Telematics: Growing Up In Public

Chris McMahon Insurance Experts' Forum, September 7, 2012


The technology behind telematics and usage-based insurance is now mature enough that insurers can get a program up and running with relative ease. Telematics services providers, of which there are many, can manage virtually every aspect of a telematics program, from sourcing the hardware, managing connectivity, gathering and analyzing the data and creating an insurance score upon which to base the costs. That’s to be expected, and that was the overarching message from the Telematics USA show in Chicago this week.

The real value of a show like this goes beyond the overt marketing messages and lays in the first-hand validation of these ideas from insurance regulators, car makers, vendors and the insurers themselves.  Telematics is no longer some abstract technological possibility, but the eventual and natural result of multiple technological, economic and societal trends, including value shopping, perpetual connectivity, big data, consumer-loyalty programs, gamification, and more abstract ideas, like The Forever Health Monitor, which in short is about measuring everything, from individual performances to what one consumers and produces.

One of the more compelling and interesting ideas that supports the eventuality of telematics-based auto insurance came from Robin Harbage, director at Towers Watson, who spoke about the evolution of the telematics value proposition.

So far, insurers have been touting telematics as way for consumers to score discounts on auto insurance; but if you combine lower premiums and large upfront costs associated with planning, creating, testing and launching a telematics program, it’s no wonder that many insurers are taking a “wait and see attitude,” which has slowed adoption rates and delayed the achievement of a critical mass of insurers offering programs and consumers buying them.

In his presentation, Harbage described the evolution of telematics’ value:

• Marketing discounts, which appeal to self-selecting consumers, those who consider themselves to be safe drivers, or low-mileage and therefore low-risk drivers, and value shoppers. High visibility examples include Progressive’s Snapshot and State Farm’s In-Drive Co-Pilot.

• Marketing value-added services, which are designed to segment and appeal to higher value customers, (as exemplified by State Farm’s In-Drive Connect, the mid-tier offering which offers a range of reminders, diagnostics, driving tips and other apps).

• Marketing added security, (exemplified by and In-Drive Guardian, the “all-inclusive” offering that adds on incident alerts, emergency calls and roadside assistance).

• Personal goal achievement, which would be targeted at the more than 60 percent of drivers who don’t select basic usage-based insurance.

Telematics, in addition to offering a way to offer differentiated products in a crowded and
commoditized space, Harbage said, can significantly contribute to claims reduction and enhanced risk segmentation. The trick is to find the right tools to support your company’s definition of success, whether it’s a simple usage-based insurance product or a more expansive, and expensive, offering, and derive the data you need, not just the data you’re given.

He referred to the “intense data” coming out of telematics programs, which has real value for rating risk on a per-policy basis and as a segmentation tool. The caveat, however is that it’s easy to overspend and that the devices are just tools, not solutions.

Chris McMahon is a senior editor for Insurance Networking News.

Readers are encouraged to respond to Chris by using the “Add Your Comments” box below. Healso can be reached at chris.mcmahon@sourcemedia.com.

Know Your Money, Sees Huge Increase in Telematics Car Insurance Traffic

Leading financial comparison website witnesses sustained 70% increase in month-on-month searches – Research finds that number of telematics car insurance companies in the market also growing significantly, and more than 210,000 policies have been sold LONDON, UNITED KINGDOM, Sep 04, 2012 Know Your Money – a leading financial comparison and advice website – has registered a 70% month-on-month increase in traffic for telematics car insurance policies. With telematics car insurance – sometimes known as ‘black box’ insurance – a device is installed into a customer’s car which monitors the way that they drive. Those that drive safely are rewarded with cheaper policies. Know Your Money’s increases in search numbers for the product have been sustained at steady rate of growth between March and August 2012, with 70% representing the average monthly increase during that period. In response, Know Your Money has polled the insurance companies that offer telematics car insurance in the UK and can reveal that more than 210,000 policies have been sold to date. Though the first UK telematics products were tested in the market as early as 2006, more than half of the total policies have been taken out over the last year, since mid-2011. The number of companies that offer the product has also grown considerably. Though the providers are generally specialist companies, the market is now a third bigger than at the beginning of this year and more of the traditional insurers are beginning to offer telematics. In addition, the growth is expected to continue to rise dramatically over the next five years. So much so, that the product could account for more than half of all car insurance policies by 2017, according to some companies’ estimates. Supporters of telematics car insurance say that the product answers two problems. As well as lower premiums, especially for young people, it is predicted that the development will lead to much safer roads, since drivers will be more careful in order to get the cheapest prices. With this in mind, Know Your Money joint founder Jason Tassie said he was pleased to witness the upwards trends. He commented: “The growth in interest for telematics insurance products has been explosive so far this year. It’s something that we’re delighted to see here at Know Your Money. “Rising car insurance policies have priced many young people out of the market in recent years and it is unfair to punish the majority because of the actions of the few. Telematics car insurance policies have been proven to reduce car insurance costs significantly for young people and the early evidence suggests that road safety will improve too. We therefore see telematics as very much a product that is in line with our values as a consumer champion in the finance market.” Rassam Fakour-Zaker, editor at Know Your Money, added: “Black box insurance products have been developing over the last few years but up until now take up has been slow. However, as well as the increase in traffic to our website we’ve had lots of requests from our audience for the latest products and tips on how to buy telematics insurance. It looks like 2012 will go down in history as the year that black box cover takes its place as a mainstream insurance product.” How it works To get cheaper rates on their car insurance, telematics policy holders must drive to a number of standards. Their average speed, how much they drive and where, their breaking habits and how fast they go round corners will all be transmitted back to the insurer by the device. The company will then analyze the data to decide how much the customer pays. To help customers improve their driving, telematics insurers will also present each customer with an analysis of their own performance. This information is made available via the Internet or is sent via text messages, allowing the customer to make interventions where necessary. Systematic price reviews are then carried out at monthly or quarterly intervals for each customer. The policy also comes with the added bonus that if the car is stolen the telematics device will be able to pinpoint where it is. A round-up of other statistics on telematics car insurance: 1500% – the growth in the telematics market since 2009 (British Insurance Brokers’ Association) 57% – The number of drivers that expect to switch to telematics car insurance by 2017 (research commissioned by GoCompare) 20% – The amount that road accidents could be reduced by through telematics insurance (Norwich Union – now Aviva) 92% – The number of drivers who back prices to be decided by the way that they drive (research commissioned by GoCompare) 26% – The number of drivers that are involved in a collision within two years of passing their test (AA/Populus survey) As well as covering a wide range of banking and insurance products within its comparison tables, Know Your Money serves its audience with a portfolio of straight talking guides, industry updates and offers for high street shops and restaurants. The Know Your Money Telematics Car Insurance Guide is available by clicking here: http://www.knowyourmoney.co.uk/telemetric-car-insurance-guide/ . The Know Your Money review for the car insurance comparison site, Go Compare is available here: http://www.knowyourmoney.co.uk/go-compare/ . About us: At Know Your Money our remit is to help our users make informed decisions when purchasing or applying for financial products. Through our product comparison tables and straight-talking guides, we help people to find suitable and affordable products that will stand them in good stead for the unknown financial demands of the future. The range of products we cover accounts for all major banking, insurance and utilities products. Since launching in 2005, Know Your Money has grown to over 300,000 unique visitors every month, with more than 50,000 opted-in recipients of our weekly e-newsletter. Re-posted by Vincent Rush of VP of Business Development for Lynx Telematics. Lynx Telematics is a Cincinnati based OEM of Telematic technology and provider of the Geo Tab product along with patented “Anti Texting and Web Browsing” technology for fleet based companies. Lynx Telematics is also the innovator and pioneer of the Lynx Safe Teen Driving Monitor that grants parents real-time data on their teenagers driving habits while blocking and disabling texting and driving. For more information, contact Vincent Rush at (513) 965-6318 or by email at vrush@lynxtelematics.com

