Telemetrics May Become Key To Insurance Expense Reduction

According to this piece from Insurance Business Magazine, telemetrics in the commercial auto insurance space have reached the point of market saturation that will only gain momentum in all likelihood, whereas the same technologies have had a much more difficult time gaining widespread adoption among private auto insurance policyholders.

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While telemetric technologies have in many ways advanced in the automobile space faster than in a lot of other areas, the usage trend for these devices is clearly growing across a much wider range of commercial insurance and other business applications than just vehicle coverage.

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Because auto telemetrics are just a bit ahead of the curve, however, perhaps by taking a closer look at some of the reasons that the same telemetric devices and programs fared so differently between commercial and private usage could prove beneficial in identifying when and how best to put these emerging technologies to work at your company in order to optimize risk management and reduce premium expenses. 

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What Causes Reluctance To Adopt Telemetrics

• Unfamiliarity & Resistance To Change

On the personal auto coverage side of the equation, many people have displayed a general wariness about having their actions while driving recorded and evaluated by a telemetric device, and that wariness ultimately outweighs the prospect of reduced insurance expenses.

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Professional drivers who are on-the-job and typically utilizing company property when they are driving, however, tend to be more comfortable with the notion of being monitored and may already be subject to inspections like weigh stations and location tracking, so the transition to telemetric devices was a much smaller and more manageable leap. 

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With that analogy in mind, one good question to ask may be, 'where does your company employ data collection technology and how might the addition of telemetric data collection and analysis at these existing data collection points be interwoven into the system in order to make the transition to better risk-monitoring and exposure-reduction as seamless as possible?' 

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• Technological Incompatibility

Even among forward looking companies who pursue the idea of incorporating insurance-aiding telemetrics into their operations, another frequently encountered hurdle is trying to get existing technologies and platforms to accommodate the new telemetric systems and produce data of the necessary quality and format that insurance companies can translate and utilize for risk assessment purposes. 

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For example, in industries that involve the management of fleets of commercial vehicles, some companies collect driver data through hardware that gathers information directly from the vehicle itself while other companies have relied more on driver-input data or other devices like cell phones. Further, while some companies may issue company phones to drivers and collect data through an application downloaded to the phone, other companies may notissue cell phones to drivers and therefore can’t require them to download the telemetric data collection app onto their personal phones. There can also be a great degree of variability in data quality between the various devices used and insurance carriers have yet to be financially incentivized to solve all these problems themselves given the high-cost and difficulty of developing a one-size-fits-all solution.

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As these technologies continue to evolve and as your company adopts additional data collection methodologies, processes, and devices for non-insurance-related purposes, it may be worth inquiring as to which of the the technologies you are considering is best equipped to potentially share that information with third parties like your insurance company when doing so becomes advantageous. 

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What Catalyzes Telemetric Adoption

Regardless of any lingering telemetric adoption reluctance that may remain in a given market and regardless of the difficulties of bringing together and analyzing all the potential data that is becoming available, the use of telematics is clearly gaining steam, largely driven by one factor: Cost

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Supply chain issues, inflation, and increasing interest rates have been impacting bottom lines across industries for years now, and most organizations continue to be sensitive to those pressures as they seek out just about every possible measure for reducing some of their recurring expenses.

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Given that insurance premiums through most categories have been no exception to the trend of rising sticker prices, expect the momentum of telemetrics to continue picking up speed, and those that want to stay ahead of the curve should be planning for that eventuality in the technologies they are adopting today.

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You can read more about this topic here.