Usage Based Insurance, Powered by Telematics

What is Usage Based Insurance?

Usage Based Insurance, or UBI, is defined by the National Association of Insurance Commissioners as a type of auto insurance that tracks mileage and driving behaviors. They further explain that the basic idea of UBI is that a driver’s behavior is monitored directly while the person drives, allowing insurers to more closely align driving behaviors with premium rates.

How UBI Works

Underwriters can now consider factors that formerly were not available. Total miles driven, time of day, geographic location, and road type all speak to driving conditions and insurance liability. Speed, rapid acceleration, hard braking, and hard cornering are behaviors known to directly impact accident risk. Obviously actual automobile usage is a more accurate method to assess risk than the actuarial methods in use. Actuarial methods aggregate accident risk based on age, gender, marital status, credit score, and driving history. Consequently UBI is a much fairer way to assign risk and set insurance premiums.

In response, telematics vendors are developing more tools to evaluate at risk driving. For example, the free Verisk Data Exchange add-in was recently introduced to the Geotab Marketplace. It is a platform that allows both customers and their insurers to access the same smart analytics that impact insurance premiums.

Usage Based Insurance App

Telematics is the Key to UBI

Advanced telematics is what makes Usage Based Insurance possible. Over the years, telematics providers and their partners have proven the value of telematics data. The information at our fingertips identifies risky driving behaviors. More important, we can use it to improve and correct them with driver training. In contrast, not acting on the information we have increases liability. But that is easily corrected as shown in the video below. Clearly the benefits that make companies more efficient and competitive outweigh any concerns over increased liability. Usage Based Insurance rates are another potential cost savings to add to that return on investment.

Usage Based Insurance Drives Driver Improvement

Improving driver behavior based on telematics data is easy to automate. Apps like Predictive Coach do all of the heavy lifting. There are also traditional courses like the National Safety Council Defensive Driving Course. A combination of ongoing and individually targeted training raises driver safety awareness and creates a culture of safety. Doing that will more than pay for itself in the long run, not to mention reducing your company liability. Proactive training increases the opportunity to reduce insurance premiums with new and innovative insurance plans like Usage Based Insurance. Ultimately the incentive to improve driving behavior for lower insurance rates will drive the success of initiatives like Vision Zero, making the roads safer for us all.

What the Future Holds

In conclusion, Transport Topics recently stated rising insurance premiums are a perennial stress for many motor carriers, many of which are now installing telematics systems with the latest safety technologies to mitigate cost increases. This is a positive trend for the trucking industry, and more carriers should fully embrace these technologies as they soon will become necessary to operate a safe, efficient and, ultimately, more profitable trucking fleet.

We agree and are here to help you get the technology in place, and use it to create positive change.

Measuring Fleet Productivity & Idle Waste

Measuring fleet productivity and controlling idle waste are two easy ways to save money in difficult times.

Contributed by Sherri Mills

In this blog, we discuss two top cost-control strategies using Geotab GO device data to help boost productivity and vehicle uptime. In the business we often refer to this as the “low hanging fruit”.

What is fleet productivity?

Tracking fleet productivity is a top concern for many businesses, especially when labor is one of their most significant costs. Improving productivity will help you provide optimal service to your customers, which is important now more than ever. Telematics technology gives fleet managers accurate and detailed visibility over their vehicles, helping businesses allocate assets where they are needed most.

Maintaining 100% visibility over vehicle utilization and work assignments helps make sure that Hours Paid = Hours Worked as much as possible. Gaining just one hour of driver productivity per day, or even per week, adds up quickly.

Keeping Score

Fleet productivity is the basic measure of employee work output. Creating a productivity score provides a way to objectively measure performance so you can identify successes and pinpoint where improvement is needed.

Keep in mind, it is not ideal to expect 100% productivity, especially when employees lack control over their own output, for example when they are dependent upon customer availability, or when they are impacted by adverse weather and traffic.

Productivity score formula

(Total Hours Worked) / (Shift Hours less Lunch, Breaks or Meetings, Downtime like traffic) = Productivity Score

For example:
(Drive time = 5 hours + Office time = 1 hour) / (8 hour shift – 1 hour lunch and breaks)

(5+1) / (8-1) = 86% Productivity score

You can adjust this formula as needed depending on the structure of your business.

Managing Idling

If you’re looking at ways to improve productivity, idling is another area to look at. While not all idling is avoidable, for example in heavy traffic, there are many instances where it can and should be minimized.

Excessive idling not only wastes fuel, but also time idling vehicles are not making deliveries or driving to their next work location. Idling can also put extra load and engine hours on your fleet, increasing the number of oil changes and other maintenance tasks required.

While the GO device automatically monitors idling within each trip (no setup required), customizable reports and rules make tracking idling easy.

Here are the most effective reports for identifying and curbing idling:

1. Highest Idling Duration

See the percentages of engine time spent idling versus driving, per driver, per day. The results of this report can be used to determine which drivers need further training.

