Leveraging Fleet Data to Lower Insurance Risk: A New Approach for Commercial Fleet Operators

The insurance industry is witnessing a transformation through the integration of big data and technology. While this shift initially took place in the consumer market, it is gradually becoming a reality in the commercial sector as well. Commercial fleet operators now have the opportunity to utilize their own fleet data to showcase their risk profile and improvements to insurers. By doing so, they can effectively combat the rise in auto premiums and secure better insurance rates. In this article, we explore how commercial fleet operators can leverage their fleet data to demonstrate that they pose a lower risk.

Challenges with Traditional Insurance Methods

Despite ongoing changes, traditional insurance methods continue to dominate the commercial fleet insurance landscape. The calculation of insurance premiums is typically based on factors such as the sector of operation, fleet size, prior claims history, operating times, and geographical coverage. While this approach has been widely accepted, it fails to provide an accurate indicator of an operator's specific risk. Instead, it relies on historical averages derived from a diverse range of commercial fleets, disregarding the unique circumstances of individual fleets. Furthermore, operators may still find themselves paying for past issues that have since been addressed and successfully mitigated across their driver population.

Utilizing Fleet Data to Demonstrate Lower Insurance Risk

To initiate a more informed discussion with insurers and negotiate better premiums, commercial fleet operators can adopt a new model that leverages their fleet data effectively. Here's how:

1. Fleet Risk Profile: By utilizing data from their fleet risk management system, operators can showcase how their risk profile has evolved over time. This data can be normalized to account for changes in mileage, driver count, and vehicle numbers. Operators can highlight the five most significant risk factors and demonstrate the steps taken to address them. This analysis can be broken down to the driver level, emphasizing the wealth of data available and how it is used to target and improve specific problem areas.
2. Driver Engagement: Driver engagement serves as a valuable metric to substantiate the analysis and insights derived from the fleet risk management data. Operators can showcase the number of touchpoints, such as management interventions and training sessions, conducted to enhance driver awareness of risk factors. The data can demonstrate the improvement in driver performance, both among new recruits and experienced drivers, over a designated period as a result of investment in management and training initiatives.
3. Claims: First notification of loss (FNOL) plays a pivotal role in claims cost management. Swift reporting of incidents allows for expedited deployment of management resources and better control over related costs. Over time, this proactive approach to claim cost management can lead to improved premiums. Operators can further enhance this process by providing comprehensive information on individual incident claims, enabling insurers to work towards reducing claim severity. The resulting savings for insurers, attributable to the operators' actions, can subsequently translate into benefits for the operators themselves. To have a substantial impact, it is crucial to ensure that the data provided is of high quality and covers a significant portion, ideally 70% or more, of the claims, thus demonstrating the operators' control over the situations to their insurers.

Challenging Insurers

This approach may be unfamiliar to insurers or brokers, making it an opportune time for operators to challenge them. By utilizing their fleet data to support their case, operators can initiate a shift in the discussion and advocate for better insurance rates. Engaging in this process not only presents operators with nothing to lose but also highlights the additional value derived from their investments in fleet risk management, data collection, and utilization.

Commercial fleet operators have the ability to leverage their fleet data to demonstrate their lower insurance risk profile. By embracing this new approach and engaging in discussions with insurers, operators can proactively combat rising premiums and secure better rates. This shift towards data-driven decision-making in the insurance industry offers operators the opportunity to showcase their efforts in fleet risk management and their commitment to utilizing data effectively. Embracing change and adopting a data-centric approach can lead to tangible benefits for commercial fleet operators in the insurance market.

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