Can Insurers Encourage Safer Teen Driving?

For many of us, learning to drive is among the most significant milestones of adolescence. Having grown up in the British countryside, with the only way to escape being the excruciatingly slow, once-per-hour bus to the city, I remember well the sense of freedom when I passed my driving test. I was relatively care-free and confident in my driving, so I took to the country roads as if I was auditioning for a role in The Fast and the Furious.

I’m lucky—I’ve never been involved in an accident with bigger consequences than a bit of scratched paintwork. Sadly, not everyone is so fortunate. There were over 27,000 serious injuries or deaths from driving accidents in the U.K. in the last year. The majority of these—65 percent—were due to mistakes by the driver. And despite making up just 7 percent of U.K. license holders, drivers aged between 17 and 25 were involved in 18 percent of accidents.

This problem isn’t limited to the U.K. The World Health Organization lists road accidents as the number-one cause of death for young people worldwide. What is it that makes young people riskier drivers than the rest of us?

There’s strong evidence that interactions between developmental, cognitive, social, and contextual factors contribute to young people’s disproportionate share of accidents. For example, adolescents are hypersensitive to rewards, particularly in “hot” emotional contexts, and show greater impulsivity and risk taking behavior than adults. One reason why is that the brain’s prefrontal cortex, which plays a key role in impulse control, develops relatively slowly; regions involved in reward prediction mature earlier. This could explain questionable decision-making during early adulthood.

One of the reasons for our overconfidence is that there is scant objective feedback about our driving.

Importantly, it’s bad news for young drivers given the temptations of speeding, tailgating, driving under the influence of alcohol or other drugs, or checking notifications on a mobile phone with a car full of friends. The dangers of sensation-seeking are even more poignant given that inexperience is related to poorer ability to assess potential hazards on the road.

What’s more, our ability to assess risks is limited. We don’t necessarily think like actuaries considering probabilistic outcomes of our behavior. Instead, we use heuristics—such as interpreting our emotions (the affect heuristic), or the ease with which risky situations come to mind (the availability heuristic)—to make judgements. Erroneously, we are often more scared of injury or death from terrorist attacks, plane crashes, and shark attacks than we are of driving.

Our tendency for optimism leaves us prone to overconfidence in our driving ability and crash risk. How many of you reading this would consider yourself to be an above average driver, or to be less likely than the average driver to crash? I daresay more of us than is statistically plausible.

One of the reasons for our overconfidence is that there is scant objective feedback about our driving. This presents a further challenge for inexperienced drivers learning how to behave on the road. How far from the car in front should we really be? Is my current state of fatigue unacceptably increasing my risk? Is it really safe to drive at the speed limit on a country road?

The insurance industry is developing a solution for these challenges. I work as a psychologist for a young-driver telematics car-insurance product in the UK called MORE TH>N SM>RT WHEELS. Telematics technology uses a small black box installed out of sight in drivers’ cars that records elements of the users’ driving style in nearly real-time. We use the data to analyze what constitutes good driving, observe drivers’ performance against those measures, and give them a score that they can keep track of using an app and website. This means we are able to realign the incentives for safe driving and provide objective feedback on drivers’ performance.

But we are taking telematics’ role in promoting safe driving a step further by using behavioral science to change young drivers’ behavior. By drawing on principles from behavioral economics, nudge theory, and more traditional behavior change theories such as the theory of planned behavior, we are improving the way we communicate with our drivers and motivating them to drive more safely.

We use the data to analyze what constitutes good driving, observe drivers’ performance against those measures, and give them a score that they can keep track of using an app and website.

Is our telematics-plus-behavioral-science approach helping young people drive more safely? We’re using large-scale randomized controlled trials to find out.

In one trial, we contacted some of our riskiest drivers (based on an analysis of our telematics data) and encouraged them to set achievable short-term goals related to their scores. We used techniques from behavioral economics to make the goal setting more attractive, to make the goals “stick,” and to promote goal commitment and self-efficacy. We measured their subsequent driving performance and compared it to both a non-contact control group and another group with whom we communicated but who did not set a goal. We found that our goal setters significantly improved their driving—an 11 percent improvement compared to their baseline performance (p  < .05). Importantly, the change in goal-setters’ performance was significantly better than the control group and non-goal setters alike (p  < .05), neither of who improved significantly over the same period.

This is just one example of how, using the power of telematics data and behavioral-science insights, we can positively influence young people’s driving behavior. By testing theory-driven hypotheses in a scientific way, we can develop, and continue to improve, tools that really work to reduce our drivers’ crash risk.

At MORE TH>N SM>RT WHEELS we feel a great moral responsibility to our drivers, given the power of the data we have. Technology that generates behavioral data is increasingly permeating our lives, and the insurance industry can play a key role in nudging toward positive behavior. By keeping a firm handle on scientific principles, we can marry business priorities with genuinely positive—and perhaps life-changing—outcomes for our customers.