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3 ways data can help transportation companies better manage risk

3 ways data can help transportation companies manage risks and improve underwriting results.

05/13/2024 · 3 minute read

Fleet owners face extensive risks. Vehicle incidents can have a devastating impact on drivers, other motorists, and pedestrians. In 2021, for example, there were more than 5,700 fatalities and close to 155,000 injuries related to traffic crashes involving large trucks. These incidents can also lead to extensive costs when it comes to vehicle repair and replacement, as well as a significant increase in insurance premiums and cost of claims.

High claim settlements together with stricter state and federal regulations are among the multiple risks contributing to a more challenging auto fleet insurance market for organizations that manage a fleet, whether of trucks, automobiles, tractors, or other vehicles. While traditionally affecting mainly trucking companies, today most organizations with large fleets are encountering challenges securing sufficient coverage without significant price increases and restrictive terms and conditions.

As they seek to reduce potentially dangerous incidents and access more stable insurance rates, transportation companies can leverage data in three main ways to obtain critical driver-specific information that allows for a tailored risk management strategy.

1. Harnessing the power of data to improve safety

Technology embedded in trucks and other vehicles provides transportation companies with a wealth of data, including recording excessive speed, hard breaking, collision avoidance maneuvers, and the signs of distracted driving. When properly analyzed, this information allows risk and fleet safety managers to identify potential challenges and take proactive steps to address them.

Most significantly, driver-specific data allows organizations to take action to address individual challenges through targeted training that focuses on an individual driver’s learning opportunities, such as hard braking, insufficient following distances as well as distractions and fatigue that could lead to vehicular collisions. And because data is captured live, when organizations have the resources — either internal or external — to analyze it quickly, they can not only address issues immediately, but also track granular improvements and provide actionable feedback.

A move away from a one-size-fits-all training approach allows transportation companies to use their training dollars more effectively through a targeted approach that is specifically designed to address their existing challenges. Further, a more targeted training strategy is integral as the industry continues to grapple with significant driver shortages, which is most pronounced in the trucking sector.

Aside from helping reduce risks for transportation companies, data-driven enhancements can improve road safety, creating a positive impact beyond the organization.

It’s also important to note that advanced technologies may allow trainer to coach drivers engaged in at risk behaviors with the aim of reducing collision events and associated injuries.

2. Leveraging data to understand incident circumstances and be prepared for potential litigation

Aside from providing critical driver-specific information, AI-powered dashcams and other image-capturing technology can help transportation companies better understand the circumstances surrounding an incident. This becomes even more important when an incident results in injuries — to drivers or third parties — or property damage and there is a potential for litigation.

Considering the challenging trend of high and unpredictable settlements and the increased cost to litigate a case, which has made it harder to model potential losses, visual information about the circumstances surrounding an incident can help transportation companies defend themselves. In certain situations, this data can also avoid costly litigation by providing both parties with clear information about the likely cause of an incident.

3. Understanding data trends to improve underwriting outcomes

Commercial auto and excess casualty rates have been registering significant increases for multiple quarters. This trend was accompanied by increased scrutiny from underwriters, as well as narrowed coverage and reduced limits. In many instances, limits are no longer available per occurrence, but on an aggregated basis, putting increased pressure on organizations with large fleets that face significantly higher risks of costly claims.

In today’s difficult insurance environment, data-based insights can help transportation companies demonstrate the results of risk management strategies to underwriters during renewal meetings. For example, results of targeted training and how this led to improvements in individual driving habits can provide clear and data-driven evidence of an organization’s progress in its efforts to improve safety.

Considering today’s complex insurance landscape, it is important to work with a broker or insurance advisor who can help you identify underwriters that are open to using telematic data when determining rates and extent of coverage, which can help drive down your risk transfer costs.

Improving the safety of drivers and contractors is critical. By capturing data and analyzing it effectively, transportation companies can identify challenges and make the necessary changes, which can also help them secure better auto fleet coverage during a challenging market.

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Paul Woodward

Paul Woodward

Head of Casualty, Bowring Marsh

Craig Dancer

Craig Dancer

US Transportation Industry Practice Leader