June 25, 2024

Future-proofing Insurance with Telematics

Insurance rates are one of the biggest expenses for carriers, alongside fuel and maintenance. According to MarketScout’s recent analysis, the transportation industry experienced the highest rate increase in 2023 at 7.26%, with the overall increase across all industry groups at 4.56%.

In a recent episode of “WHAT THE TRUCK?!?” Jackson Alexander, Executive Vice President of Sales at Reliance Partners, joined Dooner to discuss the factors driving up insurance costs and potential solutions to help carriers manage these expenses.

Alexander highlighted a significant shift in the insurance industry: the incorporation of telematics into the underwriting process. “Insurance companies are now connecting with motor carriers via API to their ELD or camera providers, transmitting data back to insurance providers for review,” Alexander explained.

Insurers focus less on the rates carriers receive for loads and more on the exposure associated with what’s on the road, including equipment and load value. When implementing telematics for insurance purposes, providers are particularly interested in metrics such as speeding, harsh braking, sharp turns, and quick accelerations—factors that significantly influence truck claims.

There are two main types of insurance providers: traditional insurers and newer insurtech companies. Insurtech companies leverage technology in their services, much like fintech does in finance. Unlike traditional insurers, insurtechs often require connectivity to a carrier’s telematics system before providing a quote. These companies base rates on driving history and telematics data, offering competitive pricing for carriers with strong safety records.

Traditional insurance providers also incentivize the use of telematics, though it is not always a requirement. Most insurtechs, however, will not offer a quote without API connectivity and a review of the past 90 days of driving history. Carriers that fail to meet the required thresholds may not receive coverage.

For carriers with excellent safe driving records backed by telematics data, insurtechs can offer a viable solution to mitigate rising insurance costs. This is particularly beneficial in a down freight market. Small carriers, who traditionally had fewer opportunities in the telematics space, can now access these programs as some insurtechs have started providing dashcams to help them begin their telematics journey.

Alexander advises carriers to start the insurance renewal process 90-120 days before their renewal date. “You might not get your renewal quote from your current carrier until 30 days or maybe even 14 days before your actual renewal date,” he said. “Expect a 10-15% increase in rates, but don’t wait for that quote to shop. Some markets won’t release a quote unless they receive a submission at least 30 days before the renewal date.”

Click here to read the full article on FreightWaves.