Here’s a hypothetical risk management situation for you:

You’re at a buffet restaurant, hoping to enjoy a meal with some friends. As you’re seated, your server singles you out to inform you that you’re going to be charged more because based on their previous experience with young men with black hair who wear gray button-down shirts and blue jeans, such individuals tend to consume substantially larger volumes of food and beverage than average. Above-average chowing = above-average cost for the restaurant.

And because YOU have those characteristics, you are considered to be part of this particularly risky group – so the restaurant is preemptively charging you more for your meal.

Doesn’t matter if you, personally, actually happen to eat like a bird – you’re getting dinged because you’re part of a demographic known for guzzling.

Of course, if the restaurant industry actually functioned like that – charging diners based on predictive risk models versus their actual dining behavior – we’d probably eat a heck of a lot more home-cooked meals. It just doesn’t make sense.

The auto insurance industry, on the other hand, HAS historically functioned like that: premiums based not on a given driver’s own behavior but rather on how they MIGHT drive based on past history and demographic patterns. Why? Mainly because until recently, deep data on individuals’ driving behavior hasn’t been available. But the times, they are a-changin’ towards a new model: telematics-driven usage-based insurance (UBI), allowing insurers to identify, attract and reward safer drivers.

Though sophisticated and increasingly popular, these systems are seriously flawed in one regard: they’re blind to how people use their mobile phones while driving.

But this doesn’t have to be the case. Telematics-based UBI programs have enormous potential – if they grow to include cell phone use monitoring, and ultimately, management in order to limit cell phone-related distracted driving’s crash risk, danger and expense.

To learn more, read our just-published white paper, Beyond Telematics: Extending UBI Data to Include Mobile Phone Use While Driving. It’s free and full of important information on why telematics and UBI could be key to preventing distracted driving. Get your free copy now!