Telematics speaks the insurer’s language

Telematics speaks the insurer’s language

 

Among the growing number of telematics products aiming at partnering with insurers, we’ve seen a lot of over-complication and over-simplification. The key issues seem to be that not only is the language these industries speak different, but their priorities, age, business models and customer relationships (to name just a few) are barely comparable.

In fact, it’s virtually impossible to find any common ground.

Well, Total Systems might have found it.

Total Systems provides IT services to the insurance sector. The company’s core business is helping with things like premium collection, credit control and ledgers, as well as quotes and claims registration management.

Total Systems understands what the insurance companies do and how they can save a lot of money. But the question remains: How can the insurance sector profit directly from using the telematics data from a FMS system?

Total Systems’ insurance solution typically sits independently of the insurance company’s back-end. It provides the insurer with a tool that manages the information coming from the fleet managers and their fleet and enables the insurer to provide a telematics-assisted risk management service.

This not only enables cheap or free track-and-trace as part of the fleet’s insurance premium, it also provides this insurance with a lot of benefits and cost savings.

It’s called a “back-office insurance policy and claims administration system”

The interesting aspect is that the service talks to the insurers in a language they understand. Very little is made of behaviour-monitoring data used in risk management calculation. The core applications are more about:

  • New driver in policy update.
  • Automatic register of new vehicle in the motor insurance database
  • Linking incidents, claims, checks and repairs
  • Tracking of the vehicle to protect the insurer against fraud

For the insurance sector, the key driver for this is the margin they have to play with in the motor industry.

Simon Andrews, sales director at Armour Fleet-Trac, was quick to say that nobody in the insurance sector is making money on that specific line. Fraud is rife, and has been for so long that claiming for whiplash is taken as a given for any kind of accident. Similarly, the seriousness of accidents is very often exaggerated or wrongly communicated between drivers and fleet managers, which leads to baseless claims.

The cost of investigating these claims is huge – one of the biggest money losses in the sector.

Claims handlers need to be very thorough, and the more information they have at hand, the better. The system makes a very clear link between the vehicle, the driver, the fleet manager, the insurer, the broker and even the repair workshop. In the event of an accident, the process of checking the facts with the driver, posting the claim, getting it approved and having the workshop act on it is made seamless, while leaving a detailed information trail and providing enough flexibility for each party to add information to the system.

The system also links to the set of repairers in partnership with the insurer, so the workshop can be selected according to the location of the accident (or other logical criteria).

In the end, the winner seems to be the claims handler. The system seems to be made with them in mind.

It is also particularly useful in a leasing area, where most claims are made just before the end of the lease.

According to Alex Hall, senior consultant at Total Systems, this is because a policyholder / client / driver may be charged for any damage to the vehicle on its return to the leasing / hire company at the end of the contract term.

Historically a disproportionate number of claims are made at the end of the leasing term. This often occurs because "wear and tear" repairs have not been done during the contract period. Therefore, dubious accident claims are made to shift liability of repair costs from the client / driver to the insurer.

“Our solution would prevent such behaviour,” says Hall.

The future for this system is the ability to show insurers that from the minute they have the live info on the vehicle (mostly where and how it’s driven), they are able to completely re-invent how their insurance product will work.

It can be per mile, per day, per area, and include or exclude certain zones. It can include vehicle-specific parameters like speed and – dear to the hearts of fleets eager to improve their environmental credentials – CO2 emissions and pollutants.

So what do the claims handlers think?

According to Mike Grant, Business Development Manager at Total Systems, insurers have never had the opportunity to use this type of system before. GPS-technology is generally trusted to be accurate, and Armour Fleet-Trac has enhanced this technology further to enable claims departments to reduce claims and the associated costs.

The business case:
The system is meant to be branded by the insurer who will act as the service provider, but my understanding is that the broker is still the foot soldier who has to explain the concept to the fleet manager.

The main channels to market are:

The insurers’ own customers. Starting with the distress book (customers with the most accidents or claims or the highest premiums). The solution will make it feasible for underwriters to accept those accounts again with neither massive premium increases nor undue risk.

The brokers, although Total Systems insists that the underwriters will be involved from the start and it’s up to them to educate the brokers. They also believe that if the insurer or TSP talks to the fleet first, they will still ask their brokers about the deals they can get from them.

At the moment, the model is thought to be free (in terms of hardware) at the beginning, with the customer paying for communication depending on the services he chooses. I suspect a lot of VAS can be added from the telematics side, but Armour Fleet-Trac is not prepared for that at this stage.

The case for the fleet can be pushed by making fleets realise the variable cost of insurance: what’s not covered, excesses payable, the cost of being off the road, the loss of business and man-hours.

But by being so attractive to the insurance sector, is the proposition valid enough for the fleet owner? Is there any real advantage to locking your fleet management systems into your fleet insurance, when basic track-and-trace is readily available – and cheap?

According to Alex Hall, both systems bond to build up a detailed picture of information to enable more exact rating, underwriting and risk management. This benefits both policyholder and insurer by allowing a better insurance package with more competitive premiums, lower admin costs (e.g. motor insurance database compliance), reduced claims costs and quicker response times.

Author: Thomas Hallauer, Editor, Telematics Update


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