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How telematics is transforming transportation

How telematics is transforming transportation

By: Sovereign Insurance

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Telematics is changing the game for the transportation industry. It isn’t exactly a new concept, but the latest wave of telematics technology is increasing safety and boosting efficiency on a whole new level. Competitive pressures are driving transportation operations to cut business costs and improve both productivity and efficiency, and telematics plays a central role in making that happen. Savvy transportation firms are starting to see spending on telematics for exactly what it is: an investment in the organization that has the potential to create a tangible return on investment over time.

What is telematics?

Telematics is a technology that uses global navigation satellite systems and onboard diagnostics to track, collect and store information about a vehicle and its driver. Basically, it’s a hi-tech computer that records every single move the vehicle makes from the time the driver turns on the engine.

Telematics sensors are usually housed in a black box, cell phone, smart tag or dongle. They collect an important array of qualitative and quantitative driver behaviour data, such as driving time, idle time, distance, acceleration, braking and cornering. That information is then analyzed alongside contextual data such as weather and road type.

If someone gets into an accident, the telematics device can determine in real-time where the car was damaged, the extent of the damage, the probability of bodily injury, and what other car was involved.

How can telematics help your business?

Utilizing telematics has many benefits for any fleet manager. Having access to real-time data on their drivers and vehicles can help a company boost fuel efficiency, cut maintenance costs and stop bad driver behaviours. It can save a company time and money and help improve the physical and mental health of its most important asset: the drivers.

The data that telematics devices collect can be analyzed by organizational leaders to make important strategic decisions. It enables management to optimize their business by selecting new routes, reducing their risks and assessing whether or not a certain driver needs to receive some updated training.

Telematics is also driving the adoption of Internet of Things (IoT) and improving the coherence in conversations between transportation companies and their insurers.

Telematics and your insurance policy

In addition to giving management a deeper insight into their drivers and freight, telematics can provide insurers with rich information so they can better assess a company’s transportation risks. The information can in turn help transportation companies demonstrate that they’re taking measures to improve safety and cut out things like driver errors caused by fatigue.

The way an insurer ‘scores’ a transportation company’s risk (and then prices the policy) is influenced by the telematics tool’s data collection capabilities and more importantly, how the company uses the data to improve the safety of their fleet and mitigate risks.

Underwriting and pricing of a fleet considers all safety and risk management systems in place. A fleet with robust telematics – that uses the data regularly and effectively – would be considered as having implemented positive risk mitigation and risk management measures, which could be reflected in the pricing process.

There are various types of telematics-based solutions on the market and differences can dictate how much information is collected, which could in turn influence how much a transportation company could save on their insurance premium. The way an insurer ‘scores’ a transportation company’s risk (and then prices the policy) is influenced by the telematics tool’s data collection capabilities and more importantly, how the company uses the data to improve the safety of their fleet and mitigate risks.

Certain simple devices only collect miles driven, while more advanced solutions can track acceleration, braking, cornering and driving context to support more complex behavioural models. Insurers are keen to get a closer understanding of the behaviours that correlate with risk of loss, and to what extent they can benefit from telematics.

Telematics sensors generally track measurable variables, such as surge, pitch, yaw, and roll, to identify when a crash has occurred. Depending on the device and the algorithms it uses, the accuracy of crash detection can vary significantly. By using data directly from the vehicle with a dongle or smart tag, insurers can gain insights into not only how the crash occurred, but also the severity of the impact and the path or trajectory of the vehicle just prior to the accident.

Telematics Opportunities and Benefits

Making the upfront investment in a new technology can be daunting for company owners. Taking a step into modernity can sometimes feel risky, but with a technology like telematics it’s difficult to see how a transportation company will not benefit. Improved safety, reduced maintenance costs, theft deterrence, richer data collection and in some cases a lower insurance premium – and that’s just for starters.

Investing in a technology like telematics has the potential to boost driver morale and change the image that other industry participants have of your firm. Attracting the best talent is always one of the biggest challenges and introducing telematics to your fleet lets drivers know that your company is driver-focused; that your company really cares.


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