Insurance telematics could "flip the underwriting model on its head"!

Your insurance provider may soon be asking for access to your telematics data. What’s in it for you?
By: James Menzies of “Truck News” 2012-08-20 



Insurance brokers and providers may soon be asking fleets for access to their telematics data, in an effort to provide more accurate insurance pricing and to help fleets better utilize that data.
It’s a bold new approach that’s already happening in other parts of the world, including Europe and Australia. Here in Canada, Industrial Alliance made waves earlier this year, when it launched a program in Quebec that allowed young drivers to install data recorders in their car and then pay premiums based on their specific driving habits.

Truck News has learned that the concept – sometimes referred to as Pay How You Drive or Pay As You Drive – will soon be rolled out to the Canadian trucking industry. Insurers realize telematics provides the basis for a more accurate means of underwriting risk. Today, brokers and insurers collect the same old data (such as CVOR and CSA scores as well as a five-year claims history) to determine premiums. But insurers have come to realize that basing premiums on past claims isn’t the best way to do things. For starters, it doesn’t address those fleets that employ risky drivers but have avoided accidents through sheer luck.

Using telematics, insurance providers will be able to identify risky driving behavior that will most likely result in accident over time and can push a fleet to intervene with offending drivers and address unsafe behavior before that accident occurs. Insurers who tap into their customers’ telematics data will be looking for information on speed, hard braking, abrupt lane changes and rapid acceleration, among other risky behaviors.

“From an underwriting standpoint, it flips the underwriting model on its head,” Scott Cober, vice-president, national leader with Marsh Canada’s trucking practice told Truck News in an interview. “It becomes more of a predictive underwriting model.”

At the very least, using telematics to determine insurance pricing will allow insurers to charge premiums that better reflect a fleet’s likelihood of being involved in a crash. But ideally, insurance providers will use that valuable information to alert a fleet to worrisome trends and encourage interventions before such accidents even occur.

“Fleet insurance underwriters currently review driver abstracts for tickets and look at accidents to assess a high-risk driver in the fleet,” Cober explained. “A fleet’s risky drivers may not be the ones with tickets or accidents, but those who are trending towards bad behaviors on the road – making unsafe lane changes, cornering at high speeds, etc. These drivers are potentially your future accidents and claims. The driver behavior data (collected through telematics) will help safety managers prevent accidents before they happen.”

In most cases, insurers will be able to tap into data collected by existing and widely used telematics systems. Other programs may encourage fleets to invest in specific real-time monitoring and coaching systems such as those that alert drivers to risky behaviors in the cab as they occur, while also sending reports to the fleet manager. Some “Live View” systems feature an in-cab camera that captures video of what transpired in the moments immediately before and after a risky maneuver occurred. In-cab camera technology provides insurers with a useful tool when trying to reconstruct an accident or determine who was at fault.

“We’re using that not only as a behavioral tool, but as a claims tool,” Cober said. “For the first time, we’re gaining insight into what happened and we’re seeing drivers become exonerated from the claim. I think video is going to have a fundamental change on the whole claims process. A fleet can say ‘My driver wasn’t at fault, he was cut off by this driver,’ and on the reverse side, he may know the driver was at fault right away and from the insurance standpoint we can set the reserve up and get ready to pay the claim.”

