LOOP is revolutionizing auto insurance with location data

When it comes to auto insurance, drivers are looking for providers that offer reasonable rates based on fair estimates of risk, but classic insurance models don’t always allow for this. LOOP thinks there is a better way. It uses location data to understand driver behavior and road risk, and offer individualized and fair premiums.

The challenge: Location data brings opportunity to driver insurance models

Thanks to location technology, the insurance industry is changing in a positive way.

Historically speaking, insurance models used to calculate premiums using demographic data such as: age, gender, where you live, whether you own or rent a home, your income, and your level of schooling. What these models fail to accommodate is how and where the individual drives and uses their car – two variables that are arguably far more relevant when it comes to calculating risk than the characteristics typically used.

It’s easy to be critical, but the insurance industry is centuries old and not until now has there been technology available to address the imbalances caused from demographic-based models.

Safe drivers who avoid dangerous roads and navigate responsibly should receive more attractive auto insurance rates. That’s how insurtech startup LOOP sees it. But to get there, the company needed insights driven by location data.

A new driver’s insurance rate model

“LOOP was founded with the belief that insurance should work for everyone,” said Ali Salhi, Chief Technology Officer at LOOP.

The company’s auto insurance model measures what matters when you're on the road, so you can have insurance that's honest, transparent and priced fairly for you. To develop its technology, LOOP has partnered with TomTom to use the location tech company’s map and traffic data.

LOOP’s new pricing model is built using two main ingredients. The first is road risk factor. LOOP starts with the TomTom base map, which is then overlaid with historical flow and traffic density information, also from TomTom. LOOP then appends crash data, so that its model can understand where dangerous roads are and if they’re driven on.

Driver routes are input into its machine learning model and are referenced against the risk factor of roads driven on. The resulting output of the model is an individual’s risk score, which is computed for each month of the year. This risk score translates to the likelihood an individual driver will experience a crash during the next 30 days, based on their last 30 days of driving.

The second ingredient is an artificial intelligence app that monitors driving behavior in real time to offer suggestions for safer driving. It even reroutes drivers away from roads that are high-risk for car accidents to coach drivers on safe driving practices.

LOOP’s telematics solution captures driver behavior such as harsh braking, speeding, excessive turning, and phone distractions. These factors are also used to calculate the driver’s policy rate, so it’s based on actual behavior, not some arbitrary measure based on demographics.

Better map and traffic data are paramount

Through an extensive evaluation process, LOOP selected TomTom as its map and traffic data provider. Over time, LOOP has found that its core values align with TomTom’s. Both companies are looking to create products that bring meaningful value to consumers and find better ways of doing things. In this case, the two companies came together to deliver a product that keeps drivers on safer roads and rewards them with more fairly priced insurance.

Secondly, LOOP found TomTom’s data and customer service to be winning factors. TomTom’s data offers wide coverage of North America and provides the opportunity to expand internationally. When LOOP proves its business model in the U.S., rolling out to other nations won't be hindered by data.

However, what stood out as a critical differentiator was TomTom’s level of customer support and expertise.

“

We evaluated other data providers. TomTom was miles ahead in terms of responsiveness and willingness to help. We appreciate the availability and knowledge of the TomTom team. They answered questions when we needed them and took our feedback and incorporated it into their product roadmap. They’re a great partner.

Ali Salhi

Chief Technology Officer at LOOP

The way ahead

LOOP wants to serve people who have been mispriced and mistreated by their insurance company. The company’s experience in social-first marketing makes it uniquely equipped to build a community of satisfied customers and loyal fans who believe in this mission. Today LOOP is scaling its insurance product regionally, while launching community engagement experiences on social channels including Discord, Facebook and Instagram.

The Insurance industry is taking notice. Drivers looking for fair policy rates are as well. Through technology innovation and collaboration, LOOP and TomTom are innovating a decades-old industry for the better.