motor carrier - Central Analysis Bureau

How Telematics Boosts Safety and Savings for Motor Carriers and Insurers

Telematics has rapidly transformed the landscape of the insurance industry by collecting real-time data on vehicle performance, driver behavior, and vehicle location. This data allows insurers to uncover deeper insights into risk factors and safety metrics that were once difficult to quantify.

This article explores how telematics is revolutionizing risk scoring, influencing insurance rates, and driving decisions for underwriters and claims managers, specifically in the motor carrier industry. We’ll examine the advantages of telematics data, discuss its implications for insurers and motor carriers, and take a look at the future trends shaping this powerful tool. Whether you’re a fleet operator or an insurance professional, understanding these shifts is essential to staying competitive in a data-driven market.

Benefits of Telematics for Insurers

With telematics, underwriting moves from a “one-size-fits-all” approach to a model where policies can be customized for each motor carrier’s unique risk characteristics. For example, telematics can tell you how often a fleet operates in urban areas during peak traffic hours, which can be factored into its overall risk profile. It’s also possible that some carriers might exhibit consistently safe driving behaviors, which could make them eligible for reduced premiums or other incentives.

In this section, we will examine more ways telematics benefits insurers and enhances their underwriting ability by:

1. Preventing Premium Leakage

2. Enhancing Risk Assessment

3. Boosting Client Retention

4. Streamlining Claims and Enhancing Fraud Detection

5. Accelerating Growth Through Increased Efficiency

1. Preventing Premium Leakage

Telematics technology enables underwriters in the motor carrier industry to combat premium leakage by providing precise, real-time data on vehicle usage and driver behavior. For instance, telematics can accurately track mileage, ensuring that premiums reflect actual vehicle use rather than relying on potentially underreported estimates. This accuracy helps prevent losses and possible coverage declinations due to misreported information.

According to an article by ForMotiv, premium leakage cost the U.S. property and casualty insurance industry between $29 billion and $36 billion in 2022. It also accounted for up to 10% of an insurer’s loss and loss adjustment expenses. By leveraging telematics data, underwriters can enhance risk assessments, set appropriate premiums, and reduce the financial impact of premium leakage overall.

2. Enhancing Risk Assessment

Traditionally, insurers have relied on historical data like demographics, class of vehicles, and historical accident statistics or safety scores to determine rates. When insurers use telematics, they can collect even more data in near real-time to gain a clearer understanding of a company’s operational dynamics and commercial auto exposure. This includes data on average speed, travel routes, braking behavior, and other key metrics.

Having more data enables insurers to more accurately assess and rate risks based on exposure, providing tailored pricing that reflects the safety and operational practices of fleets, whether they have safer or riskier drivers.

3. Boosting Client Retention

Traditional data collection methods provide valuable insights into operational behaviors. By highlighting safety scores or identifying areas with frequent violations, clients can pinpoint opportunities for improvement. This not only helps them mitigate risks but can also contribute to stopping their insurance premiums from rising, ultimately supporting stronger client retention.

With telematics, insurers can provide their clients with deeper insights, such as identifying drivers who may be speeding, braking excessively, or taking higher-risk routes. By enabling fleets to focus safety coaching on the drivers who need it most, telematics helps clients improve their operations and reduce risks—strengthening their relationship with insurers and improving retention through demonstrated value and result.

4. Streamlining Claims and Enhancing Fraud Detection

Telematics plays a crucial role in claims management, fraud prevention, and first notice of loss (FNOL) by providing real-time data on driving events, vehicle location, and incident specifics. When an accident occurs, telematics data can offer an accurate timeline and context, such as speed, braking patterns, and time of day – enabling claims adjusters to quickly verify details, assess liability, and initiate the FNOL process efficiently.

These insights reduce claim processing time and lower costs by identifying fraudulent claims early. For instance, if telematics data reveals that a vehicle was parked at the time of an alleged accident, it can signal potential fraud. By providing transparent, verifiable data, telematics streamlines claim handling, supports fair assessments, and ultimately helps reduce unnecessary payouts and improve insurer-client trust.

5. Accelerating Growth Through Increased Efficiency

According to a report by Fortune Business Insights, “The [telematics] market is projected to grow from USD 85.95 billion in 2024 to USD 170.35 billion by 2032, exhibiting a CAGR of 8.9% during the forecast period.” This rapid growth highlights the increasing value insurers place on telematics and that insurers are adopting telematics into their workflows at a fast rate. By integrating telematics into workflows, insurers and underwriters can innovate faster, respond to market demands, and deliver greater value to policyholders.

“The [telematics] market is projected to grow from USD 85.95 billion in 2024 to USD 170.35 billion by 2032, exhibiting a CAGR of 8.9% during the forecast period.”

