From the March 2011 issue of Treasury & Risk magazine

Driving Monitor

Data from telematics systems in company vehicles can identify dangerous behavior, helping reduce accidents and insurance costs.

If an iPhone can make people healthier by tracking how many steps they take, why can't something similar make cars and trucks safer by monitoring drivers' behavior? Telematics equipment--black boxes--has been available for years, helping companies track the locations of their vehicles and the speeds at which they are traveling. Now the devices have become more affordable--and smart enough--to be used to identify unsafe driver behaviors. In January, global insurance giant Zurich announced a product that gathers data from telematics hardware and analyzes it to track driver behavior related to safety, with the goal of reducing accidents and insurance premiums.

The service, Zurich Fleet Intelligence, is currently available only to Zurich's insurance clients, says Bob Tschippert, the company's head of global automotive industry for the Americas.

"We're able to identify quick braking, hard braking, going around turns too fast and start-and-stop driving," Tschippert says. "It helps us identify who the bad drivers are, prior to its leading to an accident."

And that leads to lower insurance rates. "If a company is able to reduce its losses, it will be able to reduce its insurance costs as a result of having a better-than-average loss ratio," Tschippert says.

Companies can even choose to make real-time feedback available to drivers, such as a red light in the cab that flashes if a driver brakes too hard.

"You don't have to have the light flash too many times before you're trained as a driver about what you should and shouldn't be doing," Tschippert says.

The cost of telematics has fallen to the point where companies with as few as 50 vehicles could benefit financially, he says. "And the cost of this will continue to go down." Tschippert declined to give a price for Zurich's service, saying that there were too many variables.

Zurich works with a number of telematics vendors, including DriveCam, GreenRoad, IVOX, SmartDrive and Trimble Navigation. A report released last year by ABI Research of Oyster Bay, N.Y., estimates just 3.5% of company fleets in the U.S. and Canada currently use telematics systems. But ABI predicts that number will grow to 5% in 2013 and 8% in 2015.

Joyce Tam, director of product marketing at Sunnyvale, Calif.-based Trimble, expects to see more interest in telematics analytics from other insurance companies.

In trials, customers were able to "significantly reduce the number of accidents that can occur," Tam says.

And there are other benefits as well, she adds. "We're also seeing a lot of fuel improvements."


For a discussion of companies' efforts to limit employees' use of electronic devices while driving, see Distracted Driving Costs.


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