How Telematics Can Improve Safety and Lower Insurance Costs for Trucking Companies
Maintaining a comprehensive insurance policy is essential for trucking companies to meet regulatory requirements and protect their businesses. It can also be a big expense, one that seems to be constantly increasing. In fact, according to The Council of Insurance Agents & Brokers’ report, premiums increased each quarter in 2023 – increases that ranged from 7.3% to 10.4% over the previous quarter. (1)
With a forecast like that, it’s no wonder trucking companies are looking for new ways to cut down on insurance costs. One popular way of doing so is by utilizing telematics technology.
What is Telematics Technology?
Telematics technology is used to track driving behavior. Telematics are usually installed on a vehicle’s diagnostic port, or accessed on a smartphone, and automatically track data like a driver’s speed, braking habits, acceleration, and distance. Some telematics technology includes cameras that may record what a driver sees as well as the driver themselves.
Once the data is collected, it can be used to inform premium rates, to provide information in claims cases, and even incentivize drivers for safe driving practices.
How Does Telematics Technology Influence Premium Rates?
A carrier’s insurance premiums are based largely on the number of claims it makes – the more the claims, the higher the premium. Safe driving helps to prevent accidents, which helps to prevent insurance claims, and leads to lower premiums. Tracking driving behavior helps hold drivers accountable, alerts company leaders of problematic driving, and offers the opportunity to provide additional driver training. It also helps to cut down on fraudulent insurance claims, which benefits premium rates industry-wide.
Benefits of Using Telematics Technology
In addition to lower premium rates, the use of telematics technology can provide a variety of other benefits, including:
Improved safety: When a driver knows their driving is being monitored, they are more likely to obey traffic laws and drive cautiously, reducing the risk of accidents and increasing safety. A reported 26% of carriers who use telematics have experienced fewer accidents. (2)
Lower fuel costs: When you have full transparency with driver behavior, you can ensure your drivers are taking the most efficient route and using their fuel economically. Studies have shown that fleet trucks sit idle an average of four to eight hours a day, which equates to $5,000-$12,000 in wasted fuel every year. (2) Studies also show that 43% of trucking companies that implemented telematics technology reported cost savings in what they were spending on fuel. (2) Reducing fuel consumption is not only good for your budget, but it also reduces emissions and benefits the environment.
Better maintenance management: The data provided by telematics technology can inform your maintenance schedule so you can ensure your fleet gets the regular maintenance it needs.
Regulatory compliance: Federal regulations require trucks to utilize electronic logging devices to track dates, driving times, engine use, and miles traveled as part of its mandated record keeping. Telematics can help carriers comply with this requirement.
Administrative efficiency: Despite federal regulations, an estimated 33% of carriers still use paper for their record-keeping (2), which takes time and is prone to human error. Telematics can automatically, and accurately, record required information for you.
Liability protection: Unfortunately, not everyone is honest when it comes to their role in causing an accident. Telematic technology with a camera can provide evidence to support your driver’s account of an accident and reduce the risk of another motorist making a false claim of negligence.
Employee satisfaction and retention: One reason companies sometimes hesitate to implement the use of telematics technology in their fleet is due to concerns over the privacy of their drivers. However, telematics data can help you incentivize safe driving behavior – you can give raises to those who meet safety standards and offer contests for employees to win rewards for driving safely. Research indicates that companies that incentivize employee behavior see 89% more employee engagement, 87% more retention, and 85% more loyalty than their counterparts that do not. (3)
Telematics technology is a useful tool to help trucking companies, as well as their insurance providers, save time and money, operate more efficiently, and protect their drivers, their clients’ cargo, and the travelers they share the road with.
Improved safety comes with even more benefit – it can lower your CSA score, a number calculated by the Federal Motor Carrier Safety Administration (FMCSA) that relates to a carrier’s safety performance, measures compliance with safety regulations, and identifies high-risk fleets, carriers, and drivers.
SWZ also offers a free SCORE report to help you understand your safety score, identify safety issues, and learn how to resolve them. Request your complimentary SCORE Report here.
(1) https://www.truckingdive.com/news/truck-insurance-premiums-2023-increases/712149/
(2) https://www.ajg.com/us/-/media/files/us/insights/webinars/ggb_2019autotelematics.pdf
(3) https://zoetalentsolutions.com/benefits-of-incentives-for-employees/#:~:text=A%20survey%20by%20the%20Incentive,that%20do%20not%20use%20incentives
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