Telematics in Cars Can Reduce Traffic Accidents
In the United States of America, you’ll generally find some irresponsible drivers on the road. This could be because many cities have passed laws that prevent police from pursuing vehicles that try to outrun them. Or it could be because there are a whole lot of fast cars being sold these days, and you’ll always find some of today’s fine young risk-takers – usually the lads – who are willing to race those fast cars in a reckless display of alpha male posturing. However, in most cases, dangerous driving in just good old road rage. As the famous philosopher George Carlin once said, “have you ever noticed that anybody driving slower than you is an idiot, and anyone going faster than you is a maniac?”
Traffic Accidents Are a Global Problem
We have a global audience here at Nanalyze, so we want to talk about global problems. The number of road traffic deaths globally continues to climb, reaching 1.35 million in 2016. Remarkably, driving accidents are the number one cause of death for people between the ages of 5 and 29. Incredibly, driving is the 8th leading cause of death out of all those big bad diseases everyone drones about with their ribbons and marches.
Aside from vehicle malfunctions, it’s probably fair to say that the real problem here can be found between the driver’s seat and the steering wheel. In order to learn a bit more about the problem, we opened up the 2018 Global Status Report on Road Safety produced by the World Health Organization (WHO) with the intention of finding out which countries you’d be most at risk to travel in. The answer? It’s complicated.
Traffic Accidents by Country
The WHO report is simply a gold mine of interesting information, and we could probably write an entire book about all the interesting things contained within. Each country has a detailed fact sheet like the one seen below for the great country of Lithuania:
In addition to the above metrics given for each of the world’s countries, we’re also shown trends for whether or not fatalities are increasing or decreasing along with the types of fatalities. For example, don’t travel by motorcycle or tuk-tuk in Thailand (74% of all road fatalities), don’t cycle in the Netherlands (30% of all road fatalities), don’t walk in Malawi (50% of all road fatalities), don’t drive a car (or a peek-em-up-truck) in the United States (65% of all road fatalities) and don’t do “other” in the Philippines (94% of all road fatalities). What do they mean by “other?” Who the heck knows, and that’s a big problem we’re going to talk about next.
In many countries, the problem is difficult to even measure because stuff just gets swept under the carpet. Those countries usually have an excuse, be that poverty, some dictator, a corrupt police force, or all of the above. For example, Nigeria has reported just over 5,000 road traffic deaths in 2018. Not bad for a country with 180 million people, and it’s on par with Argentina (5,500 deaths), a country which has less than a quarter of the population (43.8 million people). Turns out though, that the actual number of traffic fatalities in Nigeria is more than 6x higher than what’s being reported, with the WHO estimating it to be between 32,00 and 47,00 people with a 95% confidence interval. As we said in our article on how not to be a boozehound, the first step to solving a problem is admitting you have one.
Problems We Can Control
When it comes to high-income countries, there’s no excuse for such a large number of road deaths. Here are some examples of places we can start working on where metrics are accurate, drivers are usually insured, and a sufficient level of modern vehicles would lend themselves to a telematics solution:
- Canada – 2,118 deaths
- Italy – 3,428 deaths
- Korea – 4,292 deaths
- Japan – 4,682 deaths
- United States – 35,092 deaths
So, how can we get people in these countries to drive more safely? A company called Cambridge Mobile Telematics thinks they’ve found a way to fix the problem and make a profit while doing so.
Cambridge Mobile Telematics
Founded in 2010 by two MIT professors, Boston Massachusetts startup Cambridge Mobile Telematics (CMT) has taken in $502.5 million in funding so far with the lion’s share of that funding coming in the form of a (checks notes again) $500 million round from Softbank which closed just last month. Simply put, CMT builds a telematics solution that helps people drive more safely. (If you want to know more about telematics, read our article on What is Telematics? A Simple Definition.)
Users of the CMT telematics solution – it’s called DriveWell – see an average reduction of 35% in phone distraction, 20% in hard braking, and 20% in at-risk speeding all within less than 30 days of using the program. Now, we’ve seen business models like this before, Metromile being one of them. The idea of monitoring driver behavior is hardly a new one. Companies like Zendrive have some mad ambitions, so is there room for yet another player? Apparently, Softbank thinks so. Here’s a quick look at the CMT offering:
A couple of things stand out here.
The DriveWell Difference
Firstly, DriveWell is a “white-labeled app” which means that anyone can put their brand on it and customers won’t know the difference. It’s kind of like an “Intel inside” business model. In less than 90 days, a company can have this app deployed to their customer base. Secondly, as you can see in the above screenshot, the app employs “gamification” in order to turn safe driving into a big competition complete with achievements to unlock and a leaderboard. No doubt plenty of that can be configured, and it’s easy to imagine your insurance company holding a “safest driver in Boston for the month of July” contest in which the winner receives a discounted premium for the remainder of the year. It’s an easy sell for insurance companies who report that using the app results in 34% lower crash rates, 19% less-severe claims, and 10% lower loss ratios, along with greater customer retention rates.
One unique feature we see here is that scoring can take place even without a phone. There’s a wireless tag that gets placed in the car with more than 4 years of battery life, and that communicates with your smartphone using Bluetooth, so you only need to sync your phone every once in a while to see how you’re ranked on the leaderboard. The solution has been in place since 2014, and they’ve already collected data from billions of driving miles that they’ve been feeding to hungry machine learning algorithms. The press release announcing their funding mentions a global customer base of several million users and they have now shipped more than 6 million tags like the one seen below.
Additional features of the system include the ability to tell if you’re the driver or the passenger, secure over-the-air upgrades, real-time impact alerts that can be coupled with roadside assistance, stolen vehicle recovery through crowd-sourcing, and no wiring or OBD interface required. Then there’s all the cool data that comes out of this tool in the form of charts like this one.
Apparently, 55% of all trips made by Portland Oregon drivers involve speeding. Interestingly enough, Portland Oregon is the city in the United States where the least amount of hard braking takes place. This makes total sense, because it’s all the slow idiots that you have to use a hard brake for. When it comes to hard braking, leave that to the Californians who apparently excel at it more than any other state in the nation.
Telematics in Cars – The TAM
When you take in a $500 million funding round led by Softbank, it’s pretty much implied that you have some grand aspirations. A great article by Xconomy last month talks about the Total Addressable Market (TAM) that CMT is looking to capture. There are an estimated 1.2 billion vehicles worldwide, of which 875 million are insured. Of those insured vehicles, only about 50 million cover vehicles that use a telematics device. Getting people to use the devices is a pretty easy sell. If you want a reduction in your policy premiums, you install the device in your car. It’s that simple. As for other countries, maybe they can start with some low-hanging fruit – like bus companies – where you’ll get more bang for your buck. A couple of good countries to target might be Zimbabwe (18% of road fatalities from buses) Eritrea (15% of road fatalities from buses), and Ghana (18% of road fatalities from buses). Backpackers, you’re welcome.
It’s pretty surprising to learn that traffic accidents are the leading cause of death for children and young people. While 1.35 million people may die from traffic accidents, that doesn’t even include those who are injured, and CMT estimates the number of annual road accidents at around 50 million. The company clearly has global ambitions, and the size of this funding round would lead one to believe that maybe they’re amassing a war chest so that they might start to consolidate some of all the connected car players out there by making some acquisitions. Of course, given that their offering is being “white labeled” by other companies, it’s tough to say who is a competitor and who is already using their technology. What we can say is that it seems more likely than not drivers will be using telematics in their cars very soon, whether they like it or not.