Some fleets, naturally, will be reluctant to share their telematics data with their insurer. But insurance companies insist fleets have plenty to gain by doing so. This applies both to safe fleets (because they’ll pay premiums that better reflect the skills of their driving force) as well as unsafe fleets (because their insurer will work with them to identify unsafe practices and provide corrective training measures proactively).

“The safest fleets are already being very proactive and are more advanced than the other fleets,” Cober said. “But if you have claims, there’s an issue with your drivers on the road. Fleets that want to improve and become more efficient will turn to technology. To be competitive in this marketplace going forward, those fleets are going to have to do this.”

It’s likely that such programs will be voluntarily, at least initially. But don’t rule out the possibility of an insurance provider requiring the use of telematics for fleets with frequent claims.

“I can see possibly in the future, if a fleet cannot control its claims, that an insurer will say ‘We will insure you, but you need to put these measures in’,” Cober predicted. “I can see insurers using that as an underwriting tool.”

Zurich’s Magi says fleets she has spoken to about sharing their telematics data have so far been receptive, though she is quick to point out Zurich insures mostly large fleets with high US exposure, and the majority of those carriers already employ and understand the benefits of collecting and analyzing telematics data.

“I have never had a customer say ‘I’m not giving you the data you need’,” Magi said. “If anything, they’re asking ‘How can you help me analyze this information so I can utilize it better?’ What telematics does is it gives you a granular view of what’s happening with each particular driver and vehicle on a daily basis. You’re going to see a picture there. Insurers are going to see there is something there and it’s to the customer’s benefit to be able to speak with an educated risk services representative who’s going to be able to dig deeper and find out where the big issues are.”

Eventually, insurance providers may look to provide insight into the operational side of a fleet’s business, in ways that extend beyond managing driver behavior. As an example, Magi foresees an opportunity to assist with route planning. Insurers may look at a carrier’s lanes and then suggest a route that avoids litigious states or areas where there are weather-related risks at certain times of the year. Carriers would then be faced with the decision of taking the most direct route and possibly paying a higher premium, or a safer route that will provide insurance savings. All this while meeting the demands of the shipper, which in many cases will be looking for the most expedient delivery of its goods.

“Ideally in the future the technology will get to a point where you look at ‘What is the safest route to get to a point?’ and there’s a charge for that,” Magi said. “If you (as an insurance company) have a true partnership with a customer, you’re going to sit down together and talk about this from a pure business perspective. What is the cost-benefit analysis for your operation to take this particular route versus the potential loss if you take a different route? It factors into their deductible. There are going to be customers that are going to be absolutely operations-minded and some customers will look at route utilization with a holistic approach as to how it’s going to affect their insurance.”

Magi noted insurance, in many cases, is a carrier’s third largest expense and so she expects fleets will be willing to alter their routes to lower costs.

Proponents of insurance telematics insist the data that’s collected and shared will always belong to the carrier.

“This isn’t about Zurich going in and mining information from the customers,” Magi stressed. “The customers can share this information with us if they choose to. Ideally, the purpose of what we’re trying to do is to show them how to better utilize that particular data.”

There are privacy issues, as well, to consider. Cober noted Canada’s stringent privacy laws mean insurers won’t be drilling down to assess drivers on an individual basis, but will be looking at a company’s fleet-wide performance.

“Because of the privacy laws, we are saying to trucking companies “You supply the data to your insurer in a condensed manner without giving driver names, without giving vehicle numbers, just give a holistic view of how the fleet is doing,’ and we’ll take that monthly or quarterly and what we want to see is continuous improvement,” he explained. “Canada has some pretty tough privacy rules.”

While fleet managers may see the benefit in participating in a telematics-based Pay How You Drive-type system, drivers themselves may be more resistant. Cober insisted the systems endorsed by insurers will be sophisticated enough to account for false alerts caused by other motorists.

“We know things happen on the road and it’s going to be quite common to have errors because of third-parties cutting in front (of the truck),” Cober said. He suggested fleets employing driver behavior monitoring use it to reward the best drivers rather than installing the systems for strictly punitive or corrective reasons.

“If it’s seen as a penalty or Big Brother, I think the safety culture of the company won’t flourish,” he noted. “It needs to be promoted as positive reinforcement for the drivers and to reward drivers for good behavior.”

Regardless of how drivers and fleet owners feel about sharing telematics data with their insurer, it seems inevitable. Canada is late to the party, but globally the auto insurance industry is already moving in this direction.

An Oliver Wyman Financial Services report, titled Uneven Road Ahead: Telematics Poised to Reshape Auto Industry, concluded: “As technology costs fall, privacy concerns recede and regulations become more supportive, telematics is fast moving into the mainstream and will fundamentally disrupt the auto insurance business. The threat to late adopters is real: better drivers will enroll in telematics programs, leaving behind a shrinking pool of poorer risks to the traditional insurers.”

The same could be said for trucking companies.

Cober noted that by 2017, it’s expected that new vehicles manufactured in North America will come equipped with some form of telematics hardware already installed, “making the insurance telematics process easier for consumers who may be confused on what actual hardware is required in their vehicle.”

Another objection likely to be faced by insurers is the cost of implementing the necessary technology, particularly for smaller fleets that don’t already employ some form of telematics. But Cober said the cost of the technology is rapidly dropping and the potential savings extend beyond lower insurance costs, delivering a quick payback.

“Traditionally, only the big fleets could afford the technology. But because the technology costs have been dropping, we’re beginning to see the middle market fleets – the fleets with 10-50 power units – can now afford this technology and can see the return on investment,” he said.