Benefits of Telematics for Motor Carriers

Telematics offers motor carriers a powerful tool for reducing costs, improving safety, and enhancing their overall operational efficiency. By using real-time data on vehicle locations, speed, braking, and other driving behaviors, carriers can gain valuable insights into driver performance and fleet risk.

In this section, we will examine more ways telematics benefits motor carriers and their operations by:

1. Improving Fleet Safety

2. Reducing Fuel Costs

3. Enhancing Fleet Management

1. Improving Fleet Safety

Drivers who actively engage with telematics systems tend to improve their safety performance. According to a study by Cambridge Mobile Telematics, they found that the riskiest and most engaged drivers decreased their distracted driving time by 20%, decreased speeding time by 27%, and reduced hard braking incidents by 9%.

The Federal Motor Carrier Safety Administration also conducted a study where it was found that drivers who were aware that their driving performance was being monitored were more safety conscious behind the wheel. By adopting telematics and improving their driver’s safety performance, fleets can improve their safety scores, which can help them find more clients and reduce their insurance premiums.

2. Reducing Fuel Costs

According to the same FMCSA study that found telematics improved drivers’ safety performance, it also discovered that the safety benefits associated with driving behavior also benefited the fuel economy for the truck. This finding is backed by another study conducted by the Massachusetts Institute of Technology, which shows that aggressive driving behavior can lower fuel economy by 15%-30% at highway speeds and 10%-40% in stop-and-go traffic.

Adopting telematics in your fleet can reduce fuel costs by improving driver behavior. With telematics, you can see which drivers tend to speed or brake and accelerate suddenly. From there, you can coach and train these drivers to help them improve their driving performance and therefore their fuel economy as well.

3. Enhancing Fleet Management

Telematics isn’t just for tracking a driver’s location and behavior, it can also help fleets with smarter, more proactive fleet management by monitoring vehicle health and alerting managers to maintenance issues before they become costly problems. Through real-time data on engine performance, tire pressure, brake wear, and other critical systems, telematics can detect early warning signs of potential failures, allowing fleets to schedule maintenance at the optimal time before those potentials equipment issues become reality.

This proactive approach minimizes unexpected breakdowns, reduces downtime, and helps avoid emergency repair costs. With detailed insights into vehicle conditions, fleet managers can make data-driven decisions to extend vehicle life, enhance driver safety, and reduce operational costs.

Future Trends in Telematics for the Motor Carrier Industry

As technology advances, telematics is transforming beyond tracking and monitoring, becoming a critical tool for predictive risk management and motor carrier efficiency. Here are some future trends to be on the lookout for in the motor carrier industry:

Artificial Intelligence and Machine Learning

AI and machine learning are revolutionizing telematics by creating predictive risk models that anticipate potential safety issues before they occur. These technologies analyze patterns in driver behavior, vehicle performance, and environmental factors to identify risks and give both insurers and motor carriers invaluable insight into a fleet’s operations.

According to an article on Progressive’s competitive prices by Carrier Management, telematics data has been found to be the most predictive rating variable for Progressive, with significantly more predictive power than traditional rating factors. The data shows telematics has more than twice the predictive power of any other insurance rating factor.

As AI continues to improve, its collaboration with telematics is sure to grow even more and help insurers find new ways to make a fleet’s risk profile even more accurate.

Policy and Regulatory Implications

As telematics technology advances, policy and regulatory frameworks are evolving to address critical issues around data use, privacy, and safety compliance. That will most likely include new regulations or adjustments to current regulations that govern how telematics data is collected, stored, and shared, ensuring that both motor carriers and drivers are protected.

One way that some telematics companies are addressing that is with “opt-in” solutions. For example, TruckerCloud, a new partner of Fusable and the leading telematics platform for commercial auto insurance, gives motor carriers the opportunity to share their telematics data with insurers. That means they can choose to give insurers access to their data, and that access can be revoked at any time. Though there are numerous benefits to motor carriers sharing this data with insurers, it still gives motor carriers full autonomy over their private information.

Another way is by providing the same data to both parties to improve data transparency. For example, Fusable provides additional motor carrier insights to both insurers and motor carriers themselves, such as CSA scores, giving insurers the information they need to write accurate policies and motor carriers the information they need to improve their safety performance and lower their insurance costs.

Conclusion

Telematics is reshaping the motor carrier and insurance industries, enabling both insurers and fleets to leverage data for more accurate risk assessment, personalized policy pricing, and proactive fleet management.

