At a glance
- The use of telematics is now well established, with clear evidence that it can reduce fleet risk and generate cost savings
- While private motorists and large fleets are increasingly exploring these benefits, the uptake of telematics remains limited in the wider commercial fleet market
- We look at how to overcome perceived barriers to telematics use and begin realising its potential
Telematics has become a hot topic in fleet risk management over recent years, with insurers, individuals and businesses increasingly exploring its potential.
What is telematics?
In fleet risk management, telematics refers to technologies that monitor and communicate data about vehicles and driver behaviours.
A wide range of data can potentially be captured, from location and speed, to cornering and braking.
This data can then be analysed and used to improve driver behaviour, impacting areas such as collision rates, claims experience and fuel economy.
Telematics solutions have now advanced to include a range of affordable and easy-to-use options, including simple smartphone apps.
With telematics technologies now well established on our roads, and mounting evidence for their benefits, some are even urging the government to make their use mandatory for high-risk drivers.
However, while telematics continues to gain traction with private motorists and businesses with large fleet risks, such as hauliers, its uptake remains limited across the wider commercial fleet market.
We look at the reasons for this limited uptake, and consider how you can help customers overcome any perceived barriers and start benefiting from telematics technology.
Cost of technology
When telematics was first utilised by the risk management community, many solutions were prohibitively expensive for the majority of customers, often requiring costly retrofits or annual service contracts. This made it difficult to justify to the wider commercial fleet market.
However, with telematics now a widespread, mass-market technology, the range of solutions has grown exponentially alongside significant reductions in cost.
Private motorists and commercial risk managers now have access to a variety of simple, cost-effective solutions to meet their needs. For example, free smartphone apps can be installed on drivers’ personal devices, giving employers the ability to remotely monitor and analyse the data captured.
Cost is therefore no longer a barrier to customers exploring the potential benefits of telematics for their organisation.
Lack of driver incentive
One of the biggest barriers to commercial fleets generating benefits from telematics, is the different incentives provided for private motorists and fleet drivers.
A private motorist knows that their telematics device could ultimately save them money via fuel savings, a reduction in collision risk and lower motor insurance premiums.
But a fleet driver does not have the same direct monetary incentive. An improvement in their driving behaviour may benefit their employer, but it is unlikely to result in a direct benefit to them.
In commercial situations, telematics must therefore be accompanied by something else to fill that void and incentivise better driver behaviour. There are a variety of methods to achieve this, from regular meetings with drivers to discuss the data captured, to offering financial incentives that reward good behaviours.
The key, however, is to have an element of line manager control where telematics data is regularly monitored and acted upon to drive improvements in behaviour.
Too difficult to manage
The importance of line manager control is in itself a perceived barrier to telematics. Many organisations will consider the task overly complex or fear that it will require too many resources.
However, unlike older telematics solutions – which may have required risk managers to analyse raw data themselves and identify trends – the latest applications typically make it very easy to understand and act upon the information captured.
Most applications will now allow managers to set certain parameters and receive notifications if drivers stray beyond them – for example, a push notification if a driver exceeds a posted speed limit or corners too fast.
Some applications will now even help incentivise drivers via ‘gamification’ of the data – for example, through leader boards, where employees are rewarded for positive behaviours and penalised for negative ones.
How we can help
Fleets that use telematics effectively often experience year-on-year improvements in their collision and claims rates, as well as lower fuel consumption.
However, while most organisations appreciate the benefits that telematics could generate, the barriers to effective implementation and use are frequently perceived as being too great.
We are happy to offer assistance to brokers and customers to help overcome any perceived barriers and enable more organisations to start benefiting from telematics solutions.
For more information on telematics and a range of other fleet risk management tools, please see the ‘further information’ section of this article (right hand column) or speak with your local Zurich contact.