Because telematics can improve driver behavior and address bad habits like rapid acceleration and hard braking as well as speeding, Cober said many fleets are realizing fuel savings of 5-10% when employing a telematics system that monitors driver behavior.

“We’re seeing fleets that in the first three to six months, are seeing their investment returned,” Cober said.

And for fleets that proactively monitor and address poor driving habits, the insurance savings will also be tangible, he noted. While premium reductions are generally a reward for lower claims costs achieved over a period of time, Cober said it’s possible insurers will provide some up-front savings for fleets that enroll in a telematics program.

And when fleets discover the additional savings that are achievable by analyzing their telematics data with some help from their insurance provider, Magi said the idea will become an easier sell.
“At the end of the day, really, they’re truckers,” she said. “They want to be able to move freight and run their business. They’re not actuaries that deal with statistics. If we can provide them with the tools and solutions that make it easier for them to very quickly analyze (data) and see a problem, we’ve done them a huge benefit but we’ve also done our bottom line a benefit as well.”

- The above feature article appears in the September issues of Truck News and Truck West

Re-posted by Vincent Rush of VP of Business Development for Lynx Telematics.

Lynx Telematics is a Cincinnati based OEM of Telematic technology and provider of the Geo Tab product along with patented “Anti Texting and Web Browsing” technology for fleet based companies.

Lynx Telematics is also the innovator and pioneer of the Lynx Safe Teen Driving Monitor that grants parents real-time data on their teenagers driving habits while blocking and disabling texting and driving.

For more information, contact Vincent Rush at (513) 965-6318 or by email at vrush@lynxtelematics.com

Lynx Telematics Signs Another 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

Insurer: Letting us spy on your driving cuts premiums!

By Chris Woodyard, USA TODAY 

If you thought devices that voluntarily spy on your driving might be a passing fad, think again: One big insurer says it’s finding that such systems are more than two-and-a-half times as good as traditional methods at predicting accidents.

Progressive Insurance just released a finding based on the program it introduced a year go that finds “loss costs” for the drivers with the highest-risk driving behaviors are about two and a half times higher than those for drivers with the lowest-risk behavior.

Though it has tried “usage-based” insurance programs for years, Progressive introduced a system called Snapshot last year in which drivers are sent a small device that plugs into their cars and relays information about their driving habits. The insurer says it measures the time of day the car is driven, distance driven, and how many hard brakes per mile the driver makes. Other insurers, such as State Farm and GMAC, also have similar programs.

As a result, Progressive says it has found that 70% of drivers who have signed up for its Snapshot program pay less for their insurance than they did before the program began:

They are saving an average of $150 a year. It’s offering to let any driver give the program a 30-day tryout, not just its own customers, to see if they will save money in the 42 states in which it is offered. Progressive officials say they want to prove that good drivers are paying unnecessarily high premiums based on the risk they present to insurers.

“For most, the rates they’re paying are higher than the risk they actually present –- and in many cases, much higher,” says Progressive CEO Glenn Renwick in a statement.
Re-posted by Vincent Rush of Lynx Telematics

Insurance companies want to take the lead in marketing and managing UBI services. It makes sense since they already have familiar brands as well as the customer base. Most important, they are the ones with relationships with state regulators, keeping track of the myriad regulations and requirements of individual states.

A Company in Cincinnati, Lynx Telematics has developed a device called the Lynx Safe Teen Driving Monitor that can not only provide insurance companies with a UBI telematics device, but is the first of its kind to give parents “real-time” parental control and live monitoring of their teens driving habits, while at the same time, preventing texting and driving.

Vincent Rush, President of Business Development for Lynx Telematics, commented in Nashville recently that, “While we realize that quality and integrity of data is paramount in the UBI market, we also saw a gigantic void. Many insurance companies have the programs, however parents really have no control over their children’s driving habits, until the company reports back to them. We wanted to bring, not only savings to a parent, but peace of mind as well. As a parent, I don’t want to receive a report about my kids poor driving habits, 3 days after their funeral. I want to know the instant my teen is getting careless. I’ve already had one personal experience and I don’t care to have another”

With the LynxSafe telematic device, Mom & Dad are now, figuratively in the front passenger seat with their teen driver from the moment they pull out of the driveway”. Rush went on to say that, “Our single user interface model allows Mom and Dad to set parameters as well as receiving immediate text alert and emails when their son or daughter is speeding, driving radically, or in any type of accident as well as experiencing any mechanical break down.”
For more information on the LynxSafe Device and Lynx Telematics, contact Vincent Rush at (513) 965-6318 or vrush@lynxtelematics.com

What Are Your Reason for Using Telematics?

What Are Your Reasons For Using Telematics?

A recent Automotive Fleet article entitled “Fleet’s Brave New World,” states that “technology, in the form of telematics solutions, is the way many fleets are looking to manage their operations more efficiently. In fact, telematics/GPS is the most widely used management technology.”  That being said, what do you think are the top reasons for using telematics among businesses?

While controlling fuel expenses may be at the forefront of your mind, according to a survey mentioned in the article, improving driver behavior is a bigger priority, with fuel savings following close behind. Additional reasons include: route productivity, accident reduction and sustainability initiatives. While these are all important reasons for using telematics, what’s really motivating businesses to adopt a telematics solution?

According to the article, the need for increased fleet efficiency is the primary reason for implementing a telematics solution and according to the author “telematics are playing a key role in improving fleet processes.” How?