For insurers, telematics can benefit the underwriting process in a number of ways including reducing premium leakage, lowering fraudulent claims, and increasing client retention. For motor carriers, telematics can provide different benefits, such as enhancing fleet safety, lowering fuel costs, and reducing insurance premiums.

Emerging technologies like artificial intelligence are further enhancing telematics, expanding its potential for predictive risk management and setting new standards for operational efficiency and safety. However, with these advancements comes the need for evolving regulatory frameworks to ensure responsible data use and privacy. Staying informed and adaptable in this dynamic landscape is crucial for carriers and insurers alike as they strive to remain competitive and deliver greater value.

Does Motor Carrier Safety Culture Actually Work

For motor carriers, “safety culture” is more than just a buzzword, it’s a critical element that ensures the well-being of your drivers, protects human life, and maintains the financial health of your business. At its core, safety culture reflects how seriously your organization prioritizes safety, from the drivers on the road to the executives in the boardroom.

However, creating and maintaining this culture presents its own set of challenges.

Yet, with the right tools and commitment, it’s possible to build a safer, more efficient operation. In this article, we’ll discuss case studies that dive deeper into how safety culture benefits motor carriers, how you can cultivate a safety-first mindset within your motor carrier, and why it matters.

What is Motor Carrier Safety Culture?

Motor carrier safety culture refers to how employees of a motor carrier perceive safety. That includes everyone in the company from the drivers and mechanics to the CEO.

Is safety a number one priority or an afterthought? Are employees thoughtful about safety because they fear being punished or because they have a strong desire to stay safe?

It’s no mystery why creating a safety culture might be important in a motor carrier. In 2022, there was an estimated 160,000 large truck crashes nationwide. That’s not only a problem for your motor carrier insurance claims, but it’s also a huge risk for human life for your drivers, other drivers on the road, and everyone’s families.

Proven through numerous research and studies, improving the safety culture of your motor carrier can not only help reduce the number of crashes and violations of your drivers, but it can also provide them with other benefits as well.

What are the Benefits of Motor Carrier Safety Culture?

Creating a workplace culture that prioritizes safety is crucial for the longevity of your motor carrier. That’s because it can create numerous benefits for your company, including:

Reducing costs: Whether it’s from reducing the need for truck repairs after accidents or lowering your insurance premiums, improving the safety of your motor carrier can help reduce the costs of running your business.

Improving job performance: Creating a safety culture in your business not only ensures that your drivers avoid more accidents, but in turn, your clients’ goods arrive on time and intact. This can help you with higher client retention rates.

Litigation protection: Motor carriers with stronger safety cultures work harder to prevent circumstances that might result in legal action. That includes unsafe driving, truck collisions, and more, which helps protect your business from litigation.

Retaining employees: Employees don’t want to work somewhere that might be dangerous to their health or wellbeing. In a 2021 survey on workplace safety, 41% of respondents said they had left an organization due to unsafe work conditions. Creating a safer work environment can enhance employee retention.

Improving Motor Carrier Safety Culture Case Studies

Over the last decade, there have been numerous studies done on the best ways to improve motor carrier safety culture and its overall results. Some of those studies include:

National Surface Transportation Safety Center for Excellence

The NSTCE conducted a study on Effective Strategies to Improve Safety in commercial motor carriers. Results showed that nine motor carriers had successfully improved their safety outcomes including less severe crashes, insurance claims, and improved CSA and BASIC scores. In this study, researchers discovered a connection between an organization’s safety culture and their actual safety performance.

“The safest companies had strong safety cultures where safety was valued, costs were not a factor when making safety decisions, employees were comfortable raising safety concerns, and all employees “bought-in” to the safety process.”

One of the most effective strategies they observed for creating a safety culture was the dedication and commitment from the top of its organization. This included regular safety meetings and maintaining consistent communication where safety was the main topic.

Overall, six out of the nine motor carriers researched cited safety culture as one of their main focuses for improving their safety. Some notable safety improvements out of these six motor carriers included a 75.6% reduction in preventable crashes, a 45-percentile improvement in CSA Unsafe Driving BASIC, and an elimination of all preventable rear-end crashes and rollovers.

Federal Motor Carrier Safety Administration

This U.S. Department of Transportation (DOT) report provides a recommendation for how the Federal Motor Carrier Safety Administration (FMCSA) can determine if a new entrant applicant meets safety requirements and how the FMCSA can better prepare new applicants to remain safe as they continue to operate.

What the report found was that creating a safety culture within the motor carrier created a substantially better safety performance.

“A hypothesis grows from this that the ongoing operational safety behavior of drivers is predominantly shaped by their motor carrier’s safety culture. Thus, a motor carrier’s safety culture should manifest itself in safety performance statistics relating to all aspects of operations, including drivers’ safety performance.”

