Insurance has always been a data-driven enterprise. Age, driver history and location, for instance, have all been classic data points that get factored into what sort of policy an insurer offers to commercial fleets. But these days, technology has made collection of even the most granular data points far more immediate and far less analog.
Geotab is among the fleet intelligence solutions whose data insurers use to craft policies for delivery fleet customers. Its Geotab Go GPS-based vehicle tracking device plugs into a truck’s system and collects precise information on vehicle location, speed, trip distance and time, engine idling and more.
And this month, the company is launching an insurance marketplace that will greatly ease the policy-shopping process for commercial fleet owners, integrating the sort of data that its tracking system delivers.
The question is, what are the primary data points that are most likely to influence the policies that insurers in such a marketplace and elsewhere ultimately craft for their prospective fleet clients?
“The data itself that’s used by insurance companies varies,” says Jim Davis, vice president of insurance at Geotab. “Every insurance company has their own algorithm and how they score the risk.”
But, generally, Davis says that there are four overarching areas that most insurers use in their scoring: speeding, hard braking, and where the drivers drive and the time of day they’re most frequently driving. The first two are fairly straightforward indicators, while the latter two can be a little more nuanced.
As far as the “where,” there’s greater liability in some areas than in others. “Some juries are more aggressive against corporations in certain states and others are not,” Davis explains.
When it comes to the “when,” there tends to be more risk driving at night. “You could say there are fewer cars [on the road], but people drive faster at night,” Davis says. “We all experienced that during Covid, right? Risk went up when there were no cars on the road, crashes went up and people were losing their minds.”
The main difference among insurers is how they choose to prioritize each of those areas in their policy development. “They all have different strategies of how much you weight one over the other because it’s just one big pie,” Davis notes, “and how do you slice that up?”
Of course, things were a bit simpler when we were talking about conventional vehicles with traditional engines. The advent of electric vehicles is adding new levels of complexity to the insurance process. For one, electric vehicles (EVs) are known for their higher torque, enabling them to accelerate much faster from a stop.
“When you talk about … the things that keep insurance companies up at night, it’s those crashes that are happening from people going really fast like that,” Davis says. “That’s the liability side, that’s the ‘I’m going to kill someone.”
As liability accounts for around 70% of a policy, that’s a significant concern that could factor into the cost to insure an EV. Electrification can also impact the other 30%, which mainly focuses on damage to the vehicle itself — usually in the form of comprehensive and collision coverage.
EVs have, for example, many extra sensors on them that are more expensive to replace. The added parts cost, the additional work and expertise required to fix them and the supply-chain-related challenges involved in procuring them all can play a role in an insurer’s coverage algorithm.
“Yes, the insurance company is looking at it, but does it keep them up at night as much as the liability and safety?” Davis offers. “No, because it’s a smaller piece of a smaller piece.”