Insurtech: Fleets Reap Insurance Savings, Improve Safety

More and more fleets use data from on-truck safety and telematics systems to improve safety. But in recent years, insurers also have begun tapping into technology to better understand broad risk profiles of the trucking industry as well as risk associated with their customers, insured fleets. 

Increasingly, the insurer and the insured are working hand in hand and sharing safety data.

Insurtech, as it’s often called, is here to stay and growing rapidly. Insurtech refers to the use of technology innovations designed to find cost savings and efficiency compared to the traditional insurance industry model. Safe fleets often can share in those savings.

Fleets no longer must wait a year for a review to have lower insurance costs. Now in many cases, the cost of insurance can drop from one month to the next.

Reid Spitz, chief product officer and cofounder of High Definition Vehicle Insurance (HDVI), compares the development of insurtech to the evolution of televisions from standard definition to high definition, like his company’s name. An HD television shows far more detail. 

The same is true when comparing insurtech to the old-school way of measuring risk and insuring fleets. Through technology and data, there is now more transparency into how safely a fleet operates.

Spitz and his team can access information about how safely a fleet is performing through HDVI Shift, a proprietary telematics product launched in 2021. It looks at fleet data each month and provides up to a 20% discount to a motor carrier based on safety performance. 

If HDVI starts insuring a fleet in January, for example, by February the motor carrier could begin seeing discounted insurance rates.

“We are using telematics data to determine what the discount rate should be from that base rate. So, it's much more responsive in real time,” Spitz says. “What we built for trucking companies is an insurance product that is real time and responsive to how they're operating their fleet on a month-in and month-out basis and providing them with safety discounts through insurance.”

Evaluating Risk

Spitz explains there are several elements of risk that an underwriter or an insurance company is going to look at to understand motor carrier risk, including vehicles or equipment, drivers, routes, commodities, losses, and safety scores from the Federal Motor Carrier Safety Administration.

The traditional model of underwriting would only look at MVRs to gain insight into a driver pool. But that may not provide the most transparent, or realistic, view of driver risk.

A traditional underwriter, to understand lanes of travel, would look at a map of FMCSA inspections of a particular truck, Spitz says. He uses the example of noticing that a truck spends a lot of time in Texas, information deducted from knowing the truck was inspected multiple times within the state.

But that process does not provide insight into whether those inspections were in rural Texas, or in larger urban areas like Houston on Dallas. Telematics provides all the fine specifics of where the truck has traveled.

“GPS tracking provides location data, enabling insurers to monitor vehicle movement and assess risk based on the areas the vehicles operate in,” says Ryan Polakoff, president of Nexterus, a third-party logistics company contracting with carriers on behalf of shippers. “Location data can also be used to analyze traffic patterns and identify accident-prone areas.”

Nexterus vets the carriers it contracts with to make sure they are insured, monitors KPIs, reviews accident reports, and evaluates safety to make sure these carriers will deliver clients’ goods at the right time, to the right place, in a safe manner without damage to the cargo. 

As Spitz and Polakoff note, knowing where all the miles are driven lets insurers provide a more personalized price for the insured customer.

Earning a Discount

The initial assessment of a fleet seeking an insurance quote is done through what Spitz calls a “safety lookback.” 

Fleets can provide a snapshot of their telematics via an API with vendors in the industry and provide data to HDVI during the quoting process. That is a one-time data pull.

The 90-day lookback is then put into HDVI’s model and if all looks well, a fleet can start the insurance term with a discount. If the fleet insures through HDVI, telematics will continue to be reviewed by the insurer going forward.

“If we see that a fleet has been generally a safe fleet, a good fleet score as well in the telematics, we can apply, for instance, a 15% discount upfront on the policy and then give them the opportunity to earn an additional 5% through the policy term by getting even safer,” Spitz explains.

Other insurers follow in similar form, first reviewing the risk profile of a fleet and comparing it to the industry benchmarks, then allowing fleets to increasingly earn discounts as safety metrics improve.

“Now, we have a nearly full comprehensive suite of the amount of data and insight that insurers can see at the fleet level, and even at the driver level, across their entire portfolio,” says Hayden Cardiff, chief innovation officer at Idelic.

Idelic, which offers Safety Suite for Fleets, recently launched Safety Suite for Insurers. 

Safety Suite for Fleets uses analytics and machine learning techniques, combined with real-life driving data, to improve driver risk prediction, according to Idelic. The models combine knowledge from decades of driving data insights with a fleet’s unique driving data patterns to produce a tool to identify which drivers are most likely to be involved in an accident in the next 90 days. That allows for targeted coaching.

