# How insurance providers are starting to use ADAS data to price cover
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-02-15
Category: INSURANCE
Category URL: https://financedigest.com/category/insurance
Meta Title: The Future of Motor Insurance with Autonomous Vehicles
Meta Description: Discover how the rise of vehicle autonomy and advanced safety features like ADAS are reshaping the motor insurance sector in the UK.
URL: https://financedigest.com/how-insurance-providers-are-starting-to-use-adas-data-to-price-coverhtml

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_By **Carla Hopkins,** senior vertical market manager, LexisNexis Risk Solutions UK & I_

The motor insurance sector is facing significant change as vehicle autonomy increases. By 2035, 40% of new UK car sales could have self-driving capabilities [\[i\]](#_edn1) according to the Department of Transport with connected and automated vehicles (CAVs) predicted to help prevent thousands of serious accidents and save lives [\[ii\]](#_edn2). The UK Government has already signposted its intentions to allow the use of Assisted Lane Keeping Systems on UK motorways and is currently reviewing feedback following a consultation that launched in August 2020 [\[iii\]](#_edn3).

Motor insurance activates when an accident or collision occurs. As levels of autonomy increase in vehicles, insurance providers will [need](https://www.financedigest.com/breaking-down-the-types-of-insurance-you-need.html "Breaking Down the Types of Insurance You Need") to understand the direct impact these developments will have on claims frequency and severity to help price insurance and evolve their offerings. Data direct from the connected [car will be key to this and the foundations are already in place to bring car manufacturers and insurance providers together to serve their common customer through a connected car data](https://www.financedigest.com/how-data-is-revolutionising-car-insurance.html "How data is revolutionising car insurance") exchange.

However, car buyers are already [investing](https://www.financedigest.com/classic-car-insurance-broker-launches-future-classic-investment-guide.html "Classic car insurance broker launches Future Classic investment guide") in car safety features as the first level of vehicle autonomy is now common amongst new vehicles. If you drive a car that was manufactured within the last few years it will almost certainly have some sort of Advanced Driver [Assistance System](https://www.financedigest.com/lane-change-assist-systems-market-overview-business-growth-development-factors-application-and-future-prospects.html "Lane Change Assist Systems Market Overview – Business Growth, Development Factors, Application And Future Prospects") (ADAS) fitted, designed to make your journeys safer. The problem is that the link between the presence of ADAS and the likelihood of an insurance claim has been a [blind spot](https://www.financedigest.com/being-aware-of-the-insurance-blind-spot-when-it-comes-to-driverless-cars.html "Being aware of the insurance blind spot when it comes to driverless cars") for the insurance market.

The most recent data from the Society of Motor Manufacturers [\[iv\]](#_edn4) confirms that 80% of new cars on sale in the UK are offered with a self-activating safety system. Of these vehicles, 70.7% have [Autonomous Emergency](https://www.financedigest.com/autonomous-vehicles-market-emerging-growth-analysis-future-demand-and-business-opportunities-2026.html "Autonomous Vehicles Market Emerging Growth Analysis, Future Demand and Business Opportunities 2026") Braking technology. Some features come as standard, others can be added as optional extras but it won’t be too long before all new cars will be ‘born’ with ADAS features as [car manufacturers continue to invest in this technology as part](https://www.financedigest.com/ford-to-invest-around-300-million-to-build-electric-car-parts-at-uk-plant.html "Ford to invest around 0 million to build electric car parts at UK plant") of their zero fatalities objectives.

![Carla Hopkins](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/carla-hopkins-senior-vertical-market-manager-lexisnexis-risk-solutions-450x592-1736838576093-compressed.jpg)

Carla Hopkins

For some car buyers ADAS is a major factor in their purchase, for others it’s a nice to have – either way, when they come to [insure their car](https://www.financedigest.com/5-tips-for-selecting-the-best-car-insurance-coverage.html "5 Tips for Selecting the Best Car Insurance Coverage"), the fact they have invested in ADAS is unlikely to be fully factored into the price they pay. This is because [insurance providers have had no way](https://www.financedigest.com/predictive-analytics-a-new-way-of-insuring-success.html "Predictive analytics: a new way of insuring success") of understanding what features are present on individual vehicles and how they combine to reduce collision frequency and severity.

This is largely because [car makers](https://www.financedigest.com/exclusive-indian-car-makers-propose-tax-cut-on-imports-in-trade-deal-with-britain.html "Exclusive-Indian car makers propose tax cut on imports in trade deal with Britain") tend to describe ADAS in a myriad of ways making it almost impossible to understand the purpose and performance of different features. For example, there are over 40 different names for automatic emergency braking and over 20 different names for adaptive cruise control. That’s 24,000 possible combinations, for just two safety features [\[v\]](#_edn5).

