How telematics can benefit any organization with vehicles

For many businesses, vehicles are a key element of their operations, as well as a significant source of risk.

Bureau of Labor Statistics reports show the seriousness of this risk; driving is one of the most dangerous job duties in the United States.¹ In 2022, more than 68,000 drivers were injured, and 1,115 died in accidents while on the job – more than 8% higher versus 2021.² 

Unsafe driving behaviors – such as speeding, driving under the influence, distracted driving – have led to an overall 14% increase in the U.S. vehicle accident fatality rate, according to the National Highway Traffic Safety Administration.³

Lawsuits and large jury verdicts stemming from accidents are also on the rise. According to the Insurance Information Institute, the impact of jury awards on commercial auto liability climbed to more than $4 billion in 2021 (the most recent year available). This is up from $2.8 billion, adjusted for inflation, in 2017.⁴

In this challenging environment, businesses with vehicles are continually looking for ways to improve safety and reduce their exposures. Telematics systems and the data sets that they deliver can be a solution.

How does telematics work

Telematics is a broad term that refers to technology that organizations can use to gather data regarding drivers, individual vehicles or an entire fleet. Specifically, businesses that leverage telematics can track information related to a vehicle’s location, driver behavior, vehicle diagnostics and similar operating metrics.⁵

Any business that manages vehicles – whether it’s a senior living community, manufacturer or construction firm – could benefit from telematics.

Telematics systems can be installed in any vehicle and can be affordable even for small organizations operating just a few vehicles.

The systems share data between each vehicle and a central location. Typically, data is gathered using telematics devices – such as a dongle, mobile application, or dashcam.

These devices gather helpful insights regarding driver behavior, trip information and vehicle status, storing the data temporarily before transmitting it back to a central hub where a dashboard depicts the information in a format business can take immediate action on. Telematics devices can gather a host of useful information on a business’s behalf:

• The speed of a vehicle
• The location of a vehicle
• The movement patterns of a vehicle
• Instances of aggressive acceleration, hard braking and erratic cornering
• Distracted driving incidents (e.g., smartphone usage)
• Diagnostics data related to fuel efficiency and vehicle performance

Privacy can be a concern for some organizations, but telematics systems do address that issue. Data transmission is typically encrypted to ensure secure communication between the vehicle and the server. Additionally, telematics providers adhere to data protection regulations and implement measures to safeguard sensitive information.⁵

Benefits of telematics

Below are some of the key ways telematics systems can support a business’s operations:

Improved safety

Telematics can help organizations protect their employees by monitoring driver behavior and vehicle performance. It can also detect unsafe driving practices (e.g., excessive driving speeds or hard braking) and allow fleet managers to personalize driver coaching and even send immediate in-cab alerts to correct dangerous behaviors in real-time. This information can lead to fewer accidents and insurance claims.

Increased productivity and customer service

By knowing the exact location and status of vehicles, a fleet manager can make real-time business decisions. For example, businesses can reroute vehicles to avoid heavy traffic or deploy additional vehicles to a job, thus increasing productivity and customer service. This is particularly beneficial for smaller fleets, as one vehicle often represents a larger portion of the overall business and one driver’s productivity can have a significant impact on an organization’s bottom line.⁶

Improved vehicle maintenance

Telematics can provide businesses with information related to vehicle mechanical issues. Diagnostic devices can flag an engine fault code, allowing the issue to be investigated before it becomes a bigger concern (e.g., the vehicle becomes nonoperational, leading to downtime and lost revenue). Many telematic systems also have a maintenance scheduling/tracking component, triggering service alerts based on mileage.

When used as part of a larger preventive maintenance program, telematics streamlines the upkeep of vehicles. Poorly maintained vehicles are more likely to break down and create potentially unsafe scenarios on the road. Comprehensive vehicle maintenance practices can prevent this, which, in turn, can help protect drivers and reduce the likelihood of potential accidents.

Improved fuel efficiency

Fuel is a significant expense for fleets, and telematics can help businesses operate more efficiently. Telematics gives businesses the functionality they need to optimize route planning, reduce engine idling and notify drivers of excessive speeds. Cost savings such as these are critical for both small and large fleets.

Fueleconomy.gov indicates aggressive driving can lower your gas mileage by 15% to 30% at highway speeds and 10% to 40% in stop-and-go traffic. For a pickup driving 15,000 miles a year an improvement in fuel economy of 10% at $3.60 a gallon covers 90% of the annual telematics expense.⁷

Quicker response to accidents

Because telematics devices can provide location data, fleet managers can mobilize emergency help to a driver’s location in the event of an accident. Some solutions can even alert insurance carriers of a collision, which can jump-start the claims process and help businesses get their vehicles back on the road in a timely fashion. Additionally, if an incident occurs, footage from cameras installed on the vehicle can help re-create an accident, which can help settle claims and litigation quickly and accurately.

Reduced administrative costs

Some telematics solutions can digitize expense reports, driver performance, maintenance reports and fuel expenses, promoting more accurate and easily trackable recordkeeping. These functions can help businesses save time and money. Automating administrative functions can also be particularly valuable for smaller fleets that lack the dedicated resources of larger ones and could benefit greatly from a less manual approach to data entry and record-keeping.

Improved communications with customers

Fleet management software can enable companies to support real-time, two-way communications between office staff and drivers. Telematics also allows customer support representatives to provide better service, as they can use real-time data on vehicle locations to give accurate delivery estimates.

Resources to share with customers

To help customers learn more about telematics systems and make choices that are right for their drivers and vehicles, you can share the following that are available on our Vehicle Safety resource library:

• Article: Why Telematics

• Telematics Selection Guide (PDF)
• Telematics Implementation and Coaching Guide (PDF)
• Telematics and Smartphone Apps (PDF)
• Everything You Need to Know About Dashcams
• Distracted Driving Prevention Technology

You can visit mylosscontrolservices.com for more industry-specific safety resources and expertise.