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This Startup Wants To Help Insurers Track Your Driving Habits Through Your Phone

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Avoid accidents for a couple years, get a discount on your car insurance. The safe driving reward has been a staple of the insurance industry for years. And as more cars come with OnStar and other communications tools built-in, the way insurers can track and reward safe driving has gotten more sophisticated.

Plenty more goes into driving safely than simply going accident-free. So increasingly, big insurers are asking drivers to connect their cars for their habits to be tracked in real time in exchange for the promise of a discount. Allstate and Progressive offer devices to their drivers to plug in; State Farm connects to new cars' software. But one startup is betting that drivers will find it easier–and more fun–to use their app instead.

Silicon Valley-based Driveway Software promises insurance customers that it can do the same tracking as the plastic dongles they offer, all from a customer's smartphone. The company's monitored nearly 250,000 drivers to date and says it's found early traction with mid-sized insurers who don't have the bleeding edge programs of the market leaders. But in the long-term, Driveway's ambitions are much bigger: to sell its telemetry to ride-hailing services like Uber and Lyft to better monitor the quality of its drivers, and eventually carve out a slice of the data boom that will come with the adoption of driverless cars.

"We give viewable risk factors on what kind of a driver you are," says vice president Roman Glukhovsky. "The insurer can better price their policy," Glukhovsky says, and the vast majority of drivers—the startup claims 89%—win as insurance rates skew from a small percentage of bad drivers making policies more expensive for everyone else.

Driveway's tracked more than 500 million miles of driving so far, but it's done so without formal relationships with the leaders in the auto industry. To try to change that, the company's raised $10 million from investors led by Russian billionaire and Chelsea FC owner Roman Abramovich of Ervington Ventures, who knew investors from Driveway's $1.3 million seed round who'd invested in companies with development offices in Israel like the startup does. (CEO Igor Katsman grew up in Israel and got his MBA at Northwestern.)

Katsman tells Forbes that Driveway's product can beat the existing options entering the market because of more than 700 algorithms the company spent years perfecting since 2011. The big challenge to date, and why you see insurers offering small beeper-like hardware to drivers who want discounts, is how to make all of it run in an app without immediately draining a phone's battery. "That takes an extremely complex, multi-functional solution," Katsman says. "It took us a year and a half to figure it out."

With the millions of funding, Driveway plans to double headcount from 20 to 40 in the next 6-8 months, including its first real sales team in its San Mateo, Calif.-headquarters. Then it's off to convince big insurers and companies like Uber that bettering tracking can save money, without creating a customer or driver revolt. Driveway's team insists that it's just a matter of time until drivers will expect that their patterns are being tracked.

"This space is finally getting hot," says Glukhovsky. "It's a huge market that will change dramatically over the next few years. And with data, it can transform again and again."

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