Incentives for improving road safety

Duration 2017–2019

Institute Institute for Finance, Banking and Insurance Institute for Multi-Level Governance and Development Department Department of Finance, Accounting and Statistics, Department of Socioeconomics

Austrian Road Safety Board, Dolphin Technologies GmbH

Young, novice drivers run a greater risk of being involved in car accidents, a risk that is two to three times higher than that of older, more experienced drivers in Austria. About a fifth of all deaths in the 14–24 age group can be attributed to motor vehicle accidents. Along with limited driving experience, lifestyle choices and young drivers’ immaturity tend to result in riskier driving, in particular among young men, which increases the likelihood of accidents.

New drivers’ road safety can be improved by intrinsic motivations, such as app-based feedback on driving behavior, and extrinsic motivations, such as monetary incentives.

In a field experiment, researchers investigated whether and how drivers who recently obtained their driver’s licenses reacted to app-based feedback on their safetyrelevant driving behavior (speeding, smartphone usage, cornering, acceleration, and braking). They identified the factors that influenced feedback intensity (i.e. how much participants interacted with the app) and examined whether the learning effects from the feedback mechanism were enhanced when coupled with monetary incentives for safe driving behavior. In a sample of 130 Austrian novice drivers, the research found that app use increased safe driving skills. These improvements were even greater when linked to monetary incentives, a clear indication of the potential role extrinsic motivation could play in improving road traffic safety. Moreover, drivers who already practiced relatively safe driving before receiving app-based feedback used the app more intensely, and greater app use led to greater improvements in driving skills.

Insurance companies have launched various programs that not only cover potential damage, but also reward customers for avoiding risks.

The study found a positive link between intrinsic motivations and monetary incentives and the road safety of new drivers. A number of insurance providers have incorporated these findings into their program design. Several insurance companies have launched new programs that employ the technology developed by research partner Dolphin Technologies and reflect a departure from the classic approach of insurance companies, car manufacturers, and banks. Instead of just charging novice drivers a premium to cover potential damage and then processing claims after an accident has occurred, customers can now earn rewards for avoiding risks. The companies involved in these novel programs include insurer DEVK Versicherung and Santander Bank in Germany, online insurer Cherrisk in Hungary, Porsche Austria, and the UNIQA Insurance Group in Austria. The UNIQA Insurance Group and research partner Dolphin Technologies have jointly launched the goSmart app, for example. A points system rewards drivers who do not use their smartphones while driving, and the points can be redeemed at various participating companies. The app also records driving behavior and analyzes elements like cornering and compliance with speed limits, thus promoting safe driving. Over 50,000 drivers currently use the app. The research project therefore contributes to safe traffic systems and, consequently, to reducing accidents (SDG 3 “Good Health and Well-Being” and SDG 11 “Sustainable Cities and Communities”).

Field experiment with novice drivers regarding safety-relevant driving behavior and app-based feedback

Groundwork for the design of app-based insurance programs that promote road safety

App-based insurance programs that reward customers for avoiding risky driving behavior