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Commercial Auto Fleet Insurance and Safety Scores

July 12, 2018

Some commercial insurers are today able to arrive at more accurate policy pricing because of the significant amount of analytics data they get from new vehicle technologies. They are building more advanced risk-models instead of merely referring to the five-year claims history. Innovative insurers are now able to offer a combination of Driver Scores, Fleet Safety Scores, and DashCam systems to commercial fleets for Usage Based Insurance (UBI).

Fleet safety gets on par with efficiency

Telematics today focuses on identifying dangerous driving behaviors and driver risk, such that relevant remedial measures can be undertaken promptly. While the earlier notion of UBI only took into account the total miles driven, we’ve moved on today to combining driver behavior data with rich contextual information on risk factors such as the prevailing conditions—weather, traffic, time of day, zip-code miles etc., all of which provide additional dimensions that together provide a more complete representation of risk over those miles.

The primary reason for deploying telematics in a commercial fleet is to improve fleet efficiency, and not only for lowering risk. Fleets can reap multiple benefits from a cutting-edge telematics solution—greater safety, reduced risk, lower operating costs, less fuel wasted, and higher efficiency. However, a new generation Telematics solution also offers much insight into the driving style of individual drivers, and it can accurately pinpoint the kind of coaching required for various drivers who are in the high-risk category.

Why Fleet insurers are rewarding improved safety scores

Finally, with more affordable telematics, one can expect to see new programs from insurance companies which are specifically tailored for fleets. Insurers are applying a deeper knowledge of the actual risk, and looking at recorded improvements in driver behavior. Fleet customers with clear evidence of such improvement will be rewarded by insurers with suitable pricing. This would depend on reliable, advanced Driver Scores. For a fleet to actively pursue a marked improvement in overall fleet score, an effective Rewards System has to be in place so that the company can become eligible for lower insurance premiums.

Azuga has developed a proprietary algorithm that is the basis for its Advanced Driver Ranking System.  All drivers’ safety events (speeding, hard braking, rapid acceleration) are analyzed using this algorithm developed by its data science team. Each individual safety score component factors in the magnitude, duration and frequency of events along with spatio-temporal data. The scores give a composite picture of the fleet’s performance to the commercial insurer and has been validated with actual accident data from fleets.

The Gold Standard for a Safety Score?

The marketplace for safety scores can be confusing. Everyone is chasing and some are claiming the gold standard for scoring. Is there really a gold standard? Is gold standard achieved when a brand is applied to a score? What is the correlation with FICO scores? Azuga has also journeyed through this same analysis. The strong correlation was established after receiving real accident data from fleet customers, both reported and unreported accidents. After 2 years of data gathering and correlation testing, Azuga has been able to stand up its scores with actuarial teams, while retaining the flexibility to modify based on a specific insurers needs.

Azuga is working with fleet insurers to help them with win-win customer relationships, better risk pricing, and in developing innovative usage-based insurance products.