With a GPS fleet tracking solution, businesses can automate their processes and monitor driver behavior, helping reduce overhead costs like labor, insurance and maintenance. Reporting features enable businesses to track hours worked and schedule routine maintenance for their vehicles. With improving driver behavior as the number one reason for using telematics, Speed Alerts and Speed Reports can help fleet managers determine their aggressive drivers so that they can take corrective action.

And for those who want to control their fleet’s fuel expenditure, with a GPSfleet management solution, businesses can monitor their fleets’ fuel usage and eliminate wasteful fuel practices like idling through Idle Reports. And because less idling means less harmful emissions, fleet managers will be able to scratch going green off their list.

So, what are your reasons for using telematics?

 Re-posted by Vincent Rush of Lynx Telematics in Cincinnati Ohio. Lynx Telematics is the developer of the Lynxsafe Teen Driving Monitor that allows parents of teen drivers to eliminate texting and driving by their teen drivers while at the same time, ensuring safe driving habits by monitoring speed, seat belt usage, driving habits and mechanical failures.

For more information, contact Vincent Rush at vrush@lynxtelematics.com or (513) 965-6318

Telematics and Customized UBI Business Models

Susan Kuchinskas looks at open niches within the lucrative UBI space

According to Towers Watson research, insurers representing 60 percent of the personal auto insurance market have implemented a version of a UBI program in at least one state. Many more are running or preparing to run internal UBI pilots. And Ptolemus Group forecasts more than 100 million vehicles will be insured with telematics globally by 2020, generating premiums of approximately $60 billion.

The advantages for consumers and insurers are clear: More accurate ratings of risk factors will lead to lower claims and lower premiums for safe drivers. Technical barriers to these offerings are minimal, but the industry will need to appease consumers and regulators.

Pay-as-you-drive solutions

Many US insurers offer pay-as-you-drive (PAYD), also called usage-based insurance (UBI). This option is available in the majority of states. These plans use a plug-in device to measure actual miles driven: The less you drive, the less you pay for insurance.

Progressive’s PAYD program, SnapShot, provides a free device that drivers plug into their cars for six months; after that, they send it back and the rate based on miles driven is finalized. State Farm’s Drive Safe & Save program uses OnStar to validate mileage, and it just inked a similar deal to let consumers transmit mileage info via Ford Sync.

Because insurance rates have long used driver-reported mileage as one rating factor for evaluating risk and setting rates, PAYD is a relatively easy product to get approved by state regulators. Each state in the US regulates auto insurance independently. (For more on US state regulation, see Insurance telematics: US state regulators tackle UBI [2].) It also makes sense to consumers, because they’re used to this metric. And it doesn’t raise privacy concerns.

Pay-how-you-drive schemes

Things get more interesting, and potentially more lucrative, when insurers use additional ratings factors that allow them to better calculate an individual driver’s risk. Telematics devices incorporating accelerometers and other sensors can provide accurate information about driving style that could impact a consumer’s risk profile. So-called pay-how-you-drive (PHYD) schemes use a variety of factors, including speed, time of day, braking, acceleration and cornering, to paint a more accurate picture.

State Farm’s PHYD plan is called In-Drive, and it uses a device created by Hughes Telematics. In-Drive has rolled out in Illinois and Utah, with more states in the offing. “Obviously, mileage is a good predictor,” says Dick Luedke, spokesman for State Farm. “The more miles you drive, the more likely it is you’re going to file a claim.”

State Farm did quite a bit of testing to find what other factors would be most useful for rating an individual’s risk by installing the devices in the cars of associates across the nation. The secret sauce, of course, is the algorithm each insurer uses to weigh all these factors. Each firm guards them as trade secrets. Luedke says drily, “I doubt we’d be too specific.”

Simply gathering data from telematics devices is not that difficult. Doug VanDagens, director, Connected Services Solutions at Ford Motor Company, says that, while the agreement with State Farm calls for only transmitting mileage information, Ford already can technically accommodate transmission of any metric needed for PHYD. In fact, Ford’s Crew Chief product for fleets, powered by Telogis, provides information on braking, acceleration, maintenance warnings and more.

“Anything happening in the vehicle, we can communicate outside of it,” VanDagens says. It’s easier and cheaper to do so via Sync, he points out, because Sync uses the driver’s cell phone for connectivity. “We can provide all of that relatively easily, as soon as insurance companies want to set up the programs.”

Insurance companies want to take the lead in marketing and managing UBI services. It makes sense since they already have familiar brands as well as the customer base. Most important, they are the ones with relationships with state regulators, keeping track of the myriad regulations and requirements of individual states.

A Company in Cincinnati, Lynx Telematics has developed a device called the Lynx Safe Teen Driving Monitor that can not only provide insurance companies with a UBI telematics device, but is the first of its kind to give parents “real-time” parental control and live monitoring of their teens driving habits, while at the same time, preventing texting and driving.

Vincent Rush of Lynx Telematics discusses the LynxSafe Teen Driving Monitor

Vincent Rush, President of Business Development for Lynx Telematics, commented in Nashville recently that, “While we realize that quality and integrity of data is paramount in the UBI market, we also saw a gigantic void. Many insurance companies have the programs, however parents really have no control over their children’s driving habits, until the company reports back to them. We wanted to bring, not only savings to a parent, but peace of mind as well. As a parent, I don’t want to receive a report about my kids poor driving habits, 3 days after their funeral. I want to know the instant my teen is getting careless. I’ve already had one personal experience and I don’t care to have another”

With the LynxSafe telematic device, "Mom & Dad are now, figuratively in the front passenger seat with their teen driver from the moment they pull out of the driveway”. Rush went on to say that, “Our single user interface model allows Mom and Dad to set parameters as well as receiving immediate text alert and emails when their son or daughter is speeding, driving radically, or in any type of accident as well as experiencing any mechanical break down.”

