Large fleets have been using telematics to support fleet management capabilities and improve business outcomes for years. There’s good reason – fleets using telematics have reported significant improvements in fleet management efficiency, productivity, and fuel consumption.
Small fleets face many of the same challenges as their larger counterparts, including:
- Increasing safety
- Improving productivity
- Meeting regulatory compliance issues
- Reducing fleet costs
Many small fleet managers are interested in telematics fleet management solutions, but cite the cost of such systems as a major barrier to adoption. With well over half of insured commercial vehicles being part of a small fleet, there is a large portion of the market that is under-served yet ready to jump in if the right solution presents itself.
How telematics-driven fleet management addresses key challenges
Telematics allows fleet managers to track vehicles and understand how their employees are driving. Risky behaviors such as rapid acceleration and deceleration, hard cornering, and night driving can be tracked and scored, giving fleet managers insights into the relative risk of their drivers. Driver feedback, from the fleet manager or the telematics service provider, can be provided to individual drivers, improving their safety. Finally, geofencing and curfews allows fleet managers to identify when drivers are utilizing vehicles for non-commercial use and address unauthorized use issues with any drivers who are misappropriating commercial assets.
Telematics has evolved beyond simple start and end location tracking to allow for sophisticated route optimization capabilities. Now, fleet managers have insight into where drivers are and which vehicles they are driving, allowing them to more effectively dispatch assets to address customer needs. Layering in dynamic driving data, such as weather and traffic, drivers can get to their location exactly when customers expect. Better optimized routes and shorter distances traveled reduce fuel usage, saving fleets money. Minute-by-minute vehicle data also allows fleets to curtail vehicle idling, further reducing fuel costs.
One of the largest challenges facing fleet managers is identifying the best way to maintain and repair vehicles. Any vehicle downtime can have a huge impact on productivity. Larger fleets are often able to compensate for a vehicle or two being down for repairs, but small fleets rarely have the capacity to do so. Telematics allows data directly from a vehicle to be translated into information fleet managers can use to identify vehicle issues and address them effectively. One major benefit is the ability to optimize vehicle maintenance and repair schedules. Small issues, identified by a telematics device, can be postponed while critical problems can be addressed first. If a crash occurs, Octo’s crash and claims management capabilities allow a fleet manager to dispatch emergency services and intervene to send the vehicle to a preferred repair shop.
Meeting regulatory requirements
Telematics is ideal for meeting current and upcoming regulatory compliance challenges as it is automatic, accurate, and verifiable.
Electronic logging device requirements are one such example. In 2018, commercial vehicles will be required to electronically track and report on driving behavior to ensure that all drivers are properly rested and can drive safely. Fleets can go out and purchase ELD systems to become compliant, or use telematics devices to perform the same function. Not all telematics devices are ELD compliant, so fleet managers need to do their research before implementing a system.
Fleets also need to report on fuel efficiency to comply with IFTA fuel tax reporting requirements. When a telematics device can read vehicle systems data, like Octo’s devices, they can also be used to document compliance with these requirements.
Between reducing fuel costs, cutting maintenance downtime and costs, and reducing the impact of accidents, telematics-driven fleet management can result in significant cost reductions for fleets. Critically, with great asset use optimization and powerful fleet management capabilities, fleets can significantly reduce their spend on additional assets, drivers, and fleet management products.
How insurers can fill the gap
Taken all together, commercial insurance telematics effectively addresses all the major challenges facing fleets large and small. With fleet management systems costing up to $65 per month per vehicle, though, many small fleets find these systems out of reach.
Insurers are uniquely positioned to fill this gap. With the commercial auto combined ratio exceeding 106% in 2016, and a historically high combined ratio over the past five years, insurers need to find ways to reduce their costs. Offering fleet management capabilities to commercial customers, along with other telematics-driven programs such as usage-based insurance and crash and claims management, insurers can realize up to 18% improvement in their combined ratio. This improvement stems from increased customer acquisition and retention through value-added fleet management services, reduced claims costs, and a more accurate understanding of the risk of individual commercial policies.
Octo has recently seen increased adoption of telematics for commercial lines insurers across the United States and expects to see this trend continue.