The telematics value proposition for commercial auto insureds

The telematics value proposition for commercial auto insureds | Insurance Business America

The telematics value proposition for commercial auto insureds

It’s time for insurance carriers and agents to change the conversation around telematics solutions for commercial auto clients. According to Pete Frey (pictured), director of commercial lines telematics at Nationwide, telematics has moved on from being a nice ‘add-on’ discount-driving perk to being “an essential tool for operating a fleet-focused business.”

Telematics solutions present a prime growth area for commercial agents as most middle market business owners now welcome the technology due to its positive safety and operational impacts. According to Nationwide’s new Agent Authority survey, 93% of middle market business owners are willing to invest in telematics if it will improve driver safety, and 90% agree that the benefits outweigh the financial cost of the technology.

While telematics has been quite widely accepted in personal lines for some time, the uptake in commercial lines has been far slower. There are two main reasons behind this. The first is cost. Many of the early commercial telematics solutions were too expensive for middle market and small business fleets. That’s now changing as the solutions become much more economical. Commercial drivers were also quite anti-telematics at the offset. They didn’t want their bosses paying attention to every move they made behind the wheel. But again, that perception has changed over time as drivers realize the benefits of telematics solutions.

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“Companies are just starting to figure out that there’s a strong value-proposition in using telematics solutions,” Frey told Insurance Business. “Business owners have found it very useful to help manage their drivers and their fleet vehicles. It’s a way to track what their drivers are doing, where their vehicles are, and it also helps to keep track of the health and maintenance of their vehicles as well. There are care benefits, safety benefits and efficiency benefits. And when you tie that to insurance, there’s an opportunity to get valuable savings on premiums from good driving behavior and from proper care of your fleet vehicles. Those conversations are now starting to rise to the surface as to how insurance and commercial telematics can come together to add more value for consumers.”

Nationwide’s Agent Authority survey shows a little bit of a disconnect between insurance agents and their insureds on the topic of commercial telematics. The survey suggests that fleet owners may be more supportive of solutions than agents realize and they’re willing to pay more to track unsafe driving behaviors than agents anticipate. For example, 14% of agents said they don’t think clients would pay at all for telematics, yet 93% of businesses say they’d pay to ensure a safer driving experience. Furthermore, 70% of business owners said they would be willing to pay between $20-$39.99 per month per vehicle, while more than 60% of agents said they thought their clients would only pay $29.99 or less a month.

Survey responses also show that some agents would benefit from additional resources to help them talk to commercial lines customers about the advantages of telematics, especially at the producer and customer service representative levels. Nearly 40% of producers and 70% of customer service representatives said they don’t feel they have the resources needed to effectively counsel clients on telematics. This is where insurance carriers, like Nationwide, can step in to help agents have that conversation, Frey stressed.

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“In the past, telematics has been most prevalent in personal lines insurance, and it’s typically been about getting a premium discount. I think some agents still have that mindset around telematics. They know it’s out there, but there’s not quite as deep of an understanding of what it can do for a business,” Frey commented. “This is an opportunity for Nationwide, and other insurance carriers, to talk to agents and give them the knowledge and the tools necessary to have those robust conversations with business clients and help them understand what telematics can do from a business standpoint.”

There are still some misconceptions among business owners about telematics solutions, especially around how they work and how they collect and use data. Almost 80% insurance agents who took part in the Nationwide survey said they thought their clients were hesitant in considering telematics because they think it’s an invasion of privacy. Many business owners agreed, with 37% citing data privacy as a barrier for using telematics, and 83% of business owners expressing concerns that the data captured through telematics could make their insurance rates go up.

“While there are still some questions from insureds around data privacy, Nationwide’s Agent Authority survey also shows that if a customer understands what’s going to be done with their data and how it’s going to add value for them, they’re much more willing to have that conversation,” said Frey. “As carriers, I think it’s our obligation to help break that data down and make it simple for an agent to understand so that they can translate it for the customers.

“Another thing that came out in our survey is that business customers really do trust their agents. They rely on their agents to counsel them and to give them that understanding. So, the table is set for those conversations around telematics; we just have to help agents be more aware and have the tools they need to ingest the data and present it in a simple way for customers to understand. At Nationwide, our strategy is very customer-focused and agent-supportive. We know that agents are an important piece of this and so we will continue to support them.”