In the dynamic realm of commercial insurance, where new technological advancements are introduced daily, one innovation is gaining interest among early adopters and is poised to become a significant game-changer: telematics aggregation. Telematics aggregation harnesses the power of technology to consolidate and analyze data from various sources, ranging from in-vehicle devices to dashcams to black boxes, apps and wearable devices. Leaders across the transportation ecosystem, including fleet managers, insurers, and risk managers are all working to find the most efficient ways to leverage the data being generated by telematics systems and aggregation solutions may be the answer.
For commercial insurers keen on maintaining a competitive edge, understanding and effectively leveraging telematics aggregation is a strategic move that can reshape the landscape of risk management and policy customization. In this blog, we will explore the challenges insurers have found in using telematics data and how using aggregated data helps solve the problem.
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Why Are Commercial Carriers Using Aggregated Telematics Data?
Scalable Telematics Programs
According to McKinsey and Company, a connected vehicle can produce 1 to 2 terabytes of raw data per day. As the volume of telematics data grows along with the types of devices on the market, commercial insurers have an opportunity to access the data from their policyholders’ devices to better understand risk within their portfolio. Some insurers have started to leverage aggregated telematics data to accelerate telematics programs. They have also been able to minimize scalability challenges when it comes to integration resources, data normalization and performance and API maintenance.
Data Quality and Usability
Ensuring that the telematics data collected from vehicles is in a valuable format that can be interpreted accurately is a complex task that should be considered. Although many insurance carriers have a robust analytics infrastructure the amount of time required to standardize and normalize the formats and methodologies from varying telematics devices is daunting. Additionally, the task of continuously monitoring the data quality coming from each individual telematics data provider is a formidable undertaking, requiring precision and vigilance to navigate the complexities and ensure the reliability of the information.
Outsourcing to a company that specializes in providing high-quality aggregated telematics data that can be accessed easily, often through cloud-based technology, is growing across the commercial insurance industry. When considering a telematics aggregator, opt for one that offers value-added services, such as streamlined dashboards that provide various views of risk and training solutions.
Infrastructure Challenges
Integrating telematics data from various providers poses substantial challenges for insurers, demanding significant time and resources for each integration with a telematics service provider. This process can extend over months, and in some cases, over a year, impeding the agility of insurers to swiftly adopt and utilize telematics data.
In light of these challenges, insurers navigating the landscape of telematics data aggregation should aim to work with an aggregator with a broad integration footprint across multiple telematics service providers (TSPs). This strategic choice enables insurers to broaden the scope of their telematics program for a more extensive customer base. An aggregator with this capability streamlines the integration process by standardizing data formats between providers, significantly reducing the time to value.
Furthermore, the complexity of managing data in different formats from various TSPs is a formidable obstacle. To address this issue, insurers should opt for aggregators that not only standardize data but also actively maintain the APIs across the various TSPs. This proactive approach minimizes the technical burden on the insurer’s end, allowing them to focus on leveraging telematics insights rather than allocating extensive resources to API maintenance.
In essence, finding an aggregator with a comprehensive integration footprint becomes not just a strategic move but a practical necessity for insurers navigating the challenges of time, resources, and data standardization for telematics integration.
Top Use Cases for Telematics Aggregation in Commercial Insurance
1. Accelerate Time to Value
With a detailed understanding of risk factors, underwriters can build new, specialized usage-based-insurance products that leverage actual driving behavior faster than they were able to previously. Fleets with lower risk factors and well-maintained vehicles can be rewarded with lower premiums, fostering a sense of fairness and transparency between insurers and customers.
2. Enhanced Risk Assessment
Telematics aggregation allows insurers to access a wealth of data that goes beyond traditional underwriting methods. By analyzing real-time driving behavior, insurers can supplement and enhance traditional rating factors, allowing them to make more informed decisions when assessing risk. This leads to a more accurate understanding of an individual or fleet’s risk profile.
3. Loss Prevention and Mitigation Through Training
Telematics data enables insurers to identify and address potential risks within their book before they escalate. When insurers work together with their commercial policyholders, they can leverage the aggregated telematics data to enhance loss control consultation. Insurers can provide feedback to policyholders based on a fleet’s driving trends, offer safety tips, and create a more interactive and value-added relationship. Proactive measures can be taken to prevent accidents, reduce claims, and ultimately minimize losses for both insurers and policyholders.
Conclusion
Telematics aggregation is reshaping the landscape of commercial insurance, providing insurers with unprecedented insights into risk and driving behavior. By embracing this technology, commercial insurers can not only enhance risk assessment and premium customization but also contribute to safer roads and more satisfied policyholders. As the industry continues to evolve, telematics aggregation stands out as a key enabler for those looking to thrive in the dynamic world of commercial insurance.
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