Why Telematics?

By: Kevin Seth AU, ARM, AAI, AIS, AINS

The landscape of telematics has been changing significantly in recent years.  Many barriers to entry have been eliminated.  For example, cost has been a major deterrent for many in the past.  With the improvements in technology and the increase in competition, the cost has been coming down.  The TSP’s (telematic service providers) also have compelling white papers or use cases explaining the cost benefit analysis of purchasing telematics.  In most cases, the benefits far outweigh the costs.  Finding a product that meets a company’s requirements is less of an issue today with more functionalities being added and with the number of telematic service providers to choose from.  There are over 200 telematic service providers many of which specialize in certain industry types.

The uses for telematics that most people think of include routing, gas mileage management, Electronic Logging Device (ELD), gas tax and operational efficiencies.  There are other additional benefits that are to be considered.   The more recent ELD requirements have proven to be a big motivator for many companies to also implement telematics.

Telematics lends itself to being an excellent tool in driver coaching.  There is a broad range of data from telematics that can be used for coaching that include speeding, hard braking, quick acceleration, and hard cornering.  This information, when used properly, can be the foundation for a positive driver coaching experience.  One of the advantages of using telematics’ data is that it’s factual and unbiased.  It allows the driver coaching event to be focused on why they were performing the risky driving behaviors and what they can do to prevent them in the future instead of debating the merit of the event.  Improving driving behaviors benefit companies in many ways.  Reducing risky driving behaviors will reduce the number of accidents.  The cost of accidents can include claim administrative costs, vehicle downtime, driver downtime, insurance impact, legal costs and negative impact on operations and reputation.

The use of telematics can play an important role in insurance.  Reducing claims with the use of telematics data in driver coaching can have a positive impact on your insurance cost.  Using telematics and driver coaching may put a company in a better defensible position at the time of a claim. The data can also be used in the claim handling process.  Understanding the vehicle route, driver speed, road type, traffic density, etc., can be of value.  Some insurance companies offer usage-based insurance that is derived by using telematics.

This is not intended to be the complete value proposition for why companies should use telematics, but it can be used to demonstrate that there is a strong case to consider telematics.