Telematics tools are transforming trucking and fleet management. Telematics allow companies to gather data about vehicle location, driver behavior and real-time engine diagnostics, which can help them reduce their insurance premiums by mini-mizing risk and encouraging safer driving.
The uptake of telematics in the commer-cial auto industry has taken a while to shift out of first gear due to concerns around the upfront investment cost for entire fleets, uncertainty about sharing data with insurance companies and pushback from drivers concerned about the ‘Big Brother’ feeling of the technology. However, over the past few years, things have changed. Trucking companies and fleet operators have started to realize the benefits of telematics solutions, and they now welcome the technology for its positive safety and operational impacts.
“It’s reached a point where almost all of our clients in the trucking business use some form of telematics,” says Bo Birtwell, senior vice president at Brown & Brown Insurance. “They’re embracing the technology for a number of reasons. Not only can telematics improve driver safety, but the technology also generates analytics and reports that help companies pinpoint opportunities for risk reduction.”
Those reports can help insurance brokers and agents paint a more accurate picture of an insured’s risk profile to carriers, potentially helping to lower their insurance premiums. This is a significant value-add in the current hard market, where commercial auto insurers have raised rates and restricted coverage in reaction to years of deteriorating loss ratios.Telematics also help to validate vehicle usage, which will be critical as more insurers start to write policies based on mileage.
“The conversation in telematics has shifted towards the use of video technology,” Birtwell says. “With artificial intelligence and the way that technology has progressed within the cameras, not only can trucking companies and fleet managers look backward at irregularities that have already happened, but they can get updates in real time.
“You can certainly do the same without a camera, but I would argue that telematics without video only really tells half of the story. Telematics solutions are typically triggered if there are irregularities in braking, speed and other driving behaviors – and that can happen all the time. But with cameras, you can see exactly what was happening both inside and outside the vehicle at the point of irregularity. If there’s a collision or an incident on the road, the camera can tell the entire story, which can have a significant impact on the outcome of a claim.”
It can take some time for telematics to result in a reduction in premiums. Some insurers will offer immediate discounts, but at the moment, the offerings still “vary widely,” Birtwell says. However, he’s noticed that companies that embrace telematics with video often see a relatively immediate reduc-tion in the frequency and severity of claims, which can be leveraged over time to drive down the cost of risk.
“I think it’s important for brokers and agents to advocate for telematics and for us to help our current and prospective clients to understand how the different functionalities of telematics are really a good return on investment,” Birtwell says. “We’ve got to be able to look at the impact on claims for organizations that have implemented telematics and share that with our clients who might not be doing anything. And we’ve also got to work with our insurers around how telematics is going impact premiums, risk assessment and claims management.
“We have a lot of real-life examples within our client base where the telematics and cameras have prevented significant accidents. So it’s up to us to be advocates of telematics for our clients and potentially help them as they go through the selection of the system and deciding how they’re going to use the data and who’s going to have access to it. I believe it’s really important for brokers and agents to be a part of the process and the conversa-tion around how our clients and prospects are going to implement telematics.”