A Bayesian Approach for Prioritising Driving Behaviour Investigations in Telematic Auto Insurance Policies

Automotive insurers increasingly have access to telematic information via black-box recorders installed in the insured vehicle, and wish to identify undesirable behaviour which may signify increased risk or uninsured activities. However, identification of such behaviour with machine learning is non-trivial, and results are far from perfect, requiring human investigation to verify suspected cases. An appropriately formed priority score, generated by automated analysis of GPS data, allows underwriters to make more efficient use of their time, improving detection of the behaviour under investigation. An example of such behaviour is the use of a privately insured vehicle for commercial purposes, such as delivering meals and parcels. We first make use of trip GPS and accelerometer data, augmented by geospatial information, to train an imperfect classifier for delivery driving on a per-trip basis. We make use of a mixture of Beta-Binomial distributions to model the propensity of a policyholder to undertake trips which result in a positive classification as being drawn from either a rare high-scoring or common low-scoring group, and learn the parameters of this model using MCMC. This model provides us with a posterior probability that any policyholder will be a regular generator of automated alerts given any number of trips and alerts. This posterior probability is converted to a priority score, which was used to select the most valuable candidates for manual investigation. Testing over a 1-year period ranked policyholders by likelihood of commercial driving activity on a weekly basis. The top 0.9% have been reviewed at least once by the underwriters at the time of writing, and of those 99.4% have been confirmed as correctly identified, showing the approach has achieved a significant improvement in efficiency of human resource allocation compared to manual searching.