smartphone-based telematics more economical across larger insurance portfolios.
The approach also gives insurers more flexibility over where they introduce driving behaviour into the customer relationship. Scores and attributes generated through the integrated system support underwriting at quote, ongoing policy management and other insurance processes where driving information affects risk assessment.
Consumer privacy remains another part of the product design.
Driving behaviour stays on the smartphone during local analysis rather than requiring all raw information to move into external infrastructure, giving drivers a clearer relationship between the information collected and the risk outputs sent to their insurer.
The companies are positioning the integration as infrastructure for insurers seeking broader use of telematics rather than a separate consumer insurance product. Carriers retain responsibility for how driving scores enter their rating plans, underwriting processes and customer propositions.
For insurers already operating UBI products, the principal economic argument centres on reducing cloud processing and storage expenses. For carriers entering telematics for the first time, the EdgeSDK structure reduces the amount of infrastructure required before driving data becomes usable in pricing and underwriting.
The partnership combines IMS’s smartphone telematics technology with a LexisNexis scoring model already used elsewhere in the US auto insurance market.
Its commercial proposition rests on processing more information locally, delivering standardised risk attributes into existing workflows and lowering the infrastructure expense associated with large-scale UBI programs.
As auto insurers seek more granular information on individual driving behaviour, the companies expect smartphone telematics to support pricing beyond traditional variables such as age, location and vehicle characteristics. The new integration gives carriers another way to introduce those behaviour-based factors without maintaining the same cloud-heavy processing architecture used by many earlier UBI programs.
