How the driving habits have changed in 2020 and what impact that has on the insurers business

29 April 2021 — Daniela GHETU
How the driving habits have changed in 2020 and what impact that has on the insurers business
Throughout 2020, a significant change in how people are using their cars has developed, driven by the lockdown and the subsequent travel restrictions, as well as by the new remote working stile or the avoidance of using public transportation means.

In a recent webinar, Marijan Mumdziev, CEO of Amodo, the digital solutions provider specialized in mobile based insurance telematics, has spoken about the changes in the drivers' behavior, as reveled by the analysis performed on the data in the Amodo portfolio. He stressed out that it is important analyzing first and foremost two periods: - the first lockdown period - as it was the most restrictive and the post-lockdown one. While during the lockdown, as expected, the road traffic decreased dramatically, there was still a category of drivers - 10-12% of the Amodo portfolio -, that were driving even more than usually.

Yet, one of the interesting findings was that after the lockdown ended, a significant increase in the distance driven has occurred.

In comparison with the periods before the lockdown, the distance driven increased, in average, by 24%, showing a change in a certain habit of how people are using different means of transportation, i.e. a clear preference for the use of their own car. The number of trips and journeys has also increased by 58%.

He also emphasized that most probably due to the new work arrangements, there is large category of drivers that no longer need to travel at all - about 34% in the Amodo portfolio. On the other hand, the active drivers are driving more, a trend visible especially in the urban areas, and less for the highways. That shows that people are using their cars rather for home to work commuting, than for inter-city traveling or even for trips outside of the country.

"Clearly some of habits changed and along them also changed the capability of insurers to predict the risk. I would say that to certain extent it has diminished. We have seen looking at our data a different nature of claims arising in this period," Mumdziev said. Significant changes have also occured in the distribution of this claims ratio across different types of products in 2020. "Overall, the effect is that the claim ratio is going down. It spiked up in the days right before the lockdown, probably because of the shopping rush, reaching 3.85% for our portfolio and after that went down to 0.78% or even lower, in the following months. This is something that will disturb the more or all less predictive history of the claims for the drivers in the insurance data. Insurers will need other sources of data to compensate the changes in their customers base behavior and also that leads to a higher relevance of the UBI products."

The full recording of the Lockdown & Mobility Webinar 2021 is available online, on the Amodo website.

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