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The price of vehicle insurance in South Africa is on the rise. This is due to the increase in the cost of vehicle replacement parts and repairs, mainly driven by inflation. Insurers need to account for the increased claims payouts, and as a result, these costs are compensated for through higher premiums.
Insurance costs can amount to a significant portion of running a fleet, so keeping them as minimal as possible is important.
Learn about the connection between telematics and insurance
Find out how insurers use telematics to asses your fleet
Discover the Cartrack solutions that will help lower the risk your fleet poses to insurers
The link between telematics and insurance
As the world continues to experience innovations and technological advancements, the insurance sector is also embracing this shift by leveraging telematics technology. Insurers now use this powerful technology for risk assessment, pricing, and claims management.
To better understand, you first need to know how telematics works. Telematics involves the tracking and monitoring of vehicles through navigation systems, sensors, and sometimes cameras. This tool typically comes in the form of a GPS-enabled device installed in a vehicle to collect data. These devices provide vast amounts of data about driver behaviour, vehicle usage, vehicle health, and location. This information is essential for insurers to assess risk more accurately.
How insurers use telematics data
Insurers use telematics to collect data about driving habits such as speed and harsh braking, to determine risk levels, create a profile for the fleet, and set premiums. The open sharing of telematics data builds trust between fleet owners and insurers, ensuring more accurate and fair pricing based on actual driving behaviour.
What fleet insurers assess to determine premiums
Commercial vehicle insurance requires that the insurer understand the operational demands of the vehicles. Insurers conduct thorough assessments of the entire fleet, taking into account its unique needs and associated risks. In an article by FAnews, Karen Himmer, Head of Distribution at PSG, stated that vehicle fleet insurance should also never be thought of as a “once-off” or “static” agreement. Instead, policies should be regularly updated and reviewed to ensure that the level and nature of cover evolves along with the fleet’s growth and development.
Here are some of the factors that fleet insurers consider to determine your premium:
Number of vehicles: The larger a fleet, the higher the possibility of claims. However, insurers usually give larger fleets more discounts due to reduced administration costs, as they often calculate premiums using a single risk profile instead of having to assess each vehicle’s risk separately for each individual insurance policy.
Usage and mileage: The more time vehicles spend on the road, the more exposed they are to accidents, and the greater the chances of wear and tear. For this reason, insurers want to know how far vehicles travel daily.
Travel zones: Vehicles that travel across borders are charged higher premiums due to the risks associated with being out of the country. Vehicles that operate in high-risk areas attract higher premiums.
Driver record: Having drivers with more experience reduces the chances of accidents. For that reason, insurance companies also check the type of drivers you have in your fleet.
Claims history: A business with a history of frequent claims is more likely to pay higher premiums.
Type of goods being transported: Insurers usually include the cargo being transported. If it is of high value, then there are more risks associated with the fleet. Taxi and shuttle businesses should have liability coverage given the risk of personal injury and death when transporting people.
The presence of security measures: A fleet equipped with tracking devices and telematics capabilities reduces the risk of accidents, resulting in fewer claims. This, therefore, results in lower premiums.
Key ways telematics impacts fleet insurance
There are several ways in which telematics affects fleet insurance. Here are four of the most impactful:
Usage-based insurance (UBI) options The pay-as-you-drive or pay-how-you-drive models are growing in South Africa. Usage-based insurance is when insurers use telematics data to customise premiums, leading to potential savings, i.e the better the driver behaviour, the higher the chances of lower premiums.
Improved risk assessment Telematics data gives insurers insightful information on where vehicles travel, the road conditions, and how safe it is. This enables more customised and fair premium pricing.
Accident mitigation Monitoring driver behaviour and vehicle conditions translates to fleet managers being able to quickly identify unhealthy driving patterns and mechanical issues. This allows them to take action before drivers and vehicles cause accidents.
Faster claims resolution Since telematics devices can pick up driving habits and impact, businesses get to prove their innocence in cases of fraudulent accident claims through accurate data. This speeds up the claims process and reduces the delays caused by disputes.
Preventive maintenance: A fleet management system alerts managers of maintenance issues before they become serious problems so they can schedule maintenance, avoid unplanned downtime, and avoid costly repairs. This information reduces fleet expenses while minimising fleet safety risks.
Driver behaviour alerts: Thereal-time alerts and reports on driver behaviour allow managers and supervisors to address concerns and send fleet operators for coaching based on the specific help they need.
Route monitoring: The GPS tracking technology enables fleet coordinators to spot deviations and when drivers are in high-risk zones or accident-prone areas in real time. This allows them to contact the driver and check if there are any issues.
Data protection and compliance with POPIA in telematics
Telematics systems collect a significant amount of sensitive business information. Data security is an essential aspect of fleet management software, and therefore, your fleet’s data should always be protected. Insurers must comply with South Africa’s Protection of Personal Information Act (POPIA) when getting access to your telematics data. There should be no misuse or unauthorised sharing of data, and there must be transparency on the data collected. This ensures that your fleet records aren't shared with third parties.