2. Daily Idling Cost Trend

The Daily Idling Cost Trend report provides a rolling, seven-day view of your fleet’s total cost of idling, which can be refreshed daily. You can use this report to spot trends during certain days of the week, which may correlate to specific work assignments or job sites, allowing you to make adjustments for the following week.

3. Last 3 Months Idling Trends Report

This report displays the total fuel spent while idling across the entire fleet. You can use this report to assess whether or not your efforts to reduce idling have been successful. Trend reporting tools can also be used in areas like asset utilization.

You can download the Last 3 Months Idling Trend from the Geotab Marketplace. View report.

 

4. Idle Cost (previous 30 days)

The Idle Cost report provides a 30-day rolling view of the fleet’s total cost of Idling. While managing productivity is key, seeing the whole cost of idling over 30 days is impactful as well.

Conclusion

Telematics systems can be used to measure and understand the productivity of fleets. With Fleetistics and the Geotab telematics platform, you and your customers are assured exceptional data producing real ROI results.

We look forward to partnering with you and demonstrating real success for your customers’ fleets in 2020. The best is yet to come.

 

Integrations that Drive ROI

There are two primary ways to integrate GPS Tracking data to drive ongoing return on investment. The first, and most often used is analytical integration. Second, and often overlooked is visual integration. Let’s take a look at both.

Analytical Integrations

Application programming interfaces (APIs), allow you to compile data from multiple sources. An API is provided by many GPS vendors. Some vendors add additional fees for their API service and others do not. Likewise, some providers place limits on what data you may access and how frequently you can make requests. In contrast, others make all collected data available and allow more frequent API calls.

Using the API you can integrate data from your GPS tracking system with data from other applications you use. Combining data and directing it into custom reports brings the information you need to the surface. Additionally, you can format and display the data the way you want to see it. We have one client that developed a custom interface to view his tracking data using the API. He does not use the user interface provided with his system at all.

Integrated exceptions graph

Another great example of analytical integration is the Device Status Table in MyFleetistics. It is integrated with our internal support ticketing. This allows our clients to quickly identify vehicles that have not reported. Additional data indicates if the device is powered. It only takes one click to open a support ticket, and it is all viewed on a single screen.

Device Status Integration

The Value Proposition

The API allows you to use the data collected by your tracking system in other applications. Location, speed, and duration details add additional value when combined with data from other sources. Some common examples are listed below.

  • Planned vs actual routes
  • Identifying customers that have not been visited recently
  • Isolate stops that were too short or too long based on an associated work order
  • Understanding on-time vs early or late stops to improve customer service.

Engine status data and faults directed to your vehicle maintenance software ensures all faults are reported. Unsafe driving events reported directly to the applications used by your Safety and HR Departments saves time over entering events manually. More importantly, it ensures safety records are complete and up to date.

You can also use the API to automate tasks. For instance, when a new customer or vendor order is entered, a custom developed application can automate the dispatch by sending a text message through the integrated application. Other examples are syncing customer locations with the closest vehicle when dispatching and assigning training to a driver that has too many unsafe driving events.

Visual Integrations

Visual integrations allow us to consume more information faster. A quick look at a “heat map” of customer stops speaks volumes. It will quickly reveal a territory that needs another driver assigned as well as an area that has too much staff already committed. Put that side by side with a “heat map” of profit dollars generated and you get a deeper understanding of where it is most valuable for drivers to be.

GIS overlays allow you to see infrastructure in relation to the location of your assets. For a Fire Department, the location of fire hydrants in relation to trucks on the map is very helpful information. Likewise, for an oil well service company, well locations on the tracking map allow dispatch to easily see available assets relative to service locations.

Visual Integration Improved Using a Shapefile Import Tool

For Geotab users, the GIS Shapefile Import Tool allows you to import zones from GIS shapefiles. This creates a zone with the exact perimeter you see in a GIS map overlay. As a functioning zone in Geotab, you can create exception rules for events related to the zone. Examples are entering, exiting, driving too fast inside the zone, stopping too long or not long enough in the zone, and much more.

Visual integration using shapefile import tool

Both analytical and visual integrations are beneficial in a variety of ways. The key is understanding what pieces of information you have that when combined reveal something more. Think about all of the times you have asked a question and your manager or supervisor responds “I don’t know.” You may want to start keeping a list of those questions because if you are asking, there must be some value in knowing. Starting with a clear question, the sources of information that can be integrated to reveal the answers are easily identified.

Return on Investment Series: Manage Driver Behavior

Fleet Savings Summary

Driver behavior is tough to manage without the right tools. The Fleet Savings Summary Report highlights your fleets top five most valuable drivers and bottom 5 which are your top five coaching opportunities. These drivers represent the fleet’s most costly drivers, and therefore represent the best bang for your buck driver coaching opportunities. Driver behavior is critical to the safe operation of your vehicles and is a key area where risk is managable.

Proactive management is key. Aberdeen Group reports that top performing organizations are 96% more likely than their peers to utilize technology that alerts management, and the driver, of exceptions being made (i.e., speeding, harsh cornering, etc).

