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Article

Usage-based vehicle insurance: Driving style factors of accident probability and severity

Stankevich I., Korishchenko K., Pilnik N., Petrova D.

This paper introduces an approach to telematics device data application in automotive insurance. We conduct a comparative analysis of different types of devices that collect information on vehicle utilization and driving style of its driver and describe advantages and disadvantages of these devices. The possible formats of telematics data are described and methods of their processing to a format convenient for modeling are proposed. We also introduce an approach to classify the accidents’ strength. Using all the available information, we estimate accident probability models for different types of accidents and identify an optimal set of factors for each of the models. We assess the quality of resulting models using both in-sample and out-of-sample estimates.