White Paper research from LexisNexis Risk Solutions shows how these features influence both claims and premiums.

In the collision repair industry, there has been, for some time a great deal of interest in the correlation between vehicles equipped with Advanced Driver Assistance Systems (ADAS) features and auto insurance claims.

Specifically, how repair costs of these features impact the real cost of claims. In the U.S., LexisNexis Risk Solutions has just released findings from a White Paper study entitled The True Impact of ADAS Features on Insurance Claim Severity Revealed.

This White Paper, which forms part of a two-part analysis conducted by LexisNexis Risk Solutions on the relationship between ADAS and claims frequency, revealed that adoption of ADAS features does impact insurance loss costs.

Corresponding reduction

On a vehicle employing at least one core ADAS feature, there was a corresponding reduction in loss cost.

The study did however determine that these loss costs will vary depending on the specific combination of ADAS features employed and how these features perform.

Results from the White Paper determined that ADAS features result in a:

• 23% reduction in Bodily Injury loss cost;
• 14% reduction in Property Damage loss cost; and
• 8% reduction in Collision claim loss cost in ADAS-equipped vehicles compared to non-ADAS vehicles

Additionally, the findings from both studies revealed that while the change in claim severity in vehicles with ADAS was minimal compared to those that did not have ADAS features; the decrease in claim frequency was significant.

The LexisNexis Risk Solutions study demonstrated that an overall reduction in loss cost by coverage can result in ADAS feature-based policy discounts and benefits for both drivers and insurers.

Other factors

There are some important factors to consider, however. One is analyzing how ADAS systems impact collision severity.

“We find it interesting from an actuarial perspective that all coverages resulted in a decrease in severity in ADAS-equipped vehicles,” said Gabe Hinton, Senior Data Scientist, Insurance, LexisNexis Risk Solutions.

“An educated guess is that the decrease in severity for liability coverages can be justified by the idea that vehicles with ADAS may collide with less force, resulting in less damage to another vehicle (Property Damage claim) or injury to a third party (Bodily Injury claim).”

Hinton also explained that “by controlling for common rating variables, we were able to isolate the impact of ADAS. With a vehicle collision, within a given cluster of values of control factors, there tends to be proportionally lower percentages of high severity claims with ADAS, resulting in an overall lower severity.”

Therefore, LexisNexis Risk Solutions determines that certain vehicles equipped with specific ADAS features or a combination of them, when combined with loss cost performance, enables insurers to apply appropriate premium discounts to both individual motorists and the vehicles they operate.

And although this study was based on U.S. market research and analysis, given Canada’s very similar vehicle fleet and infrastructure, many of these observations will likely apply north of the border as well.