Is Telematics the new Credit Score for the Motor Insurance Industry?

For many years, telematics was the preserve of Formula One and other top flight racing teams. In recent years the technology has become more accessible and is now starting to appear in fleets of commercial vehicles. In the US and UK it has hit the headlines as insurance companies are starting to offer drivers cheaper insurance if they agree to have a ‘black box’ fitted that tracks the vehicle and reports back to the insurance company on miles driven etc.

In both cases the ‘black box’ has been viewed with suspicion by many drivers as ‘big brother’ and ‘spying’.

However, as Vincent Rush of Cincinnati, Ohio based Lynx Telematics pointed out at a recent national symposium on telematics in the insurance industry, “We do not face a privacy issue but rather a privacy perception. The same individuals that may express concern over a “big brother” or “black box” technology, are generally the same individuals that think nothing of participating in customer loyalty programs or posting their every move and location on Facebook.”

On the other hand, telematics does hold the key to several different issues facing the motor insurance industry at the moment.

On the consumer side, with EU legislation banning premiums based on gender, and moves underway to change the way that young and learner drivers become qualified – for instance a ban on fast-track courses, and the requirement for learner drivers to be under training for at least a year – the insurers need to find new ways to calculate premiums.

By encouraging customers to install telematics systems, not only can the insurer charge on a pay-as-you-drive basis, they can also score drivers on how safely they drive. Telematics systems can report on much more than simply tracking where and when the vehicle is driven. They can, for example, log when the driver speeds, detect harsh braking and fast cornering, whether a seat belt is worn, and generally identify aggressive driving style. This type of reporting could help insurers to introduce more cost-effective policies for young or less experienced drivers.

According to Rush, “As the CEO of a billion dollar insurance company remarked to me, “Telematics is becoming to the insurance industry, what credit score was five years ago.”

On the commercial side, as organizations have increased duty of care for employees and several test cases for corporate manslaughter have been won, so telematics again could help.

Driving is one of the most high risk activities for employees, and in any organization that has vehicles within its business, whether they are delivery trucks or staff cars, insurance claims, compensation claims and maintenance are a significant cost. Simply by installing a telematics solution, the company can start to analyze when and where its vehicles are used, and how they are driven. This in itself will encourage employees to ensure that they adhere to company policy when using company vehicles. The organization can start to look at ways to improve asset utilization, fuel consumption, delivery schedules with the aim of providing better customer service, and tackle environment issues. All these activities have been well proven to help organizations save costs and improve efficient operations.

On top of all these benefits, insurance premiums could also be reduced. In the US the commercial insurance model is perhaps more developed than in the UK, in that they focus more on how a vehicle is driven, as well as by mileage. Indeed, insurers like Liberty Mutual are offering a 15% reduction on premiums for fleets where a telematics solution is installed, because they are seen as a better risk. Furthermore, they estimate that organizations can expect to save up to 40% on reduced claims and better maintenance of the fleet, due to the telematics solution.

The potential benefits of fleet telematics have been fairly well documented. Where organizations can really make substantial gains with telematics is by ensuring that the solution is fully integrated and sits on a platform that has the power to analyze vast amounts of location intelligence data to provide operational meaning. Such a platform would be hardware agnostic, meaning it could take data from any type of device installed in a vehicle. Hosted in the cloud on a Software-as-a-Service basis, the individual organization does not need to find the computing power in-house with all the associated overheads and can also access industry-wide data enabling them to compare their own performance with the industry benchmarks.

Most devices are currently installed after market, but looking forward, devices will be installed during manufacture on an OEM basis, and then there is the trend to Bring Your Own Device that also must be addressed. By taking the location intelligence platform approach organizations are able to squeeze every last drop of usable information from their telematics solutions and apply it to making the business more efficient, and investment in hardware is protected.

“We offer companies a complete plug and play solution that snaps into the fleet vehicle OBD 2 port in about 3 seconds” said Rush of Lynx Telematics. Within a few minutes or a couple of hours, depending on the size of a fleet, we equip the entire organization with a full-scale and functioning telematic solution. The next thing we do is to help the company implement policies and guidelines that focus on safety and operational efficiency and then begin watching and reporting our findings to the responsible parties within the organization.” Rush concluded by saying, “We, without exception have immediately changed the culture, for the positive, within every company we work with, from 12 units to 1500.”

