Zurich: "In-vehicle driver behaviour technology is a fundamental component"
Andy Price, practice leader, motor fleet at Zurich Risk Engineering, discusses managing road risk and whether or not driver behavior technology is an essential ingredient for the insurance industry
1) Briefly, what does your company/department do?
Zurich is one of the world's largest insurance groups, and one of a few to operate on a truly global basis.
We have more than 60,000 employees serving customers in more than 170 countries. Our mission is to help our customers understand and protect themselves from risk.
Zurich provides conventional and non-conventional insurance for both domestic and international fleets.
We offer a wide range of coverage solutions, along with access to our in-house risk engineering expertise, which can provide tailored risk management solutions to help customers improve their collision rates and cost of claims.
2) By and large, how do insurers in the fleet space view telematics? As a must-have? A nice-to-have? Simply an option?
Any organisations that from a fleet perspective want to effectively manage their costs, meet their moral, H&S and legal obligations, and demonstrate good corporate social responsibility, need to have an effective work-related road risk management program in place.
When an employee is making a work-related journey, this is usually unsupervised, so by implementing driver behaviour telematics employees can understand when they are driving inappropriately, through the in-vehicle feedback mechanisms.
Managers can get insights on how employees are driving, allowing them to put the appropriate management and/or driver-focused interventions in place.
3) How about fleet managers and auto OEMs? Have you experienced an uptick in their interest in insurance telematics solutions?
Fleet managers understand from a cost perspective that it is important to try and manage how vehicles are being driven by employees, but they are not the only key stakeholders in an organisation that is interested in this.
The H&S manager also has an interest to try and manage the safety of employees when they are driving, and of other members of the public who may be injured in the event of a collision.
4) How do you convince companies on both sides of the coin that telematics solutions add critical value?
Before convincing any organisations that the use of driver behaviour telematics is of value to them, they must first have an appetite to want to effectively manage work-related road risks.
Many organisations think that this fits into the “too difficult to manage” category, and/or they do not have the people to manage this aspect of their business.
As with any new proposition, it is important to have a sound business case which not only addresses the economics (and in the case of driver behaviour telematics this would primarily be the cost benefit analysis based on the reduction in the direct and uninsured losses associated with every collision and the fuel saving aspects, as well as the ‘softer’
environmental benefits), but also how work-related road safety can be managed as an integral part of the organisation’s business.
5) Can you cite an example of when telematics has created tangible, bottom-line savings?
One Zurich customer has done an intensive trial of a driver behaviour telematic system and achieved significant bottom line improvements over an eight-month period, which has prompted them to tender for a full deployment throughout the fleet.
Compared to the control group (1,227 vehicles), the trial group with the driver behaviour telematics systems installed (250 vehicles) saw a 66.4 percent reduction in their annualised incident rate for own damage claims and a 59.0 percent reduction in the cost per vehicle for these claims.
The figures for ‘Third Party’ claims were even more impressive, with a 72.2 percent reduction in the annualised incident rate and an 83.1 percent reduction in the cost per vehicle for these claims.
6) Is it important to develop tailored solutions for each vehicle segment, from light duty to HGVs in operation?
Influencing driver behaviours is independent of vehicle type, and is more to do with the philosophy of the individual organisation on how it manages its employees who are making work-related road journeys.
The type ofvehicle used does, however, need to be taken into account as there may be additional benefits that a telematics system can bring, depending on the nature of the business and how the vehicles are used.
As an example, an organisation providing on-site servicing may have an additional need for a mobile resource management solution from the telematics provider.
7) Where do you see the Insurance Telematics Industry heading in the next 5 years? Will shaping driver behavior become more and more important?
If the aspiration of an organisation running a motor fleet is to reduce its overall cost of risk, as well as the frictional costs associated with this, then in-vehicle driver behaviour technology is a fundamental component that will assist those responsible for managing motor fleets in realising their goals.
However, this will only be effective and sustainable if there is a structured, overarching motor fleet risk management philosophy in place with a succinct and predetermined plan of action.