The manage-how-you-drive model

As consumers get more comfortable with these products, they may shrug off the Big Brother warnings and embrace the manage-how-you-drive (MHYD) model. With MHYD, drivers get feedback that helps them improve and potentially lower their rates.

American Family Insurance says its Teen Safe Driver Program has helped teens reduce risky driving behaviors by 70 percent. The program includes a free in-car device attached to the review mirror. When incidents like extreme braking, cornering, and accelerating too fast—as well as actual crashes—take place, it saves eight seconds of footage prior to the mishap and the four seconds after it. The information is transmitted wirelessly to American Family’s data center for review by driver coaches.

Parents get a weekly driver report card that measures the teen’s performance against safe driving objectives and peer averages. They can log in to see the report, watch video of incidents, and get tips for safer driving that they can share with the kid.

State Farm’s In-Drive, created by Hughes Telematics and currently offered only in the US states of Utah and Illinois, provides an entrée for State Farm into stronger customer relationships and value-added services competitive with OnStar and motor clubs. It offers one-touch emergency response, roadside assistance, stolen vehicle location assistance, vehicle diagnostic alerts and maintenance reminders, plus parental monitoring tools for location services and speed alerts.

It also includes the MHYD program, Drive Safe & Save. In-Drive will provide driving performance data, and the customer’s savings will be based on mileage, turns, acceleration, braking, speed and time of day vehicle is operated.

New revenue streams

While State Farm will provide discounts on rates of up to 50 percent for the safest, lowest-mileage consumers, In-Drive also represents an opportunity for new, recurring revenue streams. The service offers four subscription levels with additional services like stolen vehicle assistance, emergency calling and alerts for events like speeding, with subscription fees from $7 to $22 per month.

Tim Moroney, insurance regulatory attorney with the law firm of Barger & Wolen LLP, thinks these services can help insurers get off the rate-cutting treadmill. “Personalized automotive insurance is very competitive,” Moroney says. “While cheaper premiums are usually the biggest hook, [by coupling services with telematics] you can offer more things. Insurers are now offering concierge benefits. They can do all things automotive and be very creative.”

Insurers could take it even further by offering classes, content, applications and third-party offers. The strategy could be similar to that used by health maintenance organizations that provide weight-loss and smoking cessation classes to members. (For more on new sources of revenue, see Consumers and UBI: The power of value-added services [3] and Telematics and UBI: How to increase consumer acceptance [4].)

Says Frederic Bruneteau, managing director of Ptolemus Consulting Group, “Thanks to insurance telematics, the insurer can become an insurance service provider. Today, the notion of insurance is, ‘They take your money and then you hear from them if you have a problem.’ With telematics, they have a real-time relationship with any policy holder.”

Susan Kuchinskasis a regular contributor to TU.

Telematics Insurance Simplified

Jared Davidson, Commercial Insurance Agent at Beehive Insurance If you’ve heard of the word, you likely work in the fleet management industry—or maybe you’re a tech junkie(!). What does telematics have to do with insurance you might be asking? Telematics is a relatively new field in technology that combines telecommunications and informatics – the study of information processing. GPS is a form of telematics. A Vehicle early warning system, such as GM’s OnStar, is another. To compare GPS to today’s telematics would be like comparing an analog cell phone from 25 years ago to today’s versatile smart phones. Businesses that operate fleets of vehicles today are under constant pressure to reduce costs and increase efficiency through improved fuel economy, better driver behavior, more effective dispatching and tracking, and overall vehicle management. The FMCSA in conjunction with the USDOT has enacted regulations and guidelines that reflect their push to improve overall road safety through better monitoring of driver behavior and vehicle road worthiness. Today’s cutting edge telematics devices integrate vehicle data obtained from the vehicle’s on-board diagnostics devices, which since 1996 are on all vehicles under 12,000 lbs GVW, with GPS data as well as driver inputs such as braking and acceleration levels to monitor overall vehicle operation. Telematics devices are becoming less proprietary over time so the cost of entry is becoming lower. The newest systems are cloud based and work on all major brand smart phones and tablet devices. Windows and/or Apple based operating systems are used at the dispatching end and Android (and other) operating systems on the driver’s end. Telematics systems can (and should) include real-time dispatching, routes traveled, and locations traveled to. There are applications that factor in traffic and weather data to route the vehicle to the most efficient way to reach its destination. This can result in savings through fewer miles traveled, lost time in traffic, and decreased idle time. Many hand held devices can now be configured to only allow incoming calls from numbers chosen by the employer, with similar restrictions on out-bound communications, reducing distractions to a minimum. Driver logs and post-trip inspections can also be performed with some of the better telematics software, reducing costs related to employees’ time to perform these government mandated duties, with the input automatically uploaded to the company’s server for real-time record keeping. So again, what does this have to do with my insurance? Well, several insurance companies have completed studies indicating that businesses that utilize telematics have fewer claims on their commercial auto policies. Lower claims for a business owner means that their account becomes more attractive to a potential insurer, and are more likely to get their best price on a quote. Some large commercial auto insurance companies are giving discounts for permanently attached telematics devices as well. Additional benefits can include time, money, and attention saved not having to deal with claims. Like deductibles, vehicle rental, repair shop issues, purchasing a replacement vehicle, possible negative publicity, and expenses related to training employees in new vehicle operation. Additionally, drivers have been shown to have fewer moving violations and accidents when they understand their vehicle and driving habits are being monitored. Quick location and recovery of stolen vehicles is much more likely. Even when the vehicle is not in use, the tracking device will ‘ping’ its location every few minutes. Weekend and holiday vehicle use can be monitored and better controlled by the business owner, lowering miles traveled, fuel expense, and unnecessary vehicle wear and tear costs. All of this adds up to a more efficient, well run vehicle fleet – and makes the roads safer for all of us. Jared Davidson Senior Account Executive 801-743-7717 | jadavidson@beehiveinsurance.com

