Commercial Auto — Insurers Looking Hard at Telematics

The National Alliance for Insurance Education and Research and the risk management software company, SambaSafety did a study of commercial auto insurers. SambaSafety’s CEO Matt Scheuing said the study found that 78% of them are looking into usage-based (UBI) products.

The reason? The high cost of claims.

“The survey results show that telematics technology has outpaced consumption, and usage falls short of full potential,” Scheuing said. “But telematics offers the opportunity for the insurance industry to break out of the cycle of reacting to the rising cost of claims by raising premiums.”

While the insurers are interested, there are challenges. Spokespeople for the 335 insurers polled said formats that vary among the providers of the technology, terminology is often confusing and event tracking system challenges are — no pun intended — challenges.

However, all that said, 65% said their companies have some level of telematics to offer. Another 38% said they’re in the early stages of that development and 33% say they’ll have something available full time in a year or two.

But 72% offer — or plan to eventually offer — a telematics-based product.

Here’s what agents and brokers are thinking:

  • Over 50% of agents say less than 10% of commercial auto insurers offer some sort of UBI auto customers
  • 15% of brokers said they offer telematics value-added services
  • Agents and brokers said commercial auto customers and personal auto customers want telematics systems they can trust

The National Alliance’s director of academic content, Paul Martin says the last comment from the bullet points is telling. It is obvious this is something businesses and consumers are wanting.

“In this dynamic era, where data steers our choices, it’s crucial for the insurance industry to remain informed, proactive and tactical,” he said. “The report not only captures current industry sentiments but also provides a roadmap for the future; it encapsulates the evolving storyline of insurance, fueled by data, insights and modern technology.”

And Scheuing said the potential for such systems is the sky is the limit.

  • Just 27% of business using commercial auto insurance have telematics or connected car teams
  • Just 6.25% have the infrastructure to handle the large volume of data generated by telematics

“Telematics enables an alternative approach,” Scheuing said. “It provides a way to focus on granular risk by offering unparalleled visibility and objectivity, leading to fair and precise assessment of mobility risk — and to profitability.”

Source link: Insurance Journal —

About PIA Western Alliance

The Professional Insurance Agents Western Alliance is a membership organization promoting and enhancing the success of independent agencies seeking to grow, learn and be heard within the industry.


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