With the emergence of telematics and advanced analytics, organizations can not only manage their fleet of vehicles and assets more efficiently but also leverage this information to negotiate better rates with their insurance companies. Traditionally, insurance companies relied on information such as driving history, number of demerits, carrier profile data, etc. to determine premiums. These companies did not have the tools needed to assess the drivers’ behavior (past, current and future) behind the wheel. However, insurance companies are increasingly exploring options to recognize good driver behavior and reward organizations with better insurance rates for proactively reducing risk. This requires these companies to have access to advanced analytics that are customized for the insurance sector. It should come as no surprise the insurers entire mandate is to mitigate risk and exposure to risk.
In order to customize an analytics engine to address the needs of insurance companies, certain key metrics need to be factored into the algorithm. This algorithm is in turn used to build a comprehensive, insightful driver scorecard. Best of breed telematics hardware employ the use of high quality accelerometers that accurately captures key factors such as acceleration, braking and the speeds at which a driver takes a turn. Heavy braking and hard acceleration can be a detrimental to the score a driver receives. Taking a turn at high speeds also weighs in heavily while calculating the driver score. An organization who has access to these driver scores can in turn be better equipped while negotiating renewal policies with insurance companies.
Clearly, not all speeding violations end up with the driver getting a ticket. A driver scorecard also takes into account the number of posted speed violations received by a driver and adjusts the driver scorecard accordingly. The distance travelled by a driver, a term referred to as “hub and radius” is another key factor that insurance companies look at while determining premium rates. The insurance specific algorithm takes into account the distance travelled by the drivers in a fleet, the weather conditions on specific days, mean traffic density, etc. All this information along with the driver scorecard can help insurance companies provide better rates to their clients thereby increasing customer satisfaction and retention. Insurance companies are willing to incentivize and reward good behaviour if their risk is mitigated.
While on one hand the insurance companies have greater visibility into the fleet’s performance, on the other hand organizations can consume this data and identify drivers with risky driving behavior, taking a proactive approach to modify this behaviour to the benefit of the organization and insurance company). This can in turn empower organizations to provide driver specific training and also introduce awards to recognize drivers with good driving behavior thereby fostering a safe driving culture. Advanced analytics is a win-win for all stakeholders; the organization, the insurance company, the broker.