Insurance telematics and the fleet sector
Greg Nichols explores how insurance companies are expanding the services they offer to fleet operators
Insurance companies have a financial interest in promoting safe driving to reduce crashes. It’s no wonder, then, that so many commercial and consumer insurance companies offer driver safety programs and reward exemplary driving records.
Now a new generation of insurance providers is capitalizing on the spread of telematics devices to expand the services they can offer to fleets.
And risk reduction through driver training is just the beginning. Insurers have begun to recognize that they are positioned to move beyond liability coverage. One insurer, Zurich, has become a one-stop shop. The Zurich Fleet Intelligence™ product includes a comprehensive safety program as well as operations management solutions and customized strategies to help fleets reduce their environmental impact. This may be a taste of things to come industry-wide. (For more on safety programs, see Managing driver behavior with fleet telematics.)
“We’re in the midst of a course change for commercial fleet insurance,” says Jim Noble, business director at Zurich. “Telematics will allow the insurer to be much more embedded, helping them to improve fleet operations.”
Leveraging new data
Some estimates suggest that for every one dollar of direct cost associated with an accident—costs such as vehicle repairs, which insurers have an interest in reducing—there may be as much as five dollars of indirect cost incurred by the fleet operator.
“Everything we can do to help customers improve their risk is a benefit to those customers and to us as an insurance provider,” says Noble. “The more active we can be in offering constructive programs that truly help customers identify risk and drive it out of the business, the better off things are going to be for our customers and for us.”
At Zurich, Noble and his colleagues are finding that telematics devices allow for a much fuller understanding of how driving behaviors correlate to risk.
“What we’re trying to do is take very good information from the telematics providers, and combine that with the traditional information to create a fleet risk portrait of the company and of the driver,” he says. “And that allows us to help our customers develop actionable items based on that information to improve their risk profile.”
Zurich can customize driver-training programs based on the behavior of specific drivers. If rapid acceleration or driving over speed are chronic problems for some drivers, Zurich can help fleet operators set benchmarks to reduce those risky behaviors. The program drives down premiums associated with unsafe driving, reduces the hidden costs of accidents and repairs, and helps make the roads safer for everyone. (For more on driving behavior, see Benchmarking with fleet telematics and Telematics, UBI, and driver education.)
Telematics providers “are moving at breakneck pace to really improve the data coming out of the vehicle,” says Noble. “But I think the other thing that has made telematics more palatable is that the cost-per-vehicle to get that data is not as high as it has been, and it’s still dropping.”
Driver safety programs get fleets some of the way toward creating a crash-free culture. But can operations management that’s driven by the data from telematics devices go even further?
According to insurers like Zurich, yes. By leveraging driver behavior and operations data, insurers can aim to put safe drivers in the safest possible driving situations. Scheduling, route optimization, and inventory control can help drivers minimize the dangers they encounter day-to-day.
This relationship between driver safety and operational management is key in understanding the ongoing evolution of the fleet insurance industry.
In addition to robust driver safety programs and operations management solutions, Zurich uses data from its telematics partners to help fleets reduce their environmental impact and comply with federal emissions standards.
“There are a lot of wasted dollars in the operations of vehicles today,” says Noble. “Telematics allows us to help our customers identify where that waste is happening and to improve. Whether it’s idle time or speed or acceleration or any of those fuel wasting things, we can improve that.” (For more on environmental impact, see Fleet telematics: Balancing commercial and environmental concerns and Why green means ‘go’ for fleet telematics.)
The Zurich product is likely the first of many to be offered by fleet insurers that will bring together the various data universes made available by telematics devices. It seems likely, then, that a battle is brewing in the near future between dedicated fleet operations companies and insurance providers looking to get into the fleet operations game.
While it’s not clear where the industry will settle, this should be good news for fleet operators. With competition growing across the operations management sector, the cost of strategic assistance may fall. Coupled with the declining prices of telematics services, even the smallest operators may soon have access to management tools that were once considered the exclusive domain of the largest fleets.
Greg Nichols is a regular contributor to TU.
For more on fleets, see Industry insight: Fleet telematics.
For more on insurance, see Industry insight: Insurance telematics.
For all the latest telematics trends, visit Content and Apps for Automotive USA 2012 on December 4-5 in San Diego.
Coming up in 2013: Consumer Telematics Show 2013 on January 7 in Las Vegas, V2X for Auto Safety and Mobility Europe 2013 on February 19-20 in Frankfurt, Telematics for Fleet Management Europe 2013 on March 19-20 in Amsterdam, Insurance Telematics Europe 2013 on May 8-9 in London and Telematics India and South Asia 2013 on June 5-7 in India.
For exclusive telematics business analysis and insight, check out TU’s reports on In-Vehicle Smartphone Integration Report, Human Machine Interface Technologies and Smart Vehicle Technology: The Future of Insurance Telematics.