With emerging technologies shaping the insurance industry, insurance companies have a unique opportunity to help reduce risk on the road, while also improving customer retention and driving profitability.

Ipsos highlights data from eMarketer (formerly known as Insider Intelligence) that in 2023, over 41 million U.S. drivers enrolled in a usage-based insurance (UBI) program, a growth of 15.5% from previous years. As digital customer interactions continue to advance the marketplace, the responsibility for insurers to create digital solutions that don’t add complexity to the driving task or an already increasing rate of driver distraction is imperative. 

Instead, insurers have the opportunity to create digital experiences and harness technologies that deliver a better customer experience, deepen engagement, and help mitigate risk or the burden of increased rates. 

We know behavior change technology will be a necessary investment for insurers.

How insurers benefit from behavior change technology

Smartphones, past and present, give users a streamlined approach to do many things. From personal banking to food delivery, our increasing technological dependency has created a cultural shift in smartphone immersion that may contribute to less-than-ideal behavioral changes like distracted driving.

But what if harnessing similar technology could lead to a positive behavior change and lead to reduced distraction or risk on the road? 

Also known as persuasive technology or behavior change support system (BCSS), behavior change technology uses digital devices or software to form, alter or reinforce attitudes or behaviors — eliciting a change in someone’s lifestyle or behavioral habits without coercion or deception.

The implementation of behavior change technology in an insurance application can lead to two key outcomes:

1. Insurance profitability

2. Engaged and motivated drivers staying safer

Traditionally, insurance aims to match price to risk.

When we consider UBI programs and risk prevention solutions that utilize behavior change technology, insurance companies are primed to achieve profitability targets and improve customer retention.

At Quanata, we’re implementing behavior change technology by creating solutions that help lower risk over time and over the course of a policy. When you lower that risk over time, you can expect improvements in frequency and severity trends leading to an improved loss ratio and may help achieve profitability targets.

This increased margin may be used to lower customer rates and help convert more quotes into policies that attract and retain low-risk customers. By lowering customer rates, an insurer may also reduce their customer acquisition costs (CAC) by having a lower rate which will improve conversion with the same or existing marketing spend. By implementing behavior change technology and initiatives, data is gathered on how responsive drivers are to those initiatives, which can then be connected to driver attributes, equipping insurers to take those attributes and —

1. predict not only how risky they are at the time of acquisition, but also

2. predict a customer’s most likely trajectory over the course of a policy term when exposed to features that utilize behavior change technology, thus reducing their distraction over time.

With this knowledge, we believe in the efficacy of an investment in behavior change technology and its solutions for both car insurers and driver behavior.

How behavior change is possible

We’ve discussed how an investment in behavior change technology that powers risk prediction and prevention solutions can lead to a larger profit margin for insurers and ultimately safer drivers.

But how do we get there? At Quanata, we believe it can happen from creating moments that motivate users to change their behavior behind the wheel. In developing our engagement flywheel, we've crafted a variety of challenges and rewards that cater to different motivational triggers such as social recognition, personal achievement, and financial incentives. However, the emphasis remains on creating a rewarding experience that encourages repetitive engagement.

This is where challenges that integrate gamification strategies have proven to be effective at engaging customers and lowering distraction on the road. We've seen measurable success through initiatives like Hands-off Phone where drivers are celebrated for reaching streaks of safer driving behavior. As a perpetual challenge to users, this product design technique can be more effective for behavior change versus short-term or one-off challenges.

Here are some benefits: 

• Increased engagement as user is more likely to engage in other app activities

• Simple, achievable task: Don’t touch your phone while driving

• Opportunity to improve in the challenge of staying distraction-free

• Increased satisfaction that comes from a greater sense of accomplishment

• Complements other shorter-term challenges 

Lastly, these streaks gamify the concept of ‘loss aversion’ by highlighting that when a user builds a large number of trips in a streak, they’re motivated to not touch their phone and not have to restart from zero.

But one challenge is not enough. As mentioned, it takes an ecosystem and a journey to engage a customer. We need to not only understand their motivations but how to keep them motivated — that’s what ultimately leads to a change in behavior.

The result of distracted driving prevention technology

The best way to drive behavior change? If you talk to psychologists Richard Ryan and Edward Deci, it’s through intrinsic motivation. When customers are motivated to do an activity because it’s internally rewarding, they’re more likely to engage again. 

However, customers need a low barrier to entry. To drive behavior change, Quanata has built an ecosystem of tools because one challenge can’t be the only solution. Other challenges or app activities contribute to the success of streaks. 

We’ve applied this knowledge and behavior change technology ecosystem to our telematics-based car insurance, HiRoad, to create a successful and engaging flywheel of in-app activities that reinforce our efforts to decrease distracted driving.

Our distraction-free incentives have worked together to show year-over-year reduction in distracted driving of about 3%. When we look specifically at streaks, when drivers are exposed to and engaged, we also saw a statistically significant improvement in staying distraction-free.

The distraction-free ratio is the ratio of distraction-free trips to all recorded trips made by each of the surveyed participants. 

From this initiative alone, we are better equipped to understand the motivations of drivers and create further solutions that reduce risk through behavior change technology.

Implementing technology to drive solutions

As insurers face challenges and opportunities to engage their customers, lower loss ratio, and retain customers, our team at Quanata is building risk prevention solutions such as streaks that reframe behavior change technology in ways that can help reduce distraction on the road.

Behavior change takes time, but we’ve shown that it’s possible — even in a short span of time — and provides insurers an advantage in the marketplace to drive user engagement and profitability through lowered risk and cost of acquisition.

To better understand the methodology and behavior change technology we’re implementing at Quanata, our case study, Quanata reduces distracted driving with persuasive technologies, delivers specific information on streaks and how behavior change is central to the success of an insurer, as well as the safety of all drivers.

Some of the information in this article was obtained from various sources not associated with Quanata®. While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. Quanata is not responsible for, and does not endorse or approve, either implicitly or explicitly, the content of any third party sites that might be hyperlinked from this page. The information is not intended to replace manuals, instructions or information provided by a manufacturer or the advice of a qualified professional, or to affect coverage under any applicable insurance policy. These suggestions are not a complete list of every loss control measure. Quanata makes no guarantees of results from use of this information.