ELDs, safety technology and the effect on fleet insurance costs
ATLANTA. As a fleet owner, you’ve installed electronic logging devices (ELDs) and other safety technologies throughout your entire fleet. Now your insurance premiums will automatically decrease, right?
Not necessarily, explained Harry Storck, global fleet technical specialist at AIG.
Storck, speaking to attendees at TU-Automotive’s Connected Fleets conference here in Atlanta, discussed the insurance carrier’s perspective on how connectivity is changing the landscape of commercial fleets.
“Everyone is looking at it like, ‘Oh, if I sign up to get a telematics device in my vehicle, my premium is going to go down, right?’ And the answer is no, it’s not. Just the fact of fleets putting a telematics device in a vehicle or a camera or a smartphone app, that’s not going to make your $500,000 premium go down.”
Part of the reason, Storck noted, is that every insurance company covering the commercial automotive liability market is in the negative right now. So what it really boils down to for fleets seeking to reduce their premiums is sustained improvement over time, he added. And ELDs could end up helping carriers accomplishment that.
According to Storck, the insurance industry is expecting to see a reduction in accidents and fleet risks due ELD implementation. “But we have to wait and see what happens,” he noted. “Insurance premiums are based on multiple factors. If your risk goes down over the last three years, your insurance premiums will go down.”
Storck also pointed out that there’s a bit of trepidation in the marketplace now that the insurance companies have become the new “Big Brother” when it comes to data collections.
“We’re the ones that want to see the data and make decisions on risk based on real data,” he said. “And we kind of use the adage: Tell me, show me, prove it.”
Right now, when it comes to ELD regulations, more than half of the marketplace that is going to be subject to the mandate has not taken action yet. And a recent study suggests small- and medium-sized fleets are waiting as long as possible to implement electronic logs.
“So for the JB Hunts, the Schneiders, and all these other large fleets, they are the early adopters [of ELDs],” Storck explained. “They are the safety-conscious organizations, and they should be very proud of that. But the reality in the U.S. is that over 90% of trucking companies operate a fleet of six vehicles or less, and 97% of trucking companies operate a fleet of 20 vehicles or less. That’s a different audience than the corporate risk management team with multiple safety managers across the country.”
Storck added that as long as there is still a human driving the vehicle or the driver still has some level of responsibility for the vehicle’s operation, technology alone is not going to solve all the problems. He stressed the importance of fleets setting up supervisor-driver interaction policies and gamification tactics that can help target and fix risky driving behaviors, such as speeding and harsh braking.
“If you don’t have that supervisor-driver interaction – that coaching – and living by your fleet policy involved in your corporate culture you won’t see a change in your claims,” Storck stressed. “It’s like buying a treadmill and putting it in your basement to hang your wet clothing.”
