In March, an Insurance Council of Australia (ICA) report called for urgent co-ordinated action to address the alarming cost of private comprehensive motor premiums. The ICA said the cost of the cover has gone up more than 40% since 2019 driven largely by rapidly rising claims costs.
However, the private motor market is not the only sector that has seen a spoke in premiums. Industry reports suggest commercial motor fleets, served by brokers, have experienced similarly dramatic increases.
Stakeholders in the fleet space say telematics can help meet these cost challenges by reducing the number of claims. According to some brokers and underwriters this driver behaviour focused technology is slowly gaining market traction but there are hurdles to overcome.
“There isn’t a huge amount of risk management in motor fleets so we’re trying to change that and circuit break some of these increased claims costs,” said Simon Donovan (pictured), executive general manager of underwriting DKG Insurance Group.
He suggested, during a webinar, that telematics could be a motor fleet claims numbers gamechanger. Donovan said, in some cases, his Fuse Fleet customers, using telematics, have seen their claims go down by more than 50%. He referred to a study that showed that 70% of the time this technology found a pattern of risky driving, an accident claim followed. “That’s the most powerful insight I’ve ever seen in my time in insurance,” said Donovan.
Brokers are key, he said, to deploying this powerful preventative accident tool effectively and helping fleet companies “see the risk before it happens.” He suggested brokers should make sure their customers commit to understanding the meaning of the data and also to helping their drivers change unsafe driving patterns. That can require a culture shift to engage drivers and win their trust.
The first important trust hurdle, said Tanwir Dadarkar, director of Drivetec Solutions, is the concern among drivers that the technology’s primary use won’t be improving safety and reducing accidents. Many drivers are concerned the technology will be a management tool to monitor them and pressure them to work quickly by comparing start and finish times.
Dadarkar said brokers should address these Big Brother concerns during their first conversations with a fleet company. “It’s about culture and the leadership team and how do drivers feel?” said Dadarker. “Do they trust the leadership that the data will be used for coaching, improvement and actually, safety?”
He said establishing a culture of trust is very important to successfully rolling out the technology.
Another important focus area connected to building driver trust, is positive revelations from the data about driver behaviour - rather than just focusing on the negatives. Otherwise, he said, driver trust will erode. “So rather than focusing only on the 15% who cause half the accidents, what about the 85% who drive well and saying ‘you guys are doing a great job?’” Donovan said. “This is why, and this is how you guys can improve.”
Dadarker said this should be considered together with developing a rewards-based culture to encourage good driving.
Another major hurdle for fleets, said Dadarker, is actually using the data they are gathering from drivers to develop actionable insights. “For 70 to 80% of organisations out there using fleet technology, the utilisation of data is just so low,” he said. “That’s where fleets struggle.”
Donovan said brokers can help with this challenge by encouraging fleet firms to nominate an internal champion. This champion, he said, should personally trial the telematics system in their own car so they really understand it and can help with the rollout.
At smaller SMEs with motor fleets, Donovan identified another broker challenge. He said they typically don’t train new drivers despite many being males in their early 20s - a higher risk group in terms of vehicle accidents.
He suggested brokers can help these firms implement a basic driver training program that would also educate them about telematics. “There’s a lot of informing that we can do for companies when we talk from the underwriters’ and brokers’ sides,” said Donovan.
Another major challenge for brokers, particularly in the current tough economic climate, is that fleet managers are looking to cut costs. Telematics is expensive and its economic benefits may not kick in for a couple of years. Donovan said brokers need to encourage a longer term view that takes into account the substantial future economic benefits of reducing the number of accidents.
“How do we change the root cause of the problem [high accident numbers] which is driver behaviour,” he said. “It’s not easy, but it’s understanding the value of the risk management and the overall solution that is available – as long as the motor fleet company makes some commitments.”
Are you a broker in the motor fleet space offering telematics based insurance? Please tell us below about how you go about convincing clients to use it.
