How to Talk to Your Fleet Insurance Provider About Fleet Safety Technology

Both fleets and insurers bear the cost of fleet accidents. Fleets without an excellent safety record risk much higher insurance rates, higher deductibles, or unavailability of insurance. Luckily, safety technology has proven to improve fleet safety. Fleet insurance providers prefer working with companies that prioritize fleet safety, and one clear way that a company can demonstrate its focus on fleet safety is to proactively invest in fleet safety technology.

The fleet sees the insurer as benefitting from the investment the fleet makes in safety technology. Should the fleet expect the insurer to co-fund the investment in technology aimed to result in less fleet accidents? Is it in the insurer’s best interest to support the investment in safety technology? What does the insurer look for in order to justify financial participation in an insured’s investment in fleet safety technology?

Key Considerations for Commercial Fleet Insurers

1. Insurers continue to struggle for profitability in commercial auto insurance and are naturally reluctant to trust that technology will deliver improved results.
2. Insurers need to be sure that any investment in technology is not lost if the insured does not renew their technology program.
3. Despite investments of time and money in technology, accident rates and costs continue to climb, driver distraction is at an all-time high, and affordable insurance is a challenge for all fleets.
4. Improved loss history for the fleet has typically resulted in after-the-fact policy renewal improvements in insurability as the historic prime method of determining rates was based on previous periods actual losses.
5. Previously touted tools to improve loss histories have often had marginal effect, often dependent on expertise and commitment of fleet management to run the program.
6. Insurers are more likely to be most proactive around technology that is:
   1. Proven to produce results
   2. Not contingent on fleet management execution of driver coaching
   3. Addresses a known significant safety issue
   4. Is relatively inexpensive
   5. Provides immediate benefit

Fleet technology deploys various approaches to driver safety. Technologies that report results are least effective. Technologies that warn drivers with real time verbal warnings have a better impact on negative driving behaviors. And technologies that stop the behavior from happening create the most improvement and thus should be the initial focus of insurer financial participation.

Examples of fleet safety technologies:

• Telematics: modest safety improvement, requires installed hardware, dependent on after-the-fact reporting and a continuous driver coaching.
• Dash Cams: expensive but provide clear value in claims settlement and exoneration with “recording of truth”, require installed hardware, provide basis for coaching and possible real-time verbal correction (”slow down, put that phone down, watch your lane changes, watch your following distance”), pending collision warning, dependent on drivers to respond to behavior change messages.
• Collision Avoidance: not dependent on driver responding to verbal alerts or coaching (automatic emergency braking both forward and backward), lane correction, speed governors, cell phone blocking.

What Should You Ask For

1. Commercial Insurance loss control funds: Some insurers provide discretionary loss control funds to policyholders that can be used to help lower the frequency and/or severity of claims.  When you are negotiating your policy renewal, you should ask your underwriter for discretionary loss control funds. There’s no downside to asking and it obviously shows that you are being proactive about insurance loss control, which can only reflect positively for you as the type of policyholder that insurers are looking to work with.
2. Insurance cost sharing: Some insurers provide a program for policyholders where they provide some level of cost-sharing for loss control solutions that the insurer has vetted and approved for the program.  For example, if you use an approved telematics solution, the fleet insurance provider may reimburse you or the telematics provider for a certain % of the cost per year.  This % can be a significant amount and help you defray the cost of the solution.
3. Underwriting goodwill: If all else fails, your company should at least negotiate some explicitly acknowledged goodwill from your underwriter that you have taken the proactive step to mitigate the risk that they are covering and you want that goodwill to be factored into your next policy renewal. Fleet insurance providers classify their policyholders into underwriting tiers based on various factors, including loss history, and you should ask if they will bump you up a tier (or two) based on your adoption of one or more loss control solutions.

Summary

Fleet insurance companies have the incentive to actively support technology projects for insured fleets when that technology addresses a key issue of driver safety, is relatively inexpensive, requires no added hardware in the vehicle, is proven to work, and is relatively immediate in impact. Fleets should not be afraid to ask their fleet insurance providers for help in adopting these technologies.