While insurance industry sentiment is that higher repair costs for advanced driver assistance systems (ADAS) features offset ADAS loss-cost benefits, a new study from LexisNexis Risk Solutions finds that’s not entirely true.
The report, “True Impact of ADAS Features on Insurance Claim Severity Revealed,” provides a look at a sampling of 11 million vehicles from model years 2014-2019 to examine the multivariate effect of ADAS features on claim severity. While changes in claim severity in vehicles equipped with ADAS features were minimal, the decrease in claim frequency was significant.
U.S. insurers have been trying to get ADAS feature information at a VIN level for years. Still, many believe technology has advanced too quickly, and the expense of repairing these features neutralizes the loss-cost impact of ADAS. However, as can been seen in the chart below, having at least one core ADAS feature provides a reduction in loss cost, which will vary depending on the combination of core ADAS features and how each specific combination of features performs. According to the report, having ADAS feature information can result in the following:
- 23% reduction in bodily injury loss cost;
- 14% reduction in property damage loss cost; and
- 8% reduction in collision claim loss cost in ADAS-equipped vehicles compared with similar non-ADAS vehicles.
An educated guess for why all coverages resulted in a decrease in severity in ADAS-equipped vehicles is that the decrease in severity for liability coverages can be justified by the idea that vehicles with ADAS may collide with less force, resulting in less damage to another vehicle (property damage claim) or injury to a third party (bodily injury claim).
A decrease in collision severity, however, deserved a deeper look. By controlling for common rating variables, the report isolates the impact of ADAS. With collision, there tends to be proportionally lower percentages of high severity claims with ADAS within a given cluster of values of control factors, resulting in an overall lower severity.
See also: Key to Transformation for Auto Claims
Depending on which ADAS features are present, the level of warranted discount will vary. This brings us to the challenge insurers face when trying to get normalized ADAS feature information across automakers, which often have their own naming conventions for features of the same technology (e.g., collision avoidance vs. automatic braking). Thus, solving for the multiple naming conventions found among ADAS features, vehicle build data provides greater transparency for specific features often equipped above standard base trim lines. Insurers focused on total risk analysis can begin to understand the safety features on the vehicle in combination with the risk factors associated with the driver. This new data can be used as a part of insurance companies’ rating segmentations to better meet the expectations of their customers, who often purchase vehicles with advanced safety features with the expectation that the features will help lower their insurance rates.
Understanding which vehicles have which ADAS features, combined with loss-cost performance, equips insurance carriers to apply appropriate discounts to the individual and the vehicle, delivering on consumer expectations along the way.
LexisNexis Risk Solutions has good news for insurers – this ADAS data helps show there is a distinct loss cost-benefit, and normalized VIN-level feature information is now available.
