How Telematics Helps Lower Insurance Premiums
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How Telematics Helps Lower Insurance Premiums

Category:GPS fleet tracker

smarketingMarch 14, 2023

Did you feel like someone punched you in the gut when you saw your insurance bill last time? If you did, you should not think you are in it alone. Based on a report created and published recently by the American Transportation Research Institute (ATRI) , there has been an increase of almost 50% in commercial auto insurance over the last decade, particularly between 2018 and 2020.

This analysis covered over 80 carriers and more than 95,000 commercial trucks, and it uncovered this crucial piece of information - on average, insurance costs rose to $0.087/mile in 2020. However, this increment in costs was not across fleets of varying sizes, affecting smaller fleets disproportionately.

Small and medium-sized fleets experienced a larger jump over the last three years when compared to large and very large fleets. In fact, in 2020, small and medium fleets paid almost twice as much for every mile covered as large fleets.

Yes, these numbers look bleak, but you can implement a GPS fleet tracker. It has helped carriers reduce insurance costs in the past. You can expect it to do the same for you now.

Why Insurance Costs are Increasing & How Carriers are Responding

The analysis from ATRI pinpointed three factors primarily responsible for the overall increase in insurance premiums.

1. Economic Conditions

Economic factors, including medical costs and general inflation, are some of the greatest contributors to rising insurance premiums. Other factors also play crucial roles, such as crash severity, insurance industry competition, and the cost of repairing vehicles.

2. Social Inflation

Despite being quite difficult to define, social inflation refers to increments in claims costs not directly caused by economic inflation. For instance, changes in public opinion related to who is at fault for a safety incident and how much the jury award in a settlement case should fall in this category.

3. Carrier-Specific Factors

The safety history of the individual carrier and whether the carrier demonstrated attempts of improving safety history play crucial roles. Furthermore, other factors include the usual cargo value and the primary state or area of operation. Carriers operating in more litigious states often charge higher premiums.

Naturally, numerous trucking organizations have responded to higher insurance premiums by cutting costs in other areas. According to the ATRI, three areas where companies were most likely to cut costs to offset insurance increments were;

  • Salary, wages, or bonuses of employees
  • Buying or maintaining equipment
  • Hiring or firing employees

These techniques will yield short-term savings, but snipping off these areas will have long-term consequences. Reducing employee compensation can negatively affect a company’s chances of hiring and retaining experienced drivers. Postponing equipment upgrades or failing to maintain vehicles adequately with proper brakes, tires, or other components can increase safety risks.

Furthermore, firing old employees and hiring fewer new ones will put extra strain on existing drivers and staff, which may lead to cutting corners or increase safety risks.

How to Reduce Insurance Prices

Fleet managers can’t overlook the importance of buying insurance for drivers and vehicles, but the costs can pile up. Here are a couple of tactics you can use to seek out insurance price reductions.

1.Driver Behavior Improvement

Drivers are the most important assets of a fleet manager. You have to make sure your staff stays alert when behind the steering wheel, as it is essential to lowering insurance costs. Training frequently and setting specific expectations for drivers can reduce accidents.

Keeping tabs on driver performance metrics is a proactive method of seeing how employees operate on the clock. Acts of speeding and sudden braking need immediate attention because improving driver behavior leaves room for significant savings.

2.Reduce CSA Scores

Prioritizing training regimes and reducing claims will possibly improve your CSA or Compliance, Safety, and Accountability score. It is a rating that conveys information about a carrier’s safety record. CSA scores are not visible to the public, but the data collected by the Federal Motor Carrier Safety Administration can dictate the price of insurance premiums for commercial logistics companies.

A telematics solution will prove to be of use here, as it will provide you with an accurate history of driver collisions, citations, and other reports. Fleet owners and managers can reduce insurance premiums by educating drivers about how to navigate commercial vehicles safely.

3.Get Rid of Unauthorized Use

Fleet vehicles should only serve business purposes, and to ensure insurance cost reduction, you should communicate the precise location of your company vehicle. With fleet vehicle monitoring systems, managers can check for suspicious activity that puts trucks at risk of sustaining damage. Determining how to limit unauthorized vehicle use is a crucial step in cutting down fleet insurance premiums.

4.Theft Reduction

Tracking alerts can help you recover stolen vehicles quickly. Preventing damage to the fleet and minimizing pricey insurance claims can help you save significantly large sums of money. Showcasing that you are responsible for your commercial vehicles allows you to lower insurance costs.

5.Staying Compliant

Adhering to DOT regulations can help you save money on insurance premiums. Most insurance firms tend to reward commercial establishments with drivers that abide by mandates placed at state and federal levels. Telematics functions keep all driver logs, maintenance details, and compliance reports in one place. With a telematics system, you can monitor how long drivers and vehicles stay on the road and their safety history.

6.Gather Video Evidence

Hard evidence is what insurance companies seek, and you must present it to them if you need to file an insurance claim and seek reimbursement. Relying on telematics hardware, such as dash cams, will be worthwhile, as they can record the details of a collision. These devices will give you the proof you need. The presence of an extra level of the context surrounding an accident is effective in showing that the driver was not the culprit. Also, the same evidence can stop insurance costs from burning a hole in your pocket or breaking your bank after an accident.

7.Create Reports

With a fleet compliance platform, gaining access to driver and vehicle reports will become easier. An insurance agency may charge a lower fleet insurance premium if you can show that you have a record of safe driving. You can also display documents related to inclusive vehicle maintenance histories and inspection results. Try to hash out a competitive price for your insurance plan by streamlining the compliance process.

How Fleet Vehicle Telematics Helps

Fleet telematics can have a profound impact on a business firm’s safety initiatives, which, in turn, can influence insurance premiums. Additionally, in an unfortunate event of a crash, fleet management solutions can protect the company from false claims.

Insurance is an undeniable and indispensable fact for fleet-based businesses, and many of the factors that influence premium costs remain out of the control of the owners and managers. Thankfully, there are steps you can take to mitigate those expenses.

One of those steps incorporates implementing a connected vehicle management system, a solution suitable for trucking companies of all sizes. It can effectively lower insurance costs by helping you display the depth of your organization’s focus on safety and risk management.

Want to find out how Vyncs can support your company’s safety efforts and potentially cut down insurance premiums? Visit our website to check out what we can do for you.