Wednesday, 21 May 2014

Actuarial Research on the Effectiveness of Collision Avoidance Systems

A study was recently released by Ron Actuarial Intelligence reviewing he effectiveness of a Forward Collision Warning (FCW) system and a Lane Departure Warning (LDW) system on bodily injury claim costs in Israel. 

The researchers had access to claims data from all insurance companies going back to 1985. They were able to compare the claim costs of vehicles with the FCW and LDW systems and those without to establish the net impact of the systems on claims frequency.  The goal was to develop a model that would allow actuaries to properly price risk premium for vehicles with the systems.

What they found was that vehicles with the systems had 45% fewer claims.  However, the impact on claims severity is unclear.  In addition, the sample size (only 0.082% of vehicles had the systems) and claims frequency were both small so the results are subject to some deviance.

They recommend a 15% discount be offered to drivers with similar systems as more data is collected and analyzed over the coming years.

The complete study can be found here.

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