While the NCAP is the ultimate validation of safety standards, the current NCAP protocol is outdated and has not kept pace with technological innovations. On October 1, the National Highway Traffic and Safety Administration (NHTSA) held a hearing in Washington to gather stakeholder input for an updated NCAP, which can result in the most comprehensive and up-to-date testing protocols available. We view this as an important sign of progress and something the auto insurance industry needs, for several reasons:

First, an updated NCAP will put vehicles through a more stringent, thorough set of safety tests, which will improve driver/customer safety — the top priority for any insurance company. For example, the current NCAP uses standard 50 percentile male anthropomorphic test devices (ATDs) in tests. These models were developed in the 1980s and only contain 10-20 sensors from which data can be gathered. Today's modern dummies generate data from up to 150 embedded sensors, and are available in versions representing a wider cross-section of society — women, children, infants, the elderly, and even obese persons, who are more prone to automotive accident fatalities.

An updated NCAP also calls for testing these diverse dummies in a wider variety of seating positions, promoting a higher level of safety for more types of occupants and passengers, including those most vulnerable.

A second benefit for auto insurers specifically, is that an updated NCAP would be far more rigorous in evaluating vehicles' susceptibility to accidents and damage. Under the current NCAP, crash tests simulate full frontal crashes, but do not conduct small overlap crashes, which are quite common. Small overlap crashes (an estimated 25% of crashes) are those involving about a quarter of the vehicle colliding with another car or an object like a tree or utility pole. An updated NCAP would therefore enable a more accurate, complete risk profile for individual vehicles to be incorporated into policy pricing.

An updated NCAP could test, for the first time, active safety features such as automatic emergency braking and collision warning/avoidance systems. Automobile safety has emerged in 2018 as the top consumer criteria when evaluating cars for purchase. As active safety features set the stage for greater autonomous feature demand, auto insurers will need to be able to factor the corresponding safety benefits into their policy pricing algorithms.

Biases can and often do creep into policy pricing decisions, due to the simple reality that biases are embedded in historical data. Leveraging Big Data and analytics initiatives to yield smart, actionable decisions that lead to greater business profitability — while addressing consumer protection concerns — remains a work in progress.

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