For the insurance industry the case is also compelling. As well as being able to handle data from any telematics device that customers may wish to use, such a platform approach enables insurers to provide different schemes targeted at different market segments. For example, a young drivers’ scheme would measure different criteria to an older persons’ scheme, and it would have a different user interface, but the underlying mechanism for administering the scheme would be the same. This would give Insurers the ability to provide many different policies to meet different customer requirements.

As with any enterprise system, connecting different silos of information is the key to getting a birds-eye view of the organization on which to base strategic and operational decisions. By combining telematics and vehicle insurance, using a location intelligence platform to bring together all the various data points, and analyzing the resulting information, both the end-user/customer and the insurance industry can benefit from huge cost savings and a better product that more closely meets customers’ needs.

For more information or an analysis on how Lynx Telematics can help your company fleet reduce operating expenses, improve safety compliance and productivity while reducing risk liability, contact Vincent Rush at (513) 965-6318 or vrush@lynxtelematics.com

Lynx Telematics Signs Major Contract

Lynx Telematics, in Cincinnati, Ohio recently has signed a deal to partner and provide services to an industrial company that employs a fleet of more than 700 trucks and is the number 3 company in their industry.

It was learned through conversations after the decision had been made to work exclusively with Lynx Telematics, that this was the 4th test pilot that the company had been through over the past 3 years.

The reasons sited for making their decision were the complexity and robustness of the solutions we provided as well as the customer service and attention to detail that we demonstrated while servicing the test pilot program.

Vice President of Business Development, Vincent Rush, who handled the account from inception to delivery, explains the process and what led to the acquisition;

We began by picking a total of 16 large box trucks in two different locations.

Location A had 9 trucks on pilot while location B had 7.

Before we began stage one, we crafted a team “Roll Out” letter to the employees explaining the purpose installing this technology.

We called the program “The Safe Driving and Operational Efficiency Program”. One of the problems with many telematics projects, is failure to properly implement the program. That not only takes into consideration the explanation of why, but when, how and the name of the project.

The main objectives of the program were, safety compliance, reduction in fuel consumption, lowering insurance costs and allowing drivers to earn more through improved route efficiency.

The telematics landscape is littered with programs gone wrong, due to an improper roll out with unclear expectations.

When dealing with employees, it is very important to make sure team members see the project as a good thing for the company and not a “Covert Spying Project”.

This has always been one of our specialties and what differentiates us from many of our competitors.

There is a big difference in building a successful and sustainable telematics company and simply selling telematics devices.

Phase 1 of our program consisted of setting up our “plug and play” system in the trucks and then monitoring and collecting data for the Operations Manager for a period of 2 weeks.

During this time period we focused on idling time and discovered that each truck would idle an average of 8:30 per stop or an average of 7 hours per week, per truck.

It was during this phase that we were able to show, that by getting control of the idling time, we could reduce the company’s annual fuel expense of approximately $9 Million dollars by a conservative $720,840, using just one element of savings.

In phase two we split the locations and the fleet into two separate groups.

One with audible alerts for idling over 3 minutes and the other location, with only 6 trucks, without audible alerts.

The results were staggering!!!!

Location 1 accumulated a total of 280.5 hours with 9 trucks for an average of 1:52 per stop, while Location 2 with 3 fewer trucks, totaled 592 hours for an average of 6:12 per stop.

We were able to show our client an estimated annual savings in fuel expense, based on idling alone, of $902,415 or roughly 10% of their annual fuel budget.

We didn’t stop there.

The next phase of our test pilot was a meeting with their insurance company.

Not only did we get a verbal estimate of $75,000 dollars in annual savings, we received an endorsement from the company as well.

With an additional estimated savings of $129,600 in maintenance expenses we were able to show our client a projected annual savings of $1.1 million or $3.3 over the next 3 years.

Sure, these numbers are great and alone they should be enough to help any company pull the trigger on making the investment into telematics.

We also added the ability to monitor texting and driving through our partnership with ZoomSafer. In fact, 3 days before our final meeting, one of the company drivers was ticketed for texting while driving

However, for a company that has been down the road with 3 other test pilots, all lasting 90-120 days, the real thing that sealed the deal, after only 52 days, was our level of customer service and attention to detail for the client.

