While telematics has already gained ground in the automotive industry to help establish accurate premiums, it’s also fuelling change across transportation and fleet management.
“Currently, most insurers and brokers utilize historical data pulled from a carrier’s profile, prior claims history, prior mileage history and carrier interviews to form the basis for rating a carrier’s insurance policy,” said Martin Wiley, partner at Lloyd Sadd, a Navacord broker partner. “Telematics gives carriers, insurers and brokers a new tool to proactively monitor and predict changes to the company’s risk profile.”
In Alberta, for example, the economic pressures facing the oil and gas industry are causing material changes in the types of commodities and radius that some carriers in that province are used to running.
“From an insurance perspective, they are somewhat married to their prior experience as it relates to the perceived risk and corresponding rating, so telematics embedded in the electronic logging devices (or ELDs) is the key to unlocking this information,” added Wiley.
In Canada, the most recent change facing carriers is the national ELD mandate that took effect June 12, 2021. While there are many fleets (especially those with US cross-border exposures) that have already been using telematics service providers (TSPs) with ELD tracking capabilities, in Canada regulated vehicles – even if they are 100% operating in Canada – will have to use many of these same TSPs to capture their hours of service.
“In an indirect way, the ELD mandate has now forced even more carriers in Canada to implement telematics into their fleets,” said Richard Silang, director of transportation at Jones DesLauriers, another Navacord broker partner.
“The switch is on, as more Canadian carriers are now being bombarded with their data. The challenge with data, though, is that it is only as good as the carrier’s usage of it. In fact, data can actually work against a carrier.”
As Silang explained, several insurers use a process to track what they would call a high-risk driver analysis. Those insurers may use statistics provided by the American Transportation Research Institute, which allocates percentages on the likelihood a driver would get into a preventable collision. This is based on “after the fact data” that may take into account anything from speeding incidents to distracted driving violations.
“The TSP data now adds another layer, as we do not have to wait for a preventable incident or a violation to occur,” he said. “Insurers could potentially ask for this data in the future in order to assess a risk.”
Heavy commercial carriers could be in for a further challenge with insurers if their data shows a trend of high-risk critical events and patterns on multiple, or even a majority of, drivers for a company, which may indicate a lack of proper safety practices being implemented.
As Silang explained: “Imagine that a carrier has signed on with a telematics service provider and the data demonstrates numerous high-risk trends, such as speeding among numerous drivers, and the carrier elects to do nothing with this data. Let’s say one of these drivers gets into a preventable but serious incident as a result of speeding. The claim gets to court, and the TSP data that shows the high-risk trends is subpoenaed. The plaintiff could push for gross negligence against the carrier if it’s determined that the data shows the carrier failed to proactively reduce the likelihood of such incidents by failing to act upon speeding trends seen in their TSP data.”
On the other hand, that same data – if properly used by the carrier to supplement its safety initiatives – may also help in its defence.
“Carriers can never let that data stand on its own without using it properly,” added Wiley. “Incidents can occur even with the best of fleets, best of safety practices and best of data implementation usage to supplement safety plans. There could be grounds for a carrier to demonstrate that most measures have been implemented to prevent such incidents. That is where data can help them in court, in their defence. It could truly have been a one-off event, as their data backed by a proper safety plan and policy will show a pattern of good driving behaviour.”
In that regard, cameras mounted on a vehicle’s dash become essential. When paired with telematics, data dash cams can exonerate transportation carriers from a claim by essentially working as a digital visual stamp to support the carrier’s good driving decisions in the event of an incident. Carriers should look to protect themselves more than ever and, in the event of conflicting data, videos could provide the definitive answer.
For its part, Navacord is responding by helping navigate carriers through this changing landscape of legislation, data and telematics. Navacord’s team of transportation experts is collaborating with its insurance partners and driving thought leadership, while helping clients understand the information available to them through technology to improve their risk profile.
The result, according to Silang, is helping their client find ways to reduce costs such as driver turnover, deductible and down time related to incidents, managing maintenance costs, fuel savings and finding fair and cost- effective insurance and risk transfer programs.