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How Telematics Will Impact the Insurance Industry

Data Blocks
Data Blocks

Whether you're a commercial motor vehicle (CMV) driver, dispatcher or fleet manager, telematics plays a key role in keeping your wheels rolling, and, more importantly, keeping them rolling safely. To this end, futurists have noticed some important shifts in the telematics and insurance industries. They believe 2017 will see continual adoption of telematics and an incorporation of the latest technology into consumer and commercial vehicle insurance coverage. Changes in insurance coverage, cost, and safe-driver incentives are the tip of the iceberg for telematics in 2017.

Changes in Commercial and Fleet Vehicle Insurance

One way in which telematics is projected to grow is by impacting commercial auto insurance rates. More companies, large and small, are choosing telematics for fleet management every year. And, the rapid increased in adoption over the past few years has been credited to the need for safer drivers covered by insurance that is more economical.

The implementation of telematics systems in commercial fleet vehicles has proved very useful in managing and assessing risk profiles, as it provides the timely data needed to make significant and necessary changes. Insurance firms and telematics providers want to improve driver safety, and with that shared bottom-line and greater adoption of the technology on the road, insurance rates could improve as driver behavior improves. This year could bring lower insurance costs, fewer incidents and curb fleet vehicle misuse.

Good Fortune for Good Drivers: Telematics for UBI Safe-Driver Incentives

Fueled by telematics, usage-based insurance (UBI) and pay-as-you-drive (PAYD) programs will continue to evolve this year. UBI and PAYD plans allow policyholders and stakeholders to track driving habits and share this information with their insurance provider. Insurance adjusters then use the data to more accurately link premiums to fleet performance and driver behavior. Telematics will be useful for drivers in this regard. Another benefit is that insurance companies will be able to reduce the number of false claims.

It's predicted that by the end of next year, 80 percent of vehicles sold in the United States will include embedded telematics. Early adoption this year may position your fleet well to best adjust processes and procedures to meet UBI policy standards and best practices.

Out With the Old and in With the New

We can look to millennials to drive adoption of UBI policies in 2017 – A 2015 Willis Towers Watson study found that 88 percent of millennials were strongly interested in UBI policies and technologies. Their willingness to support new and innovative telematics and GPS tracking technology will help carry telematics into the future. The increasing presence of this demographic within the fleet management community could be a crucial part of updating old systems in favor of GPS fleet tracking software.

“The rapid advancement in both wireless capabilities and handhelds has caused a disruption to the traditional OnStar model,” said Bryan Inouye, the national strategic planning manager for Toyota Motors. “We are now left contemplating how best to serve our customers by offering the best in safety features, connectivity and infotainment.”

With safety as a primary issue, now and in the future, telematics technology is likely to become more widely adopted, advanced and discussed.

What is one prediction that you have for the telematics industry and its growth as we move into the future?

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