Amid the Ogden rate cute and Insurance Premium Tax rises, fleet managers have been facing increasing premium costs – and telematics could be the answer to both reducing their spend and keeping insurers happy by lowering claims frequency.
While telematics has gained wide popularity in the personal auto market, particularly among young motorists looking to drive down hefty premium costs, the technology has yet to fully penetrate the fleet market.
Last week, however, motor fleet MGA Telefleet revealed that it has partnered with UK telematics provider Masternaut to
launch a new telematics product for fleet insurance – which it says is among the first such offerings in the UK.
Historically, fleet managers have tended to invest in telematics with the aim of reducing fuel costs and improving areas such as fleet utilisation, logistics and route planning. However, they are beginning to cotton on to the happy by-product of telematics use: a “material reduction” in the frequency and severity of accidents, according to Michael Walton, business development director at Telefleet.
The fault to non-fault ratio for fleet claims currently stands at around 65:35, exposing the fleet insurer to escalating non-fault claims against their book. But when telematics are in use, drivers tend to drive at considerably lower speeds, which leads to a reduced claims frequency and “phenomenal return on fuel economy,” for the fleet manager, Walton said.
But while there are significant benefits for both insurer and insured, insurance has been somewhat slow off the mark in rolling out telematics for fleets.
“The insurance market has realised the benefits of the technology but has been slow to develop structured insurance programmes that reward the application of fleet telematics,” Walton said. “Generally, they have given discounts for telematics, but that’s almost been a marketing ploy… They’ve never really gotten under the skin of it.”
For insurers to work effectively with fleet customers, the insurer and the fleet manager need to buy-in to the benefits of telematics and develop strict disciplines in the utilisation of the telematic data, Walton explained. “Many fleet managers install telematics in their vehicles and then assume that the fuel economies and improved driver behaviour will follow – this is not the case. The successful deployment of telematics requires constant analysis of the data and pro-active management to rout out any problems.”
Walton concluded: “If motor insurers are to improve their underwriting performance, then the application of telematics and improved claims processes will start to shift underwriting portfolios towards profitability.”