Case Study: Preventive maintenance measures for Concord Cranes
The key to better insurance premiums is fleet maintenance and driver monitoring. Here is a real-life story of how we assisted Concord Cranes through our preventative maintenance measures:
Concord Cranes is a company that specialises in crane hire solutions. They provide mobile cranes for hire, professional rigging, transport, and specialised lifting projects across 15 branches.
They often found it difficult to accurately record the hours each crane worked, making it challenging to maintain and deliver them to their clients on time.
How Cartrack makes a difference:
Cartrack's telematics device and specialised power take-off sensors make it possible for Concord Cranes to accurately monitor their cranes' on-site working hours, mileage travelled, and see exactly what equipment a crane used. This data allows them to track the condition and usage of their cranes so they can establish preventative maintenance measures for their clients and increase their fleet longevity.
Cartrack’s fleet management system with preventative maintenance insights has helped Concord Cranes reduce maintenance costs by minimising the number of cranes sent for expensive, fault-related repairs. This also reduces unplanned downtime for general services.
Concord Cranes also uses Cartrack’s fleet management and maintenance system to improve overall brand reliability with their customers, ensuring their cranes are always in safe and working order. Additionally, detailed maintenance schedules have reduced the number of unexpected breakdowns and allowed proactive planning for the timely availability and deliverability of cranes to customers.
“Using Cartrack’s advanced fleet management, we have been able to increase our operational efficiency to deliver a better service to our customers, as well as effortlessly establish a maintenance cycle that reduces our costs and increases our fleet longevity.” | Gareth Langley, Concord Cranes operations manager
Enhance your fleet insurance with Cartrack’s advanced solutions
Businesses can reduce their insurance premiums by implementing robust risk management practices and maintaining a good safety record. At Cartrack, we offer services that help with safe driving, vehicle maintenance, planning routes, and vehicle recovery. Here’s how they work:
Maintenance scheduling Our fleet system allows you to set reminders of vehicle service dates, ensuring vehicles are always in top shape and that you plan ahead for the downtime. Additionally, you can also receive real-time alerts of engine faults, worn-out brake pads, oil and water fluctuations, and other diagnostics.
Risk management (Stolen Vehicle Recovery) At Cartrack, we boast a 90% average recovery rate, have a large team of skilled recovery agents spread across the country, and a control room service that is available 24/7. Should the unfortunate happen, our teams are always on standby ready to get back what belongs to you. A stolen vehicle recovery service is also one of the things that are highly recommended by insurers, especially for a fleet that transports high-value goods, with some insurance companies even refusing coverage without one.
Driver monitoring Ensuring the safety of drivers and monitoring how they operate fleet vehicles is one of the best ways to avoid frequent insurance claims. Our telematics devices provide reports and alerts on driving behaviours such as excessive idling, speeding, harsh braking, harsh cornering, and harsh acceleration. This allows you to spot risky driving patterns, address them with drivers and send them for training. As an extra precautionary measure, you can invest in our AI-powered cameras to monitor drivers. These cameras are able to detect when drivers are distracted, using their cellphones, feeling drowsy or smoking. The system then gives drivers audible alerts so they can quickly correct their actions. Through this, drivers avoid collisions, which could be fatal or lead to heavy insurance claims and repair costs.
Live tracking The Cartrack fleet system gives you the ability to track the locations of your fleet vehicles at any time to ensure that drivers are using the correct routes and that they are safe.
Geofence The Cartrack geofence feature ensures that drivers always stay in the stipulated zone. Through this software, you can create virtual boundaries around areas of your choice and get alerts whenever vehicles enter or leave those areas. This ensures that you are always aware when vehicles are in high-risk zones which could indicate theft or deviations.
Route optimisation Our route optimisation feature is a smart tool that helps plan your routes so you can choose the most efficient ways for drivers to get to their destinations. This is done through the analysis of road conditions and traffic patterns, helping avoid delays, reducing mileage, and minimising exposure to extreme road conditions that increase vehicle wear and tear.
Improve your fleet’s insurability with Cartrack’s data-driven management tools
Insurance is a must, and so is a fleet management system. Our solutions give you better insight into your fleet so you can make more informed decisions that help you avoid higher insurance premiums. Contact us today and unlock fleet savings!
Frequently Asked Questions about telematics and insurance
How does a black box affect insurance? A black box is a telematics device that tracks driver behaviours such as speeding, harsh cornering, and braking patterns. Insurers use it to accurately assess the driver’s risk and determine the insurance premium.
Which type of insurance uses telematics to help make decisions around premiums?
Usage-based insurance (UBI) is a type of insurance where insurers use telematics technology to determine premiums. They track mileage, speed, time of day, braking patterns, and acceleration. This information is then used to tailor monthly premiums for your vehicle. For example, people who work from home might argue that they hardly use their vehicles and should therefore pay less. UBI makes that possible through telematics technology.
Telematics is a powerful tool for vehicle owners and fleet businesses. Insurers also use this technology to accurately determine premiums. Find out how.
