Editor's Note: Visualize introduces the first in a series of articles exploring the topic of advanced driver assistance systems (ADAS).
New vehicle owners are driving in an ever-denser cocoon of convenience and safety features, with slick infotainment systems and numerous advanced driver assistance systems (ADAS) such as front-collision and lane departure warning and assist. Sophisticated sensors alert drivers to possible dangers and make vehicles safer, in some cases by acting automatically if the driver fails to do so.
Other common ADAS features offered on newer vehicles include backup cameras—mandatory in the United States as of May 2018—as well as adaptive cruise control, park assist and blind spot detection.
Historically, only high-end vehicles had the cutting-edge safety features, which then gradually trickled down as optional equipment on regular cars before they eventually became standard. In recent years, the down-market movement of these features to mainstream vehicles has accelerated.
How will new systems affect risk?
As personal auto insurers seek more data to improve rating segmentation, many are considering how these newer safety systems may affect vehicle risk. Finding the answers presents multiple challenges.
The first challenge is obtaining detailed information on the factory-installed safety features in each vehicle. This often calls for vehicle build sheet data—also known as Monroney or Window sticker data—as ADAS features are still only offered in optional packages on many vehicles. This information historically has been available only to new vehicle dealerships and other entities involved in auto sales.
The second challenge is normalizing vehicle features across OEMs, which often have their own brand names for technology that works on the same principles.
In addition to normalizing ADAS descriptions, it’s also important to understand the differences between similarly named systems, as their effect on vehicle risk may be different. Some are designed to only warn the driver, while others assist by taking basic defensive action to avoid potential collisions—or even fully, proactively perform certain functions such as keeping the vehicle centered in its lane with no action by the driver.
The bundling of many ADAS features as part of optional packages also may make it difficult to isolate the effect of each technology, as these systems may interact with one another.
Finally, obtaining a credible dataset for analysis may be difficult, as ADAS features are only installed on a small percentage of vehicles and are typically more prevalent on newer model years.
Sharper reflexes or duller senses?
Another interesting question around ADAS features is how they may affect drivers’ behavior. Will ADAS technology make people better drivers as they grow more alert to potential dangers, or will it make drivers worse as they become too dependent on it and stop using their own senses to avoid accidents?
Also, vehicle repair costs have increased in recent years, as sensors and cameras are now embedded in frequently damaged parts of vehicles. This raises the question of whether ADAS adds more to increasing claims severity than it subtracts from frequency.
It’s an exciting time not only for new car buyers but for actuaries, as ADAS offers potential new vehicle rating variables to better align premium with risk. The challenges in analyzing the data are surmountable. ISO’s personal auto actuarial team, armed with the largest database of claims data based on vehicle identification numbers, is now analyzing premium and loss data with build sheet data appended to explore the effects of ADAS technologies.
The work is just beginning. The results will lead to new rating factors for ISO’s personal auto core lines program—and could transform insurers’ understanding of the changing nature of vehicle risk.