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Driving into 2020: What You Need to Know About Commercial Auto Telematics

Telematics and data can improve an organization’s risk profile, but only when implemented carefully. Here are three key considerations to help clients steer clear of potential downfalls.
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The frequency and severity of motor vehicle crashes are increasing. Large truck and bus crashes saw a 40% increase in fatalities between 2009 and 2017, according to the most recent Large Truck and Bus Crash Facts report from the Federal Motor Carrier Safety Administration.

To make matters worse, between 2016 and 2017 alone, the number of these vehicles involved in injury crashes jumped 4%, and the number involved in deadly crashes rose 8%.

As a result, the stakes for organizations with commercial fleets are rising. Litigation surrounding motor vehicle accidents is becoming increasingly lucrative, generating large monetary rewards for plaintiffs.  

As commercial organizations with large fleets look for new ways to improve safety and reduce their exposure, technology—and particularly, telematics—has come to the fore of the conversation. Although the careful use of telematics and data can certainly improve an organization’s risk profile, it is important to remember that it can also become a liability if it is not acted upon or implemented thoughtfully. 

Here are three key considerations agents and brokers should keep in mind when it comes to helping clients navigate the use of telematics:

1) Hiring and behavior first, technology second. As a first step to help improve risk profile, and ultimately safety, agents and brokers should encourage organizations with commercial fleets to hire the right people and proactively educate them about safe driving practices.

Education and training can incorporate best practices for areas including, but not limited to:

  • Following a safe start-up routine.
  • Maintaining a safe following distance from other vehicles.
  • Staying alert at intersections.
  • Avoiding pedestrians and cyclists.
  • Staying alert when changing lanes.
  • Avoiding unnecessary backing.
  • Staying aware of the speed limit.

As an extra step, organizations may consider implementing telematics and using data to reactively assess and correct driver behaviors and build a fleet strategy around safe driving and training needs.

For example, if a video camera or lane departure system regularly collects data that shows a driver swerving or breaking excessively, it may be a sign that the driver is drowsy. With this data, frontline supervisors can determine whether this driver needs to be retrained or relieved of their shift.

2) Data: use it or lose it. If data being captured by a GPS, video camera, driver assistance technology or other forms of telematics device goes unused, it becomes a significant liability in the event of a crash.

In today’s legal environment, where the use of the reptile theory—a method of impassioning jurors to give pro-plaintiff verdicts, as explained in “Reptile: The 2009 Manual of the Plaintiff’s Revolution” by David Ball and Don Keenan—and claims of negligent entrustment are common, such information may be discovered and provide an avenue for unintended liability in the event of an accident.

As a result, agents and brokers should ensure that clients using telematics have the proper processes and infrastructure in place to regularly review all available data—and that they consistently use this data to improve driver performance and adherence to safety policies, practices and protocols.

This is especially critical given the driver shortage the trucking industry is facing. Although telematics can help organizations root out inefficiencies and help address and correct inexperienced drivers’ unsafe behaviors, too much data can overwhelm frontline supervisors.

To manage the risk and reward, a solution is to start collecting data slowly, and then build as the capacity to use it increases. To this end, agents and brokers can counsel clients to begin tracking data in one particular area, such as speed. In this scenario, an organization can opt to receive alerts when drivers exceed the speed limit by a certain amount or for a given timeframe, such as being 10 miles over the speed limit for 30 seconds.

Once the data is retrieved and processed, the organization can provide necessary feedback, training or disciplinary measures in accordance with the type and severity of the infraction, per the company’s policy. Once sufficient resources are in place, the organization can look to scale their telematics program to address other risk factors.

Otherwise, and until those resources and processes are in place, agents and brokers should advise their clients to refrain from collecting such data—to either use it or lose it.

3) Telematics isn’t a cure-all. Many organizations with commercial fleets have relied on third-party vendors to provide monitoring technology—and sometimes even data analytics—services. As we enter a new decade of innovation, the industry can expect more technology to be integrated into vehicles by the manufacturer, allowing companies with large fleets to gather various types of data, starting from the first mile.

As telematics become more advanced, agents and brokers are uniquely positioned to help clients navigate the changes and how they impact coverage needs, including unintended coverage gaps and potential exposures. This includes making sure clients understand that telematics cannot eliminate risk. Organizations must still address their coverage needs, including policies around auto liability, general liability and workers compensation.

To this end, agents and brokers should connect their clients with an experienced underwriting company that not only understands the risk management landscape, but also knows that telematics must be implemented in conjunction with the proper coverage and safety management plans to achieve intended results.

Safety, after all, will always be in our hands. No matter what kind of technology takes the wheel, it is always our goal to keep one another out of harm’s way.

David Brown is an EVP and Transportation Practice Leader for the Chubb Major Accounts Division. He is responsible for managing the underwriting services provided across the country to multiple lines of business, assisting clients in their efforts to enhance their safety culture and mitigate potential exposures. He has more than 28 years of experience underwriting primary casualty coverages in the U.S. for large corporate insureds.

Charlie Halfen is a Transportation Safety Practice Leader for Chubb. He is responsible for providing consultative risk management and risk control services for a variety of clients, with a focus on fleet safety and driver training for transportation companies seeking the highest level of technical expertise. He has more than 35 years of experience in the health and safety industry.

This document is advisory in nature and is offered as a resource to be used together with your professional insurance advisors in maintaining a loss prevention program. It is an overview only, and is not intended as a substitute for consultation with your insurance broker, or for legal, engineering or other professional advice.