Fleet telematics and ACORD standards

The Association for Cooperative Operations Research and Development (ACORD), a non-profit focused on standards for data exchange, wants to create standard ways to collect and transmit driving data for usage-based insurance (UBI). UBI is a growth industry, with insurers in the United States and Europe rolling out policies based on information gathered by telematics devices. (For more on UBI, see Industry insight: Insurance telematics.)

Beyond simple usage and driving style information to better rate consumer drivers, ACORD thinks these standards could make it easier for commercial insurers to access information generated by fleet telematics applications.

Standard data payload

Dean Collins, head of business intelligence for Travelers Insurance and a member of the ACORD UBI working group, thinks such standards could translate into wider choices for OEMs, insurers and commercial customers. Speaking at the recent Insurance Telematics USA Conference, he said because Travelers is a commercial insurer it can't dictate the telematics devices used in fleets, many of which already have fleet tracking, management and analysis solutions in place.

Travelers needs to be able to accommodate clients using a variety of fleet telematics solutions and service providers. "Ideally, TSPs would use the ACORD standard format. When we have a standardized data feed and TSPs agree to use it, then insurance companies and maybe the government can enjoy a standard data payload," he told the conference audience.

Standards such as those being developed by the ACORD working group could reduce IT expenses for insurance companies, streamline the process of working with third-party data aggregators, and simplify working with the multiple TSPs of their clients.

Commercial customers would benefit by not getting locked into a particular vendor due to an installed base of devices sending telematics data in a proprietary format, according to Marcia Berner, director of implementation services for ACORD.

Without standards, she says, if a commercial customer walks into an insurance agency looking for a policy, the agent will check with five or more different companies to find the best coverage at the best price.

But insurers could compete on more than price, for example, by offering a suite of fleet management services based on data from telematics devices. "If the insurance company writes my policy, it wants to make sure I have all the tools I need to manage my own company from a claims and pricing perspective," Berner says. (For more on data standards, see Telematics and the value of data and Telematics and the connected car: How to deal with increasing data use.)

Market complexity

The situation today is a simple math problem, according to James Bielak, program manager, property and casualty, for ACORD: "It comes down to the number of interfaces. Every time you add a new party to the mix, suddenly, the number of potential interfaces goes up exponentially. One insurer may be accepting data streams from 10, 12 or 20 different TSPs. That means the insurer needs to maintain 20 different interfaces, or it can maintain a standards-based interface."

With that complexity could come opportunity, says Jon Verhaeghe, manager of insurance telematics for Teletrac, a provider of fleet management services including GPS asset location, diagnostics, fuel efficiency, safety, compliance, score-carding and business intelligence.

While consumer UBI schemes pick up only a few data points, the potential data set is much richer, Verhaeghe says: "We have the ability to do really granular data for drivers. There's the potential to get second-by-second information, including accelerometer data to measure G forces and engine information. There are an unlimited amount of things you can determine from that. It's a massive amount of information you can get."

Verhaeghe sees ACORD standards as being flexible enough to serve the needs of consumer and commercial insurers as well as fleet managers and vendors such as Teletrac. (For more on fleets, see Industry insight: Fleet telematics.)

"We have a risk management platform that already gathers that information,” Verhaeghe says. “We can take a fleet, put our devices on there and gather behavioral information. Fleet managers can coach the drivers and improve their safety and driving habits. Obviously, insurance companies have an interest in that." (For more on managing driver behavior, see Benchmarking with fleet telematics and Managing driver behavior with fleet telematics.)

Partnering with insurance companies

While some device manufacturers or TSPs might want to sell devices and services directly to insurers, Teletrac's strategy is to partner with insurance companies, which might incentivize their customers or prospects to install Teletrac telematics technology. The endorsement from the insurer is helpful; more helpful is when the insurer offers a discount on insurance with use of the device, improving the ROI for Teletrac services.

"Our goal is to increase our subscriber base, and this is a channel for us, partnering with insurers, being able to provide our customers with benefits and also getting access to their customers," he says.

While TSPs have been providing data directly to commercial customers, the insurance industry is expanding the model into personal vehicles. Bielak foresees a whole new set of service providers not yet that closely associated with the insurance industry coming aboard once data standards are in place.

The ability to exchange telematics data among themselves could enable mining of this data to create intelligence that could be used by the greater transportation industry, automakers and governmental entities. "All I have to do is put my data into a standard format and everyone can read it,” Bielak says. “Everybody is talking with the same language all the time." (For more on data mining, see How to profit from telematics driver data.)

Susan Kuchinskas is a regular contributor to TU.

For more on fleets, see Industry insight: Fleet telematics.

For more on UBI, see Industry insight: Insurance telematics.

For the latest in fleet telematics, check out Telematics for Fleet Management USA 2012 on November 13-14 in Atlanta.

For all the latest telematics trends, visit Content and Apps for Automotive USA 2012 on December 4-5 in San Diego.

Coming up in 2013: V2X for Auto Safety and Mobility Europe 2013 on February 19-20 in Frankfurt, Telematics for Fleet Management Europe 2013 on March 19-20 in Amsterdam, Insurance Telematics Europe 2013 on May 8-9 in London and Telematics India and South Asia 2013 on June 5-7 in India.

For exclusive telematics business analysis and insight, check out TU’s reports: In-Vehicle Smartphone Integration Report, Human Machine Interface Technologies and Smart Vehicle Technology: The Future of Insurance Telematics.

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