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Top five telematics concerns for middle-market businesses with fleets

DEC. 01, 2020

KEY HIGHLIGHTS

  • 94% of business owners surveyed agreed that vehicle telematics help protect their employees on the road
  • 91% feel that these solutions have a positive impact on how their business operates
  • But only 60% of agents feel knowledgeable enough to speak about telematics with their clients

 

For businesses across the country, two of the most challenging aspects of their operations are managing their fleet of vehicles and keeping their drivers safe behind the wheel. Operating a fleet of commercial vehicles is not as simple as handing an employee a set of keys and sending them on their way. Businesses spend countless hours each year searching for ways they can improve their fleet management practices.

One increasingly popular way middle-market businesses are tackling these challenges head-on is through the use of telematics systems. Broadly speaking, telematics devices gather data about vehicle performance, driver behavior and vehicle diagnostics (among other things) and then send that information to be evaluated. Common examples of telematics solutions include GPS technology, sensors, mobile applications, dashcams and vehicle engine diagnostics solutions.

As fleet telematics devices become more common, it is incumbent upon insurance professionals to learn more about these solutions, how they are used to benefit businesses and how business owners perceive this technology.

Trends within the telematics space were recently examined in Nationwide’s latest Agent Authority research, which surveyed 200 middle-market businesses with fleet vehicles and 400 independent insurance agents from across the country. In this article, we will examine key findings from that research and explain how independent agents like you can leverage this information to meet the needs of your clients and prospects.

Top Concerns for Middle-Market Businesses with Fleets

1. Distracted driving among employees driving fleet vehicles

2. The rising cost of insurance for commercial fleets

T-3. The safety of employees driving for work

T-3. Accidents involving fleet vehicles

5. Drug and alcohol use among employees

Source: Nationwide Agent Authority research on telematics

 

What middle-market business think about telematics systems

Overall, middle-market businesses tend to be advocates of telematics, with growing momentum in utilization of telematics services offered by their insurance provider. This is hardly surprising, as 94% of business owners surveyed agreed that fleet telematics help protect their employees on the road, while 91% feel that these solutions have a positive impact on how their business operates.

While there are many applications for telematics solutions and a range of benefits, the business owners surveyed gravitated toward a number of key advantages their business gains by using telematics. Interestingly enough, these perceived advantages align closely with the primary challenges businesses face in managing their fleets and drivers. According to those surveyed, vehicle telematics solutions help improve driver productivity and employee safety, prevent accidents and insurance claims, evaluate driver behaviors, implement preventive maintenance on their vehicles and track the location of their drivers. Put another way, telematics solutions can help businesses take a more proactive approach to fleet management by making decisions that are supported by data-rich information sets that can be retrieved in real time.

Top Five Perceived Advantages of Vehicle Telematics for Middle-Market Businesses
Rank
1 Provides the ability to track the location of a vehicle
2 Allows my business to evaluate the driving behaviors of my employees
3 Prevents accidents and insurance claims from occurring in the first place
4 Keeps my employees safe
5 Preemptively identifies problematic vehicle conditions to help avoid costly repairs

Source: Nationwide Agent Authority research on telematics

How much are businesses willing to spend on telematics solutions

When it comes to telematics solutions, there are often questions about costs and return on investment. This is true for business owners and agents alike. What our latest Agent Authority research made clear is that businesses are willing to invest in telematics solutions that can increase safety and have a positive impact on their business. In support of this finding, 93% of fleet owners indicated that they would be willing to pay more in order to ensure a safer driving experience for their employees. This number exceeds the percentage of agents who assumed their clients would pay more for such a solution.

Fleet owners are also willing to pay a higher price point than what agents think for a driving habit tracker. In particular, a majority of business owners with commercial fleets (70%) stated that they would be willing to pay between $20 and $39.99 a month per vehicle for a device that monitored unsafe driving habits. An additional 14% of business owners said they would be willing to spend $40 or more per month per vehicle for such a service. This provides further indicators that businesses are willing to spend to improve the quality of life for their drivers and improve efficiencies in their business.

What challenges exist in fleet telematics

While many business owners in the middle market endorse the use of telematics solutions to improve their fleet management practices, misconceptions and challenges still exist. It is important for agents to be aware of these challenges as they discuss potential telematics solutions with their clients, as well as their clients’ potential concerns about the technology.