 

Driver Behavior & Telematics Data

Today’s fleet managers are under extreme pressure to manage their fleet costs despite deteriorating economic conditions. These costs include the procurement and disposal of the vehicles, fixed and variable operating costs, labor costs, as well as collision and insurance claims.

Using telematics data, fleet managers can discover new cost savings opportunities across their entire fleet. By pursuing these savings opportunities, a fleet manager can reduce their COI, improve their fleets operating efficiency, and grow their bottom line. Conversely, managing a fleet without a telematics platform is likely to result in higher costs and poor visibility for improvement.

Telematics and the Fleet Savings Summary are valuable tools that fleet managers should use to better understand and proactively manage their vehicles and drivers, and ultimately run a more profitable fleet.

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Return on Investment Series: Identifying Key Opportunities for Cost Savings

Identify Key Opportunities for Cost Savings

In this fourth part of our ROI/COI blog, we will discuss specific telematics related cost savings categories that compile our Fleet Savings Summary Report.

#1 Safety: Reducing costly vehicle collisions

The U.S. Occupational Health & Safety Administration (OSHA) reports the following figures:

Cost Savings

 

Collisions, speeding, and aggressive driving behaviors were found to be a contributing factor in 31% of all fatal crashes, while seat belt use was found to decrease the risk of a fatality by between 45-60%. With this knowledge and the use of our telematics program, fleet managers can improve profitability by monitoring driver behaviors and proactively coaching drivers.

Other in-cab driver feedback tools such as GO TALK and real-time audible alerts can drastically reduce the likelihood of an on-duty accident. This can also be quantified in a reduction to insurance costs. To quantify these savings, the Fleet Savings Summary Report uses a proprietary safety-scoring algorithm to determine the existing and potential savings for a fleet.

 

#2 Fuel: Controlling Runaway Fuel Cost Savings

Managing fuel costs can be complicated and involve a number of variable, including fluctuating gas prices and inconsistent driver behavior. For many fleets, fuel is one for the largest expenses.

Fact: The U.S. Department of Energy reports that rapid acceleration and heavy braking can reduce fuel economy by up to 33% for highway driving and 5% on city roads. Idling and speeding can also have drastic impacts on MPG.

Market research has shown that the effective use of telematics has an effect on fuel cost savings by as much as 14%. Driver coaching is instrumental in achieving these cost reductions. For every 5 mph over 50 mph, a driver can reduce their MPG by approximately 7-14%. Therefore, getting drivers to slow down and observe the speed limit translates into saved money.

The Fleet Savings Summary Reports uses a proprietary fuel-scoring algorithm to determine a fleets existing and potential fuel-related savings. In doing so, driver speeding incidents and idle time were found to be the largest contributor to fuel waste, which resulted in fuel-related savings.

 

#3 Maintenance: Reducing Planned and Unplanned Repair and Maintenance

We all know that preventative maintenance is a regular part of owning a vehicle, but additional repairs due to aggressive driving and vehicle misuses are an unnecessary cost to a fleet. Particularly, harsh accelerations, harsh cornering, and harsh braking cause harmful wear and tear on critical vehicle components. This drastically increases a vehicles variable CpM.

The results materialize as reduced tire life, reduced brake life, more frequent scheduled maintenance and more frequent non- scheduled maintenance and repair. In fact, these non-scheduled maintenance interruptions can result in lost profits of between $400 to $700 per day, in addition to the cost of repairs.

The Organization for Economic Co-operation and Development (OECD) reports that telematics technology can help a company reduce maintenance and repair cost by as much as 14%. Because much of these savings are tied to driver behavior, using real-time driver management tools and in-cab alerts are the best way to minimize unnecessary wear and tear on your fleet vehicles.

By managing the aggressive driving behaviors, fleet managers can minimize their maintenance repair costs, in in turn generate savings reflected in the Fleet Savings Summary Report in the Maintenance section.

 

#4 Productivity: Increasing Work Efficiency

Driver compensation is often a large portion of a fleets operating budget. That being said, labor can be very expensive for fleet managers. Among the many ways to calculate labor productivity, vehicle idle time is an important metric. Even though idle time only captures a component of employee productivity, it is the only metric that the Fleet Savings Summary Report utilizes for its productivity-based scoring algorithm at this time.

Market research suggests that telematics can increase workforce productivity and reduce labor costs by up to 12%.14 This allows companies to make more customer stops and cut out unproductive mileage. The net effect is higher revenues and lower costs.

Using the Fleet Savings Summary Reports proprietary productivity-based scoring algorithm, this increase in workforce productivity translates into productivity-related saving. To maximize these savings, fleet managers must limit their fleets idle labor, which is approximated using vehicle idle hours per trip.

I know we said this was going to be a 4-part series but there is so much great information to offer that we have added a 5th part. In the next series we will discuss how to proactively manage driver behavior. Putting all these steps into place to maximize your ROI and decrease your COI!

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