The app works like this. Customers use the Root app to scan their driver’s license and then wait for two weeks while the company gathers data, including their driving history and other demographic information. The app also turns the customer’s phone into a telematics device, gathering additional data about how the customer is driving by measuring driving speeds, acceleration and breaking patterns, changing lanes and other activities that could cause distracted driving. These behaviors all figure into the quote calculation.
The plan is to only insure the “good” (about 70 percent) drivers and direct the rest (that’s probably me, by the way) to other options and carriers. And no, this is not considered to be discriminatory–all carriers typically have target markets and underwriting guidelines, the company says.
“The majority of the market is still based on traditional underwriting variables–credit score, age, gender, year/make/model of vehicle, marital status. Some still have occupation, some ask your level of education…They will use these reports and that information in order to try to predict whether you will get into an auto accident,” Timm told Carrier Management. “It is not very granular.”
The 20-person company has raised about $7 million so far and has already received regulatory approval in Ohio. Plans are in the works to quickly expand nationwide in 2017.