“Lynx Telematics did not simply install a bunch of units and accumulate data for us”, commented the company Fleet Operations Manager. “They actually took personal responsibility and helped us manage and understand what the data was telling us.”

“Lynx also monitored our fleets ECM data and alerted us to possible mechanical issues as they were happening. That alone saved us thousands in productivity and lost product.”

“When I wanted reports or samples of data, my Account Manager, Vincent Rush, didn’t just email it to me, he hand delivered it and explained how the data was presented. They were the most thorough company we had tested.”

“What has really impressed us to this point is that now that we are partnered with Lynx, we are still getting help and attention, like we did in the testing phase. Very impressive level of service from a telematics company”

For more information or an analysis on how Lynx Telematics can help your company fleet reduce operating expenses, improve safety compliance and productivity while reducing risk liability, contact Vincent Rush at (513) 965-6318 or vrush@lynxtelematics.com

Telematics and Fleet Insurance

Telematics and Fleet Insurance by Steve Banker for Logistics View Point
July 30th, 2012

A few years ago I did some research on telematics. At the time, an insurance underwriter in the UK was exploring the idea of using telematics data to price automotive and fleet insurance. Since then, underwriters have started using GPS/telematics to price automotive insurance. Progressive Insurance has a program called Snapshot where it mails a telematics device to a customer who then installs it in his car and Progressive tracks the data for 30 days. If the data from the device shows the customer is a safe driver, the driver is eligible for discounts of up to 30 percent.

A few weeks ago, one of my colleagues handed me a brochure he had received in the mail for a trade show called Insurance Telematics USA 2012. One of the keynote speakers was James Noble, the Line of Business Director for Motor Fleets at the Zurich Services Corporation. Jim’s job is to provide fleet operators with products and services aimed at identifying and reducing losses.

Insurance coverage for a fleet is based on the overall risk, including drivers, equipment, and company practices. In order to obtain a good risk profile, the data from telematics needs to be combined with other data, including CSA data and motor vehicle records that document the behavior of individual drivers (speeding tickets, violations for not wearing seat belts, etc.), past crashes at both the fleet level and the individual level, and even driver observation data. So, for example, if the trucks have writing on the back that says “How is my Driving?” and provides a 1-800 number for people to call in, this data can be used as well.

But telematics is an exciting new source of risk data. Historically, when insurance companies tried to predict which drivers were dangerous, they used lagging indicators – speeding tickets, a crash occurred. Telematics data is more immediate; you can monitor how drivers are actually behaving. And here again, more data is better. A telematics device that can provide data on hard braking, hard cornering, hard acceleration is better than a device that only provides data on speeding. Even idling data might be useful one day; it might show if a truck is in a high theft area and how long it remained in that area.

But the single most important thing for fleet operators to remember is that improving their risk profile depends far less on the possession of telematics devices and far more on how the data from these devices is used to change driver behavior. Is the data actively monitored? Are individual drivers coached if their driving is not acceptable? Are drivers who refuse to change bad driving behavior fired? These are the things that matter.

Jim also stresses that using telematics data for insurance purposes is still in its infancy. “We’ve only scratched the surface regarding how telematics information can be used to predict behavior.”

Re-posted by Vincent Rush of Lynx Telematics

For more information, contact Vincent Rush of Lynx Telematics at (513) 965-6318

For more information on how Lynx Telematics, an OEM located in Cincinnati, Ohio can help your fleet become more operationally efficient or custom design a solution to meet your fleet management needs, contact Vincent Rush at (866) 314-0461

Lynx Telematics is an OEM that controls design, engineering, firmware, software development, IT support and manufacturing processes of our product, allowing us to produce the highest quality product in our industry, while offering our customers competitive pricing.

As your partner, we provide ongoing training and support to insure that the product is properly sold to the end user, maximizing the re-sellers profitability.

As one of the pioneers in telematics technologies, Lynx Telematics provides our clients with powerful end-to-end vehicle telematics tools. Our technology offers a real solution that delivers safety, saves money and provides an unprecedented level of peace of mind to our customers.

Our product, LynxSafe, is the newest and most advanced in-vehicle communication system currently on the market. It combines GPS/satellite and GSM cellular technology to provide users and family members with immediate access to real-time information delivered directly via any internet enabled device including I Phone and Android smart phones.