AI Insurance Company Cuts Prices As Drivers Cut Phone Use

How do companies ensure that the drivers of their fleet of expensive vehicles keep their eyes on the road and off their phones? 

An Israeli insurtech startup believes it has the answer with a new AI platform that monitors driving fleet drivers’ performance and smartphone activity behind the wheel, and uses them to set insurance prices. 

Tel Aviv-based Fairmatic was founded in 2017 by its CEO Jonathan Matus, a former Google employee who worked on the development of the operating system for the tech giant’s Android phones.  

Creating a way to reduce drivers’ smartphone usage is “fixing a problem I helped create,” Matus tells NoCamels. 

The Fairmatic app is installed on fleet drivers’ phones, where it uses AI to monitor both phone activity and driving performance in real time. It is these two data points that are central to deciding the price of a fleet’s insurance. 

“Every car on the road has at least one smartphone in it,” he says. “And those smartphones are actually tiny supercomputers that allow you to run machine-learning algorithms.”  

The platform compiles the data it collects on each fleet to create a risk model that predicts the likelihood of the drivers being involved in a road traffic accident in a one-year period. The data is also used to provide fleet managers with insights into the performance of their drivers. 

“When someone slams the brake, when someone is distracted on their phone while driving, when someone is going over the speed limit – these different things can be understood and quantified,” Matus says. 

As an insurance company responsible for paying for claims, he explains, it is vital to understand these statistics – and with its AI platform, it can do just that. 

This approach makes the Fairmatic unique in the insurance industry and means there is very little competition, he says.  

Matus says the company started from just a simple idea and 25 people, all motivated to innovate a solution to distracted driving, which he calls a negative implication of ubiquitous smartphone usage.  

In fact, the US Centers for Disease Control (CDC) says that in the United States alone, nine people are killed every day in crashes that are reported to involve a distracted driver. This comes to a national annual average of 3,000 people killed just from cases of distracted driving, even without taking into account those who are injured in such incidents. 

Matus says that in more than a decade of looking at road safety through the lens of technology, he came to understand that monitoring is necessary if you want to change people’s behavior behind the wheel. 

“Insurance represents a monetary relationship that everyone is required to keep by law when driving,” he says. “So if you can use that as the right incentive in front of drivers and fleets, you can ultimately change behavior.” 

The company offers competitive pricing and incentives for fleets committed to safety improvements and behavioral changes.  

Fleet owners buy insurance for multiple drivers, who are all covered by the same policy, Matus says. But individual problematic drivers mean that the fleet owner will have to pay more, something he says backfires on them and ultimately discourages them from such behaviors. 

“The coupling of monitoring with insurance is the most efficient option we have found so far,” he says. 

While the company has what Matus calls “thriving” offices in Israel and India, as well as representatives in the UK and Poland, most of Fairmatic’s customers are located in the US. And, according to Matus, that will most likely remain the business model for the future, with a focus on American expansion.  

 “It’s a $70 billion opportunity,” he says.

The company came out of stealth in 2022 and had already raised $88 million by Q4 of 2023 – a sum Matus believes is sufficient for now.

“We don’t need to raise any more,” he says. “We already have enough to get to profitability, and this went exactly according to plan.”

Even so, he adds as a caveat, should an attractive opportunity present itself, further fundraising would not be off the table.  

Ultimately, Matus says, Fairmatic is committed to innovation and safety – and that is what drives the company into the future. 

“The purpose of our technology is to make roads safer [and] we’re doing it one fleet at a time.” 

Subscribe to NoCamels weekly newsletter and get our top stories