Cox Enterprises Uses Telematics and Fuel-Efficient Vehicles to Cut Costs and Reduce Its Carbon Footprint

Cox Enterprises Uses Telematics and Fuel-Efficient Vehicles to Cut Costs and Reduce Its Carbon Footprint

ATLANTA – Cox Enterprises celebrated the fifth anniversary of Cox Conserves, the company’s national sustainability program, and provided details on its 12,000-vehicle fleet’s specific achievements in its latest corporate sustainability report.

The company said it launched the Cox Conserves program in 2007, and that it is designed to reduce Cox Enterprises’ energy consumption “by embracing renewable forms of energy, conserving natural resources and inspiring eco-friendly behavior.”

Cox Enterprises said it currently employs flex-fuel vehicles and is replacing fleet vehicles with a mix of more fuel-efficient models and hybrids. The company said a number of these vehicles are used by its Cox Communications division.

Currently, 90% of Cox’s executive fleet vehicles each get 27 mpg, 10% of the fleet consists of Partial Zero Emissions Vehicles (PZEV) and LEED-ranked vehicles, and the fleet now has nearly 300 hybrid vehicles. For the company’s network operations vehicles, 90% of them use a new hybrid operating system that allows them to emit zero emissions during aerial operation.

Cox also employs a GPS/telematics system, now installed in a total of 5,000 vehicles in the fleet, which the company said saves more than 1 million gallons of fuel each year. The system also helps Cox reduce its carbon footprint by more than 25 million lbs. of CO2. Other features of the GPS/telematics system include a vehicle diagnostics component, which the company said helps drivers reduce fuel use (by controlling engine idle time) and C02 emissions, and a “GeoManager” module. The GeoManager features mapping and real-time traffic, and allows field tech supervisors and dispatchers to improve operating efficiency and customer service and reduce operating costs. Both features allowed Cox to reduce vehicle idle time by 84%, from 90 minutes per day to 15, during the first year of the system’s use. The company also created a “no-idle” zone at the Atlanta headquarters’ loading dock.

For the executive vehicle program, Cox employees must choose a vehicle that achieves mpg of 27 or better. Cox partners with Georgia’s Clean Air Campaign and the Perimeter Transportation Coalition. Clean Air Campaign recognized Cox with a PACE Large Business Award in 2006 and a PACE Innovator Award for a Green Fleet in 2008, according to the company.

Additional transportation options for employees also help reduce the company’s carbon footprint and costs. The company utilizes a shuttle system that transports employees to a public transit station (including MARTA). Cox also provides a motor pool via a Borrow-A-Hybrid program. Vehicles branded with “Cox Conserves” are available to employees who take alternative forms of transportation. Employees can check out the cars if they need to attend an off-site meeting, for example. The company also provides a guaranteed ride home if an emergency occurs to employees who take public transportation.

Re-posted from Automotive Fleet Magazine, April 26th

For more information, contact Vincent Rush of Lynx Telematics at (866) 314-0461 

 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

LynxTelematics 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.

All of our devices benefit from the innovation of U-Blox technology and a 3D Accelerometer, providing the industry’s most accurate pin point locating technology to within a 3 ft. radius.

Telematics Technology Proves Driver Safety and Fleet Savings Go Hand-in-Hand

Fleet Owners Cut Costs With Driving Habits

SALT LAKE CITY, UT, Apr 12, 2012 (WIRED MARKET ONLINE) – Lynx Telematics Technology Solutions Inc., a global telematics company centered on fleet management and driver safety solutions, is proving a direct correlation exists between driver habits and fleet operational cost savings. With Lynx Telematics Go5 -- the most comprehensive solution designed to improve driver safety, fleet management and compliance -- fleet owners are able to increase fuel efficiency on average by 20 percent, reduce maintenance costs by 20 percent and avoid costly penalties and fines.

"Fleet owners from all over the globe have turned to Lynx for a fleet management solution that will not only save lives, but improve their bottom line as well," said David Holland, Lynx VP. "With data collected from tens-of-thousands of vehicles using our technology for the past several years, we have proven to dramatically improve driving behavior, leading to fewer crashes, better fuel economy and safer, more productive drivers."

AAA reports that accident costs amount to over 164 billion dollars per year. To avoid incurring collision costs, Lynx Telematics offers the only solution that provides real-time in-cab verbal alerts to drivers when speeding, idling, driving aggressively or not wearing a seat belt. By mentoring drivers into developing safer driving habits, fleet managers can expect a reduction in speeding and aggressive driving of more than 86 percent, leading to greater fuel efficiency and significantly lower rate of crashes.

"While working for 34 years at one of the largest mining companies in the world, we achieved a 77 percent reduction in driver incidents in one year after installing telematic technology across our fleets," said Bruce Huber, newly named Vice President of Safety. "By improving driver behavior, we were not only able to protect the lives of our drivers, but save money on fuel and maintenance costs as well."

With Lynx Telematics, fleet managers can also monitor fleet vehicles and identify areas to reduce operational costs. Through satellite and cellular based tracking, managers can monitor trips taken and vehicle MPG, ultimately eliminating unauthorized trips and improving company productivity.

