Telematics insurance for fleet users explored by Andrew Williams.
Up until now, efforts to apply advances in telematics technology to the insurance industry have been mainly consumer orientated. However, with the fleet sector worth billions, how can this space be jump started?
According to Jelle Oosterhoff, senior product development manager, international products and services at LeasePlan, the application of telematics-based insurance products across the fleet sector is likely to follow one of two paths. Under the first alternative, he explains that telematics in fleet management might not be restricted to insurance-only applications but could, instead, form part of a broader pay-as-you-drive model, an arrangement he believes would “make particular sense for car sharing schemes or private lease arrangements”.
“This model will likely be for insurance in combination with depreciation and maintenance. In this way the entire lease instalment will be pay-per-use, not only the insurance component,” he says. In Oosterhoff's view, the second potential application could focus on the monitoring and improvement of driver behaviour, in combination with incentive schemes, as part of a manage-as-you-drive model which would allow for “premium reductions once results have been achieved”.
Whichever models eventually emerge, Oosterhoff points out that there “many advantages” to using telematics for fleet management, with the most important relating to “lowering the total cost of ownership, improving efficiency and improving safety”. “However, just installing a device will not make any difference. It is what you do with the data coming out of the device that will make the difference. A fleet manager must be willing to take that extra step. That is the only way telematics can create advantages,” he says.
Renato Chiaria senior director EU fleet planning and analytics at Hertz, agrees that telematics can help fleet managers to improve the efficiency of their fleet. He also believes the technology can help them easily reduce their environmental impact, a factor he says often goes hand-in-hand with cost savings. For example, by using telematics to track real-time vehicle journeys, he highlights the fact that fleet managers can now achieve “more transparency than ever before, with real time visibility of where vehicles are and where they are needed”.'
“Drivers can [also] take the most efficient routes and avoid unnecessary fuel consumption. Additionally, telematics technology allows fleet managers to spot non-efficient driving patterns, which can make a big difference when it comes to cutting back on fuel consumption,” he says. “If properly used, telematics can also be an important tool for damage management and help to increase the recovery of stolen vehicles.”
Role of UBI
Although some industry observers are increasingly buoyant about the potential benefits of UBI value added services like driver coaching and vehicle diagnostics, both Chiaria and Oosterhoff have mixed views about the usefulness of such applications for fleet users.
In Chiaria's view, driver coaching can be “difficult to apply” mainly because of the “great diversity of drivers and the low repetition rate”. That said, he believes that such services could ultimately be “very interesting and add significant value” if they were provided to companies that rent or manage a number of vehicles and want to oversee driver behaviour in accordance with privacy rules. Because telematics are able to track vehicle servicing intervals, Chiaria also says that car rental companies could use the technology to be “totally accurate” in contacting customers at the exact point that servicing mileage is hit, even if the vehicle is on a long-term rental. “At this stage, it is difficult to provide exact examples as all pilots on telematics are currently on a small scale - hence they are not conclusive,” he adds.
Meanwhile, Oosterhoff argues that UBI methods in their current incarnation would “not necessarily apply to fleet” and reveals that, at this stage, LeasePlan would prefer to look at UBL [usage-based leasing], although he also stresses that the company has not yet offered UBI or UBL to the market.
Generally speaking, Oosterhoff predicts that technical development will continue to support drivers in “overcoming their frustrations” in coming years. In doing so, he believes that telematics will play an important role because it “enables other technologies to add value”. “Telematics enables the driver to connect with his home and the environment. This will make the driver's life easier, safer and more efficient. The fleet manager will be supported in the day-to-day job. Cost saving and improved operations are much easier to gain when telematics is installed in a vehicle,” he says.
Looking ahead, Chiaria thinks that telematics will be increasingly used to assess customers’ behaviours and fuel consumption as well as for mileage tracking, vehicle maintenance, damage detection and reduction of the risk of frauds and thefts. “Over the next few years, telematics in car rental will probably be increasingly applied for improving operations, offering customers a new range of time saving possibilities,” he adds.
19 Apr 2017 - 20 Apr 2017, LONDON, UK
This is the largest and most comprehensive forum in Europe dedicated to connected car insurance. With over 400 attendees from across 25+ countries globally and 50+ executives speakers, this event will address the technological challenges and new business models to impact the motor insurance industry as it converges with the connected car.