The Problem: Cellphones Distract
Drivers
Any Type of Cellphone Use o Causes 28% of all traffic accidents
o Increases crash risk at least fourfold
People who Text and Drive
o Up to 23 times more likely to crash
o 35% reduction in reaction time
Prevalence o 73% talk on cellphones in car
o 26% text and drive
Solution: End Cellphone
Distraction with #GoBlue
Develop a Road-Safety Smartphone App
Promote Driving Safety
Reduce Auto Claims
Protect Allstate Family
Create Incentive Program
Maximize Program
Effectiveness
The #GoBlue App
#GoBlue o Locks phone function
o Collects texts
o Synced with Bluetooth
Accrual Requirements o Physically enabled
o Smartphone and Bluetooth synced
o Car in motion
Mileage Reimbursement o Allstate customers get premium reimbursement for #GoBlue use
Similar Technology
Other Apps on the Market: o DriveMode (AT&T)
o Text’n’Drive (iTunes)
o iZup (Illume Software)
o Drive First (Sprint)
o Otter (One Touch Text Response)
o DriveSafely
o Textecution
o Safe Driver Pro
Customer Scenario
Daniel
Age: 28
Miles per Year: 12,000
Car: 2010 Chevy Cobalt
Yearly Premium: $3,312
Usage Discount Table
% Use of GoBlue
App
% Discount
Received
Daniel's Annual
Savings
20% 1.1% $40
40% 2.2% $75
60% 3.3% $110
80% 4.4% $150
Potential for Saving Dollars
Complete Elimination = Not Possible
0.8
2.4
0
0.5
1
1.5
2
2.5
3
3.5
Do
lla
rs (
Bil
lio
ns
)
Potential Savings
CompleteElimination
CellphoneRelated Claims
Losses from cellphone related claims: $3.2 billion/year
Program Cost Example: Illinois
#GoBlue is practical
o 2010 in Illinois: Cellphone
distraction claims cost
Allstate $124.5 million
o #GoBlue use can reduce
cellphone distraction
claims
Illinois: Cellphone Distraction Cost
CellphoneDistraction:124.5M
Other ClaimsCosts:320.5M
If 10% of Illinois uses #GoBlue
Mileage
Percentage:
Claims
Savings:
Reimbursement
Cost:
Net Allstate
Savings:
Estimated
Investment
Value (5 yrs):
20%
$1.3M
$700K
$550K $685K
40%
$2.5M
$1.4M
$1.1M $1.4M
60%
$3.8M
$2.1M
$1.7M $2.1M
If 30% of Illinois uses #GoBlue
Mileage
Percentage:
Claims
Savings:
Reimbursement
Cost:
Net Allstate
Savings: Estimated
Investment
Value (5 yrs):
20% $3.8M $2.1M $1.7M $2.1M
40% $7.5M $4.2M $3.3M $4.1M
60% $11.2M $6.3M $5.0M $6.2M
If 50% of Illinois uses #GoBlue
Mileage
Percentage:
Claims
Savings:
Reimbursement
Cost:
Net Allstate
Savings:
Estimated
Investment
Value (5 yrs):
20% $6.2M $3.5M $2.7M $3.4M
40% $12.5M $7.0M $5.5M $6.9M
60% $18.7M $10.6M $8.1M $10.1M
Final Implementation
+
Discount on Bluetooth Devices Promote Jawbone with Allstate
customers
Provide support and education Run #GoBlue Ad Campaign with
Jawbone products
Pioneering Safety
1967 • Worked with government to initiate widespread seatbelt use
1970 • Began anti drunk-driving campaign
2006 • Facilitated a student initiated “Keep the Drive” Campaign
2009 • Introduced “X the Text” Campaign
2013 • Revolutionize hands-free driving with #GoBlue app
There is No Alternative
Implement #GoBlue
Lead industry into new era of safe driving
"I tend to think about customers not in economic terms as to how much can we make off them, but as to how do we fully meet their needs and capabilities and how do we differentiate ourselves so we keep winning them." -- Thomas Wilson, President and CEO of Allstate
Appendix
Slide 2: Cellphones Distract Drivers 1. The National Safety Council
http://www.nsc.org/Pages/NSCestimates16millioncrashescausedbydriversusingcellphonesandtexting.aspx
2. Monash University
http://www.distraction.gov/content/get-the-facts/facts-and-statistics.html
3. Virginia Tech Transportation Institute http://www.distraction.gov/content/get-the-facts/facts-and-statistics.html
4. Transport Research Laboratory of England
http://www2.potsdam.edu/hansondj/DrivingIssues/20081008102118.html
5. Nationwide Mutual Insurance Co. (Survey) http://www.edgarsnyder.com/car-accident/cell-phone/cell-phone-
statistics.html
Slide 22: National Legislation Trend 1. This image was taken from the D'Amore Law Group's page and was originally produced by the IIHS,
http://www.personalinjurylawupdate.com/damorelaw/page/2/
o The green states are 100% hands free states and are primary enforcement laws, meaning that the driver
can be pulled over by an officer simply for cellphone use without a hands free device. States in blue are
secondary enforcement states, meaning that the driver must commit some sort of violation first, but then
the officer may additionally enforce the cellphone ban upon pulling a driver over
Appendix
Slide 3: End Cellphone Distraction 1. Our full thesis, "Thesis: Allstate should develop a road-safety smartphone app to reduce frequency and severity of
Allstate auto insurance claims. This app used in conjunction with a premium reimbursement incentive program will
precipitate widespread driving safety improvements within the Allstate Auto insurance customer base."