Also, some ADAS features are chosen as additional options when the car is purchased from new, so working on the basis that ADAS will be standard for a particular model won’t work.

It has taken the creation of a common classification of ADAS to start to solve this problem for the benefit of consumers, [insurers](https://www.financedigest.com/different-countries-different-insurance-cultures-how-insurers-can-adapt-their-products.html "insurers") and motor manufacturers. Ultimately, this will mean that the safety features of a car, along with how they behave (for example if a feature will provide an alert or warning to the vehicle’s driver when a potential danger or hazard is detected), will soon be accessible to insurers – at a Vehicle Identification Number level. It will also allow insurance providers to understand the purpose of the safety features.

Testing of the data is already underway by [motor insurance](https://www.financedigest.com/the-road-to-digital-disruption-in-motor-insurance.html "The road to digital disruption in Motor Insurance") providers in the UK to understand how these vehicle centric insights correlate to claims.

With greater insight into the presence and performance of ADAS, it not only becomes possible to price more accurately but it opens the door to creating new products and services for consumers who have invested in [car safety](https://www.financedigest.com/rising-concerns-towards-safety-of-child-are-expected-to-drive-demand-for-baby-car-seat-market.html "Rising Concerns Towards Safety Of Child Are Expected To Drive Demand For Baby Car Seat Market") technology.

An important additional benefit of this solution is that car manufacturers will be able to benchmark their ADAS against the rest of the [automotive market](https://www.financedigest.com/automotive-timing-chain-and-belt-market-to-be-valued-at-us-10-20-bn-by-2027-comprehensive-research-report-by-fmi.html "Automotive Timing Chain and Belt Market to be valued at US$ 10.20 Bn by 2027 – Comprehensive Research Report by FMI"). This insight will be valuable in conveying the merits of specific ADAS to their customers, based on their performance in the real world.

At the root of these developments is the need to fill a big gap in knowledge for consumers, insurance providers and [car](https://www.financedigest.com/ten-things-youre-doing-that-are-invalidating-your-car-insurance.html "TEN THINGS YOU’RE DOING THAT ARE INVALIDATING YOUR CAR INSURANCE") manufacturers about how specific safety features on vehicles directly impact insurance claims. Building this understanding in tandem with the continuing advances in car safety technology could help support greater investment in ADAS by [consumers and in turn](https://www.financedigest.com/the-digital-finance-revolution-empowered-consumers-turn-digital-to-protect-financial-security.html "The digital finance revolution: empowered consumers turn digital to protect financial security") improve road safety standards. It’s a virtuous circle with vehicle [build data](https://www.financedigest.com/the-logo-of-french-cloud-computing-company-ovhcloud-is-seen-on-a-data-center-building-in-strasbourg-france-october-13-2021-reuters-christian-hartmann.html "The logo of French cloud computing company OVHcloud is seen on a data-center building in Strasbourg, France, October 13, 2021.  REUTERS/Christian Hartmann") at its heart.

[\[i\]](#_ednref1) [https://www.gov.uk/government/news/uk-on-the-cusp-of-a-transport-revolution-as-self-driving-vehicles-set-to-be-worth-nearly-42-billion-by-2035?utm\_medium=email&utm\_campaign=govuk-](https://www.gov.uk/government/news/uk-on-the-cusp-of-a-transport-revolution-as-self-driving-vehicles-set-to-be-worth-nearly-42-billion-by-2035?utm_medium=email&utm_campaign=govuk-)

notifications&utm\_source=3a1e0085-eddf-4832-a7e8-9baf5dc0c5ca&utm\_content=daily https://www.gov.uk/government/publications/connected-and-automated-vehicles-market-forecast-2020

[\[ii\]](#_ednref2) Source: SMMT and Frost & Sullivan report, 2019: Connected and Autonomous Vehicles: The Global Race to Market

[\[iii\]](#_ednref3) https://www.gov.uk/government/consultations/safe-use-of-automated-lane-keeping-system-on-gb-motorways-call-for-evidence

[\[iv\]](#_ednref4) Society of Motor Manufacturers and Traders: [https://www.smmt.co.uk/wp-content/uploads/sites/2/SMMT-Motor-Industry-Facts-JUNE-2020-FINAL.pdf](https://www.smmt.co.uk/wp-content/uploads/sites/2/SMMT-Motor-Industry-Facts-JUNE-2020-FINAL.pdf)

[\[v\]](#_ednref5) LexisNexis Risk Solutions analysis


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