Cardiff says the new product for insurers is groundbreaking because of the impact and the reach “when it comes to making informed decisions and lowering losses across large groups of fleets.

“For fleets who aren't highly self-insured, the vast majority of their cost is in the insurance market. And that’s been one of the challenges for fleets as they go into their annual renewal,” he explains. “Now fleets who are performing better can get better rates. And insurers can have better confidence in being able to go in and underwrite and price those fleets more correctly, more effectively, and aggressively in some cases, when they know that the fleets are doing the right things. That's a win for both the fleets and the insurers.”

Accident Reduction 

Telematics and insurtech are not just about providing better risk analysis for insurers and lowering insurance costs for fleets. Ultimately, both insurers and motor carriers are on a mission to improve fleet safety.

Cardiff says the average accident reduction for fleets using Safety Suite has been 20% in the first year. Some fleets have seen as high as a 40% to 50% reduction in accidents during their first year of harnessing the power of the data.

“Our biggest focus is to make sure that they use the system effectively and gain the results that they're looking for,” Cardiff says. “Our product is not a magic bullet that if you just put in your credit card then magically accidents are prevented. It is a tool. So, our big focus is, how do we help fleets most effectively use that tool?”

Idelic has built on that to provide a tool for insurers to gain deeper insights into fleet driving performance. Through Safety Suite for Insurers, insurers can prioritize intervention programs and help fleets reduce key metrics such as crash frequency, loss ratio, retention, claim quality, and efficiency.

At Cover Whale, a trucking insurance company that works with more than 6,000 agents, safety is also a key focus. Its Driver Safety Program, according to the company, improves safety for the insured fleets, saves policyholders money on insurance, and helps provide better visibility when claims happen.

“Our emphasis on safety and loss prevention is not only profitable for insurers, but it also contributes significantly to overall roadway safety, bridging the gap between insurers and fleets for a safer tomorrow,” says Kevin Abramson, president of Cover Whale.

Early warning systems, data-driven driver improvement programs, and real-time coaching derived from these tools enable Cover Whale to create safer roads, one fleet at a time. Cover Whale reports it has worked with fleets to reduce speeding by 35% and hard-braking incidents by 43%.

When fleets improve safety, insurers are happy.

“There is a symbiotic relationship between insurance and truckers in an effort to have fewer accidents and fewer claims,” says Nick Saeger, associate vice president of products and pricing at Sentry Insurance. “We don't want to be handling claims.”

Sentry spokesperson Avery Faehling says the company sends safety teams out to work with fleets and drivers. Most, if not all, of these team members have worked previously in the trucking industry in safety roles.

Future of Insurtech

“Five years ago, you had a lot of people coming into the industry really trying to focus on how to make the process of finding and binding insurance easier,” Cardiff says.

In what he calls Insurtech 1.0, Cardiff says there were efforts to allow companies to get instant quotes and buy insurance quicker. But that did not increase the profitability of commercial insurers’ books of business. Loss ratios were not good, he says. Those early tools did not change the risk profile of the book itself.

Now, what he calls Insurtech 2.0 enables insurers to increase profitability because they can better understand both how to best assign rates to new fleets coming into the business and better understand the overall portfolio risk of a current book of business.

He says insurtech addresses two key questions commercial auto insurers have:

1. How do I lower the risk of my insurance?
2. How do I put the right rate for the right fleets at the right time?

Before launching Safety Suite for Insurers, Idelic had already been working with partners on a large book of business that included 5,000 DOT numbers and more than 12,000 drivers. 

“This is not just an idea or a proof of concept. This is now actually being implemented, with an insurer today, which is obviously a good sign for everyone,” Cardiff adds.

Trimble Transportation is one of the telematics and infotech providers that provide the kind of data being used in this new insurtech world. Jason DeShaw, senior product director, experience, believes that moving forward, the insurance and telematics/data providers will continue to partner more and more to serve fleets. He predicts a greater adoption of telematics, with slimmer hardware and easier installation helping to drive that growth. 

The future holds greater collaboration between fleets and insurers. Technology and telematics will continue to innovate and provide more data, more quickly, for both parties. As insurtech continues to harness the synergies of fleets, drivers, insurers, and telematics companies, the goal will remain the same: make fleets safer, reduce risk, and lower insurance costs for commercial fleets.