A New Era of Commercial Lines Opportunity
In recent years, commercial lines insurers have struggled with profitability and experienced the poorest underwriting results primarily caused by an increase in adverse loss frequency and severity trends. Across the industry the realization that a better strategy for assessing risk potential by deploying next-generation telematics technology solutions to acquire and analyze vehicle and driver data is vital to addressing current problems and restoring profit margins.
Telematics technology originated with the convergence of several supporting technologies, including wireless sensor networks, GPS, computer analytics, informatics, and telecommunications. Advances in these technologies and additional supporting technologies have furthered the usefulness of telematics in personal and commercial vehicles.
The cost of telematics devices has dropped significantly in the last two or three years with new low-cost data-collection options emerging at the same time. Furthermore, device capabilities have improved—with more features, easier access, and enhanced usability.
Factors that have made telematics more attractive for commercial lines implementations:
- Plug-and-play deployments have become common, with no requirement for professional installation even on heavy-duty trucks.
- Smartphone penetration has become ubiquitous with data coverage expanding over wider regions. At the same time, many carriers have lowered their data fees.
- The OpenStreetMap (OSM) project provides accurate mapping and speed limits. It makes data accessible and usable for risk scoring. For example, OSM can correlate a driver’s speed with the existing speed limit in every region, making it possible to
generate feedback when limits are exceeded.
The latest generation of telematics devices works well with a variety of commercial telematics and UBI programs for businesses, fleets, and fleet managers. As an added benefit, this technology is affordable and accessible to all parties. Insurance organizations can develop an implementation strategy from a broad selection of data and feedback sources, as shown below:
With leading insurance companies quickly joining the movement Commercial Insurance Telematics can provide relevant, real-time information to firms and stakeholders, generating value, boosting efficiency, and enhancing visibility into processes and operations. Let’s also make no mistake, significant differences exist between personal and commercial telematics solutions including the fact that very few solutions are enterprise ready today. A telematics service provider (TSP) with limited experience in personal lines solutions does not necessarily have the expertise or the supporting infrastructure to handle a comprehensive commercial solution.
To ensure long-term success in the commercial auto insurance sector, partnering with a TSP with a comprehensive end-to-end insurance telematics solutions can remove the burden of establishing a monitoring system and overseeing the complex IT tasks and analytical processes involved in capturing and evaluating vehicle operation information. Equally important, logistics, deployment, and support are typically included as a part of the solution, making implementation and long-term maintenance much easier. In this type of system, data integrity remains consistently high—without the risk of human error or deliberate fraud introducing false data into the system.