The report goes on to talk about how to measure whether a safety culture can be fostered within a motor carrier. Essentially, measuring how effective proactive, early training and testing of new entrants’ management persuades them to adopt a long-term safety culture.

In the end, the Department of Transportation found that providing motor carriers with early, and proactive safety training, compared with the control group carriers, did improve their safety performance. It also included their performance with inspections, crashes, and overall attitude toward safety.

How To Create a Safety Culture in Your Motor Carrier Business

Here are some tips to help you create a safety culture within your motor carrier:

1. Leadership Commitment

No matter what culture you want to create in the workplace, everything starts at the top. If drivers don’t feel like management cares about safety, it doesn’t give them a lot of motivation to care about it themselves.

Research has shown that companies with strong management commitment to safety experience fewer crashes and better safety outcomes. A study highlighted by the FMCSA found that management’s active involvement in safety programs, such as attending safety meetings and reviewing safety performance, significantly correlates with improved safety outcomes.

2. Open Communication and Reporting

It’s also important for leaders to create an environment of open communication. This allows employees to feel more comfortable reporting safety concerns or near-misses without fear of retaliation. Encourage an open dialogue about safety issues and make sure that feedback is taken seriously and addressed promptly.

3. Ongoing Training and Education

Ongoing training and safety education allows motor carriers to consistently remind their drivers and employees about the importance of safety, not only for business but for their livelihood. It also provides drivers with any updated safety rules and regulations they need to be aware of while on the road.

From the DOT case study listed in the previous section, motor carriers that provided proactive and continuous training to new entrants saw a significant reduction in crashes and safety violations. The crash rate of carriers that received additional safety training was 30% better than the drivers in the control group. Overall, the study showed that all training programs that included follow-up sessions and reinforced homework led to better safety performance compared to those that did not.

4. Monitor Safety Scores and Data

Caring about safety scores and data is crucial for motor carriers because it directly impacts their ability to foster a strong safety culture. Good safety scores demonstrate a commitment to safety, reducing the risk of accidents and enhancing the company’s reputation. Analyzing safety data allows for the identification of risk areas and proactive interventions, leading to fewer incidents, lower insurance costs, and improved operational efficiency.

What are the Challenges of Creating a Safety Culture?

Though creating a safety culture is essential to reducing crashes and improving safety scores, it can pose some challenges to motor carriers, including:

Resistance to Change

One of the most significant challenges in establishing a safety culture is overcoming resistance to change, particularly from long-time employees who may be accustomed to certain ways of operating. It’s possible that drivers with years of experience might view new safety protocols or technologies, such as telematics systems or electronic logging devices, as intrusive or unnecessary.

This resistance can slow down the implementation of safety initiatives and create divisions within the workforce, making it difficult to achieve a unified safety culture. Overcoming this challenge often requires clear communication, demonstrating the benefits of these changes, and involving employees in the decision-making process for new safety policies.

Inconsistent Enforcement

Ensuring consistent enforcement of safety policies across all levels of a motor carrier’s operation is crucial but can be challenging. Sometimes, due to lack of oversight, differences in management styles, or varying levels of commitment among different departments, it’s possible that rules might be applied unevenly. This can create confusion and undermine the perceived importance of these policies.

For example, if some managers strictly enforce seat belt use while others overlook it, drivers may question the company’s commitment to safety. This inconsistency not only hampers the development of a safety culture but can also result in increased traffic violations.

Lack of Resources

Smaller motor carriers often face significant challenges due to limited financial and human resources. This can make it difficult to invest in the tools and programs necessary for fostering a strong safety culture. Unlike larger carriers, which may have more resources and dedicated safety departments, smaller companies might struggle to afford comprehensive safety initiatives.

That’s why it can be helpful for motor carriers to have a tool or solution that can solve multiple problems or provide ample data and information all in one place. This allows them to allocate their budget to one solution versus multiple, helping them utilize their resources more efficiently.

For example, MC Advantage by Fusable, allows you to analyze your CSA score, see detailed inspection reports, and develop safety score cards for your drivers. MC Advantage will even give you a detailed report with the same details that insurance companies review, so you know what needs your attention most to improve your safety performance.

In Conclusion

Based on research conducted over the past decade, it’s been proven that a strong motor carrier safety culture leads to less crashes, less violations, and improved safety performance. This can provide motor carriers with ample benefits, including lowered insurance costs, employee retention, and litigation protection.

Though fostering a safety culture in your motor carrier business might come with challenges, using the right tools and resources can help alleviate the stress. Powerful data products like MC Advantage can provide you with the information your motor carrier needs to better monitor its current safety performance and find ways to improve it.