About Lynx Telematics is a Cincinnati based company centered on telematics, fleet solutions and driving safety. Its breakthrough driving safety solutions are designed to safeguard lives, save money and protect the environment. LynxSafe technology dramatically improves driver behavior and has been documented to reduce accidents by more than 80 percent. For more information, please visit http://www.lynxtelematics.com

For further information, contact Vincent Rush at (513) 965-6318 or at vrush@lynxtelematics.com

Telematics: Not Just for Personal Anymore

While the use of telematics-based insurance to date has primarily been seen in monitoring personal-vehicle use, insurers are increasingly relying on the underwriting tool in the commercial-fleet and trucking industries.

“If I’m doing a risk assessment for an insurance company, a lot of underwriters are looking for some kind of refined [global positioning system],” says Beth Lowrey, senior associate for Mercury Associates Inc.—a Washington D.C.-based management consulting firm for large fleets.

Insurance players on the commercial  side are adopting programs to tap into the wealth of knowledge a telematics system can deliver—and initial data looks very promising for loss ratios, sources say.

“We’ve seen very good improvement in frequency and severity,” says Scott Stevens, vice president of captive and specialty programs at The Hartford, which launched its FleetAheadprogram more than two years ago.

Through a partnership with a telematics service provider (all insurers in this space partner with a provider instead of developing its own device, as in the personal auto insurance market), he adds, the Hartford’s loss-control staff can work with clients to improve loss costs and exposures.

Other insurers are in the process of doing the same. “We are there to work with management in order to tune their ability to improve driver performance,” says Chris Hayes, risk-control director of transportation services from Travelers, which early this year began IntelliDrive Fleet Safety Solutions for commercial lines.

Travelers partners with several telematics providers for the actual numbers. “We do not have any data feed,” explains Beth Tirone, Travelers’ senior director for commercial auto product development. “This is strictly providing services from a risk-control perspective.”

Liberty Mutual, too, is finding value in telematics. The carrier unveiled its Onboard Advisorloss-prevention and risk-management services exclusively through Liberty Mutual Agency Corporation regional companies in 2010 to small and medium-sized fleets. The insurer uses statistics from its approved telematics partners to create a score used for pricing at the time of renewal.

Onboard Advisor Program Manager Chris Carver says Liberty Mutual in the past six months has been contacted by several telematics providers wishing to partner up.

“The industry is growing fast,” he says. “It’s a great opportunity for businesses that now starting to grow [after the economic downturn]. Owners can stay in control of their fleet and control costs.”

After all, telematics is not a one-way street of benefits to the insurer. The insured can improve safety, fuel use, customer satisfaction and prevent or limit losses from theft.

There is enough data—or at least sufficient anecdotal evidence—to support the technology investment, which is decreasing as competition increases. Systems can also be leased.

“If you use it and use it right, [you’ll benefit],” Lowrey says. “You’ll see it in your bottom line. And you’ll see it in your insurance premiums.”

The applications are numerous. Fleet owners acting as their own risk managers can track drivers’ locations, monitor a driver’s habits like hard-braking and accelerating, and reduce fuel consumption by looking at the data to notice trends such as the impact of idling, or the use of one route versus another. Carver says owners can cut down on “unnecessary wear-and-tear on their fleet.”

Owners have also reported a reduction in brake-pads costs, Stevens adds, because programs centered on telematics “create better, more safety-conscious drivers.”

The value for insurers extends beyond potential reductions in loss-cost trends and narrowing poor risks. Telematics may also help preserve the exposure base. By cutting down on costs for its insureds, businesses can remain profitable.

For the insurer, information can be provided by some systems to give a much more accurate view of an accident. Was the traffic light green or red? How fast was the driver going?

Insurers say information yielded from telematics systems can also help cut down on fraud. Using data on such critical factors as speed, claims professionals can determine whether an alleged injury was in fact possible.

The industry appears to have assuaged the fear of Big Brother. Owners and operators are taking to the idea, and insurers with telematics-based programs are sticking by buyers’ sides to assist in rolling out systems and fostering an environment of constant improvement rather than conveying a dark cloud of constant criticism. 

“This doesn’t work if management isn’t fully engaged,” says Hayes. “We’re looking to foster owners as coaches while we get them comfortable with the idea and our involvement.”

More insurers relying on data-gathering tools in the commercial-fleet, trucking industries

BY CHAD HEMENWAY, PROPERTYCASUALTY360.COM

April 6, 2012 

Lowrey, who also owns a risk-management and consulting service for small and medium fleets, says drivers’ unions have voiced concerns as telematics gain popularity, but the fact is, “Owners are looking at performance anyway,” implying that drivers would still be watched closely regardless of the new technology.

Fleet owners typically pitch the idea to drivers by focusing on safety and job security.

“’If you get hijacked, we want to know—we want to know where to look for you,’” Lowrey says owners will say to drivers. “But the majority of drivers have been around and they don’t worry about it, so long as it doesn’t seem like you’re nitpicking them to death.” 

Industry-wide, telematics usage remains in its infancy. Solid favorable loss-cost trends for the industry may not be readily available and use may be limited to big insurance brands but, according to a report by research and consulting firm Celent, telematics use is growing and “not going away any time soon.”  

Critics also say telematics could “cannibalize” books of business, based on the idea that policies could be written at lower premiums based on more hard data. Yet that same data would also help better calculate risks, Celent adds, noting it “would be better to cannibalize one’s own book than watch someone else do it.”