Top Five Reasons Why Businesses Don’t Use Telematics Systems
40% Business or business owner does not know enough about telematics
37% Concerns related to the privacy of data being collected
35% The cost of investing in telematics
25% The impression that insurance rates could go up
21% The time it would take to install the devices

Source: Nationwide Agent Authority research on telematics

One major barrier that agents must contend with when pitching telematics solutions to their clients is a knowledge gap. In fact, the leading reason why businesses resist vehicle telematics is that they lack enough information to make an informed decision on the technology. While this is a challenge, it also creates an opportunity for agents to provide tailored guidance by explaining telematics to their client and examining whether it is a good fit for their fleet. Doing so can help agents reinforce their relationships with their accounts.

Another challenge that agents must navigate in this arena is privacy concerns that both business owners and their drivers have about the data being collected by telematics systems. Many business owners fear that the information collected by these devices will be perceived as an invasion of privacy, and they don’t want to make their drivers uncomfortable. Others fear that the data collected could be compromised by a cyber incident. One strategy that agents can employ to address these concerns is to be transparent and work with their carrier partners to provide their client with as much information as possible about how the data collected by the solution will be used and the benefits it can provide the business and its drivers.

Finally, many fleet owners are concerned that the use of telematics could affect their insurance rates. This sentiment was confirmed by insurance agents, as 81% of those surveyed indicated that a segment of their clients believes that telematics data collected on their vehicles could make their insurance rates go up. Interestingly enough, however, the vast majority of middle-market businesses state that they would allow a telematics device to capture driving behaviors if it provided a discount on their insurance costs.

Businesses are seeking more guidance from a trusted advisor

When it comes to seeking guidance on telematics solutions, middle-market businesses place a lot of trust in their agents to provide the information they need to make informed decisions. In fact, 88% of middle-market business owners indicated that they would trust their agent to counsel their business on vehicle telematics. The trust that businesses place in their agents to advise on telematics was reinforced in the Agent Authority research by the fact that 83% of middle-market businesses indicated that their agent was knowledgeable when speaking about the technology.

While businesses maintain a high level of faith in their agent’s ability to advise on this subject, not all agency personnel feel confident in their telematics knowledge base. Only six in 10 agents feel knowledgeable enough to speak about telematics solutions with their clients. Drilling down further, agency principals (74%) tend to be the most comfortable speaking about telematics, followed by producers (59%), and then customer service representatives (37%).

One potential stumbling block agencies should be aware of when it comes to developing their employees’ understanding of telematics is the resources they provide. Generally speaking, agency principals overestimate the level of resources they offer their workforce. While 79% of principals feel they provide their employees with plenty of sources on telematics, only 63% of producers and 32% of customer service representatives agree.

These findings speak to the need for insurance professionals, especially those who work with insureds that have fleet exposures, to stay up to date on the latest trends in fleet management and telematics systems. As more businesses seek out telematics solutions, agents will need to understand the benefits these systems provide, what applications are best for their clients’ particular needs, and ways clients can get the most out of their telematics solutions. Agents should also have a keen awareness of the resources their carrier partners can provide to support these efforts.

 

KEY TAKEAWAYS

  1. Nationwide’s latest Agent Authority study surveyed 200 middle-market businesses with fleet vehicles and 400 independent insurance agents from across the country
  2. Overall, middle-market businesses tend to be advocates of telematics, with seven out of 10 businesses utilizing the telematics services offered by their insurance provider
  3. But only six in 10 agents feel knowledgeable enough to speak about telematics with their clients

 

Survey methodology

Nationwide commissioned Edelman Intelligence to conduct a 20-minute quantitative online survey among a sample of 1,600 U.S. independent insurance agents, mid-market business owners with fleet vehicles, and general consumers between June 9 and June 25 to understand what business owners and consumers value when buying or renewing insurance policies, explore the different challenges each audience faces around insurance, gauge perceptions of the economy and how each audience is managing uncertainty, and find out the actions business owners and consumers have taken as a result of COVID-19 and the conversations they’re having with agents. As a member of CASRO in good standing, Edelman Intelligence conducts all research in accordance with Market Research Standards and Guidelines.