For fleets of all sizes, insurance is a major expense. It is also a necessity. Luckily, IoT can help fleets reduce risk insurance costs while also increasing driver safety.
It’s no secret that the fleet transportation industry has been impacted by sharp increases in insurance rates. A recent article in Commercial Fleet reported that van insurance premiums have increased by 37.4% since April 2014. There are several contributing factors to this rise including the increase of technology in vehicles making them more expensive to fix and changes to the personal accident discount rate (Ogden Rate) that have increased pay-outs involving serious injuries. According to Automotive Fleet "Fleet vehicle accidents are among the most expensive injury claims for business. The average cost of a loss related to fleet vehicle accidents is approximately $70,000."
Insurance companies have been using video technology to reduce rates for several years. Not only does video monitoring incentivise safer driving, but it also keeps a record and can be referenced in the event of accidents. Telematics takes existing video monitoring to the next level. In addition to recording footage, telematics provides continuous information on driving metrics. For example, it can pinpoint vehicle speed, weight, and brake patterns. It can also notify drivers immediately of impending road changes and give them time to react. All of this information is valuable for both fleet managers and insurance companies.
Insurance policies that offer reduced premiums to fleets with telematics are on the rise. Fleet telematics offers benefits beyond reducing insurance costs, such as enhancing safety. IoT monitoring helps make fleets safer by reducing risky driving behaviours, and ultimately, the number of accidents.
Some insurance companies are embracing IoT monitoring by reducing premiums for fleets that are equipped with it. This type of insurance, called usage-based insurance (UBI), uses telematics to understand driver behaviour and assess risk factors.
The prevalence of UBI policies is growing. In 2017, BusinessWire reported 6.5 million active UBI policies in Europe. Commercial vehicles with usage-based insurance are also predicted to grow 18% by 2024.
While not all insurance companies advertise reduced rates, having IoT monitoring can be great leverage for negotiating lower rates. Historical fleet data can show insurers a confirmed track record of responsible driver behaviour. Fleets can also demonstrate their safety measures with IoT-enhanced driver training.
Insurance policies that support telematics can be especially beneficial for small to mid-size fleets. Typically, larger fleets can afford higher premiums and have more financial leverage to negotiate with insurance companies.
Usage-based insurance offers smaller fleets the chance to provide accurate risk analysis for insurers. This can help negotiate better premiums and gives smaller fleets the chance to showcase their safety efforts.
Smaller fleets have also indicated their preference for usage-based insurance. A 2015 survey found that more than half of small fleet managers were likely to stay with their current insurance carriers if they offered UBI policies.
Insurance is crucial in case of unexpected events. However, navigating the process of insurance coverage can become complicated with opposing descriptions of events. Insurance companies require a significant amount of evidence, and collecting this can be difficult if it was never properly recorded in the first place. Accidents also cause a lot of distress, which can make recounting events accurately more difficult for people that are involved.
In the event of an accident, IoT data and video recordings could be the proof that is needed to show a driver wasn’t at fault. It can also keep fleets protected from faulty or unnecessary insurance claims. Having an accurate, accessible record of events, especially video recording, is a necessity. As companies navigate claims cases, this information can settle cases both quickly and accurately.
Finally, IoT can help to reduce insurance costs by minimising accidents altogether. Insurance rates can also be lowered year over year if companies file fewer claims. Telematics can help fleet managers obtain this by improving overall driver behaviour and keeping track of positive results.
IoT devices can track risky events during a trip like hard braking, speeding, and sharp turns. This way, managers can pinpoint exactly where risk is increasing. For example, if speeding is identified as a shared common behaviour, it can be addressed directly with IoT solutions.
IoT offers several major benefits for both fleets and insurers. It plays a pivotal role in analysing risk insurance and can help fleets both achieve and keep lower premiums.
In-vehicle video monitoring and other video recordings are the best way for insurance companies to evaluate accidents and other unexpected events. Having access to this with fleet telematics means that companies are prepared with sufficient, first-hand information at all times.
KORE Fleet provides IoT solutions that help fleets improve vehicle safety and reduce risks. The information provided by IoT monitoring can assist fleet managers in securing the best possible fleet insurance policy, for both price and value.
IoT solutions for fleet are bringing higher safety standards and more cost savings to fleet management with AI-enabled in-vehicle video. Download the whitepaper, “Artificial Intelligence Driving Better Safety, Higher Cost-Savings for Fleet Management” to learn more.
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