Slide 4: The #GoBlue App
Slide 5: Similar Technology 1. All information from our presentation was taken directly from AT&T's DriveMode website, which can be accessed
here, http://www.att.com/gen/press-room?pid=2964
Slide 6: Customer Scenario 1. Policy Estimate obtained using quote calculator found on Allstate.com
2. Mileage Estimate derived from USDOT Federal Highway Administration
http://www.fhwa.dot.gov/ohim/onh00/bar8.htm
Appendix
Slide 7: Usage Discount Table #GoBlue Mileage discount calculated based on comparisons with DriveWise and Allstate Good Driver discounts.
Discount Percentage = Percent Use/18. Ex. 60% use divided by 18 = 3.3% x $3846 (yearly premium) = $128.00.
Slide 8: Potential Savings 1. 3.2B in yearly losses for Allstate due to cell phones calculated based on 11.4B (total claims expenses) multiplied by
0.28 (percentage of claims derived from cell phone distraction) = 3.2B
2. Elimination of Cell phones Saves at least 2.4B for Allstate: This very conservative estimate takes into account a
certain percentage of accident claims derived from cell phone use (0.8B) which would have happened regardless
of cell phone use. This is a generous allowance for error. The #GoBlue program is based on the approximation
that #GoBlue App use will reduce cell phone users’ crash risk by 50%. This also is a conservative estimate.
Slide 9: Program Cost in IL The figure 124.5M is derived from an extrapolation of Allstate’s national financial statement data for 2011. Nationally in
2011 premium and expenses were 16.5B and 11.4B respectively. Based on this ratio and the fact that Allstate
premium written in the State of Illinois for 2010 was 638M, the figure 444.5M was utilized as an approximation of
Illinois claims expenses for Allstate. Subsequently, 2010 Illinois claims as a result of cell phone distraction were
calculated: 444.5 x 0.28 = 124.5
Slides 10-12 and 25-26: Allstate
Claims Savings
1. Illinois 2010 Aggregate Calculations
A. Claims Savings Estimate:
- Claims Costs = 444.6M
- Cellphones: cause 28% of accident claims: (444.6)(0.28) = 124.5M
- Drivers are 4x as dangerous with cellphone use, #GoBlue makes drivers (at
least) 50% safer – this is the factor of increased safety.
B. Claims Savings Based on #GoBlue Use:
- (a.Cellphone claims value)(b.%Use in Population)(c.Avg Mileage
Usage%)(d.Factor of increased safety from App use) =
Allstate Savings in Avoided distracted driving claims
- (a.124.5) (b.0.3) (c.0.4) (d.0.5) = 7.5 Million in Allstate Savings given 30% of
Illinois Customer base enrolled in #GoBlue and given that 30% using #GoBlue for
40% of total driving miles on average.
C. If 30% of Illinois Allstate Customers use #GoBlue for 40% of miles driven,
Allstate saves 7.5 Million in avoided claims from distracted driving.
Slides 10-12 and 25-26: Allstate's
Reimbursement Costs 2. Illinois Aggregate Calculations:
A. Reimbursement Cost of #GoBlue
- Premium Written in 2010: 638M
- #GoBlue Cost = (%Illinois Use within population)(2010 Premium written)= #GoBlue users' Premium Total
- (AverageMileageUsage% / 18) = % Discount for GoBlue Users in Population
- (a.%Discount for #GoBlue Users in Population)(b.#GoBlue users' Premium Total) = Cost of
Implementation given 30% population use and 40% of miles driven by population with #GoBlue App
engaged.
B. #GoBlue Users' Premium Reimbursement Total = (0.3)(638)= 382.8
- (40/18)= 2.22 % discount for #GoBlue Users based on 40% AVG Mileage Usage
- (a.191.4) (b.0.02222) = $4.2 Million
C. If 30% of Illinois Allstate Customers use #GoBlue for 40% of miles driven, Allstate will pay 4.2 Million in
Reimbursement Costs
Estimated Investment Value (5 yr. Investment) = Future Value Function
PV=Net Allstate Savings
Number of Years = 5 (short-term fixed income securities)
Interest Rate = 4.5% (average Portfolio return for Allstate’s current income investment strategy
as seen in the 2012 Q4 earnings call presentation)
Appendix
Slide 13: Jawbone Partnership Jawbone provides high quality Bluetooth products. The industry and customer reviews consistently support this.
http://www.consumersearch.com/bluetooth-headsets
Slide 14: Precedent of Safety All State sets the standard for auto safety
http://www.allstatenewsroom.com/channels/History-and-Timeline/releases/history-timeline-1970s
Slide 14: All State Initiatives All State initiates campaigns for safe driving.
http://www.allstatefoundation.org/teen-driving
If 20% of Illinois uses #GoBlue
Mileage
Percentage:
Claims
Savings:
Reimbursement
Cost:
Net Allstate
Savings:
20% $2.5M $1.4M $1.1M
40% $5.0M $2.8M $2.2M
60% $7.5M $4.2M $3.3M