The average driver spends more than 10 percent of every trip using a smartphone, according to TrueMotion, a technology company that has teamed up with American Family to improve driver safety and reduce distracted driving using an unlikely tool—a smartphone app.

Combining usage-based insurance (UBI) with driver safety, Madison, Wis.-based American Family Insurance launched its new, mobile app-based driver safety program, KnowYourDrive, to interested policyholders in February.

Customers utilizing the KnowYourDrive program will work with TrueMotion or Automatic technology, depending on the state they are in, according to Kelly Lien, vice president of personal lines product development for American Family. TrueMotion uses information gleaned only from a smartphone, while Automatic uses a standard plug-in adapter with an accompanying mobile app.

“We are exploring the use of different technologies to explore customer preferences and how those match up with our mission of protecting our customers’ dreams and improving their driving behavior,” explained Lien.

Policyholders who download and use the app can receive discounts on their premiums based on their driving habits. In addition, teen drivers and their families can take advantage of an additional app, TrueMotion Family, to assist teens in becoming safer drivers. Teens were found to be distracted 20 percent more per trip than their parents, TrueMotion’s analysis showed

The programs will eventually be offered in all 19 states in which the insurer operates.

Lien explained that 2013’s My Safety Valet was American Family’s first foray into usage-based insurance. That program ended last year. KnowYourDrive is the company’s second-generation UBI program, he said.

Kevin Farrell, president and chief product officer at TrueMotion, and Lien discussed the program and technology recently.

TrueMotion provides turnkey, smartphone usage-based insurance technology globally. In addition to American Family, clients include Progressive Insurance among other top auto insurers.

According to Farrell, TrueMotion’s app tracks distracted driving and other risky driving behaviors. The app scores and ranks each driver and shares the results with each member of the family. The app also offers location awareness, so parents know where their teens are at all times. Parents can see how their teens are driving, even when they are not in the car with them.

For savvy teens who may think they can turn off their phone to avoid getting tracked via the TrueMotion Family app, Farrell said parents can be notified if the app has been deleted.

Phone in Your Hand or Cupholder? UBI Technology Evolves

The Boston-based company’s downloadable app includes a big data platform that provides comprehensive driving records, driver scores and analytics as well as a management and analytics dashboard that allows an insurer’s UBI team and customer service representatives to deploy, manage and track the UBI program.

Recent analysis of driving data indicates that the average driver spends 12 percent of every trip engaged in some way with a smartphone, according to TrueMotion.

“The very device that’s causing the problem, the mobile phone, is the very one we can use to help solve the problem and educate,” said Farrell.

UBI data has evolved, he said. Initially, in order to collect driving data, there had to be an onboard diagnostic device that plugged into the port of the car. He explained that the old way of tracking driving behavior through an onboard diagnostic port provided limited information like mileage, braking and acceleration. The port is no longer necessary, he said. Using sensors within the phone, like the GPS and accelerometer, the app can tell where the phone is. The accelerometer is a sensor that measures acceleration and deceleration. Other sensors within the phone measure it’s rotation and the direction of travel. The app can evaluate weather conditions at the time of driving, speed limits for the roads traveled and GPS coordinates, he said. It can tell where the phone is in the car—whether it’s sitting in the cupholder or in the driver’s hand.

TrueMotion, previously known as Censio, a company that focused on sensors, holds more than 27 patents on driver identification.

“We do not use the hardware device. We do not require any pairing tag, anything else from the car,” Farrell said. “Once you install our app, that’s it. You just drive and do your thing. The app will automatically identify when you’re the driver or when you’re the passenger, which by the way is one of the key things…our IP and expertise in identifying the drivers strictly from the sensors on the phone.”

According to data generated by thousands of TrueMotion users, more than 75 percent of users reduce distracted driving after installing the app.

UBI Program Benefits

While the obvious benefits of a UBI program include more competitive pricing, improved customer retention and discounts for good driving behavior, the real reward, said Farrell, is that distinguishing between good and bad drivers offers insurers insight into attracting new drivers with targeted products.

“That’s just not something you can do with traditional proxies, such as where you live, what type of car you drive, your credit report and such,” explained Farrell. “We’re able…to provide an accurate measure of someone’s driving capability and, frankly, likelihood of having an accident based on how they’re driving. Hands down, today, the proxies that are used to price insurance compared to actual driving behavior is the biggest thing we bring to the table. You can’t ask someone over the phone when you’re writing up a policy, ‘Hey, do you use your phone while you’re driving?’ A lot of people aren’t even aware they’re doing it.”

According to Lien, the core principle of any UBI program is to better understand driving behavior.

“Each technology [Automatic and TrueMotion] is a little bit different. We’ll be looking to explore what exactly we can learn from the data that we received from customers’ driving behaviors to better understand how we can better tailor our offerings to meet their need,” explained Lien.

Farrell said the program can be up and running within 40-60 days.