December 16, 2024
Telematics is Changing the Game in Trucking Insurance Underwriting
At Reliance Partners, we recognize the growing role of telematics in reshaping the trucking insurance landscape. With insurance premiums increasing by an average of 5% annually in recent years, carriers and insurers alike are seeking innovative solutions to manage costs and promote safety.
For over a decade, the trucking insurance market has faced profitability challenges, largely due to factors such as rising cargo theft and nuclear verdicts. These issues have driven up premiums, putting financial pressure on motor carriers. While external economic factors like fluctuating fuel costs or revenue per mile have little impact on insurance costs, as noted by Jackson Alexander, Executive Vice President of Sales at Reliance Partners, insurers focus on reducing claims risk to achieve sustainability.
How Telematics Is Transforming the Industry
Telematics technology is leading the charge in helping insurers better assess and price risk while encouraging safer driving practices among carriers. By analyzing data such as harsh braking, sharp turns, speeding, and following distances, insurers can pinpoint behaviors that frequently lead to accidents.
For insurtech companies—insurance providers that heavily rely on technology—telematics data has become a cornerstone of underwriting. Companies like HDVI and Nirvana evaluate 90 days of historical telematics data before offering quotes, requiring carriers to share driving behavior insights as part of the process.
While incorporating telematics into underwriting doesn’t guarantee immediate premium reductions, many insurtechs are offering competitive rates. Their belief is that leveraging telematics data provides a more comprehensive view of risk compared to traditional metrics such as CSA scores and loss runs. However, carriers must still address other risk factors, as red flags in other areas can affect rates regardless of favorable telematics data.
Benefits for Carriers and Insurers
The adoption of telematics presents mutual advantages:
- For Carriers: Opportunities to control insurance costs, improve safety, and foster a culture of accountability.
- For Insurers: The ability to build sustainable business models and more accurately price risk.
By integrating telematics, the trucking industry is taking a critical step toward mitigating the challenges of rising premiums and fostering a safer, more efficient transportation ecosystem.
Learn more from the full story on FreightWaves.
