“I’m certain the loss ratio is looking amazing,” said Anthony Saunders (pictured above).
Saunders is principal of Sydney-headquartered brokerage Insurance Choice. He’s a general insurance broker with a focus, he said, on environmental security. The loss ratio he was referring to belongs to one of his motor insurance customers: Pathfinders, a non-profit group based in NSW that provides social care including services for orphans and the homeless. Saunders said this non-profit has a fleet of about 100 cars.
Early in 2023 he facilitated a new telematics based motor insurance policy for Pathfinders. The non-profit was one of the early adopters of this offering, provided by the agency Fuse Fleet Underwriting (Fuse).
The non-profit’s renewal is coming up and Saunders reported very positive results to Insurance Business from the first year of coverage: claims numbers are down and, he suggested, driver safety is improving.
He expected his customer’s result to be typical for companies, he said, that use telematics for lowering their loss ratios and substantiating a sustainable, lower premium.
IB asked Saunders to explain how exactly this telematics offering is working for his customer?
“In Pathfinder’s case, their loss ratio had been pretty bad for quite a long time,” he said. “Fuse came along and worked out the calculations and the saving on premium for renewal last year was to the extent that it was a no brainer to switch over.”
Saunders said this was irrespective of whether employing telematics “was going to work or not.”
“My phraseology [to the customer] is if the money’s on the table, pick it up!” He said. “Simple - it’s a saving to you.”
Saunders said there were conditional telematics related reporting requirements that came with the policy. The broker said the aim of this reporting is to “inform the drivers of the vehicles as to how they’re driving.”
The environmental security broker gave a coherent analysis of why this behaviour-based insurance offering seems to be working so well.
“I do a lot of driving,” said Saunders. “I plug into my Navman [GPS navigating system] where I’m going and it tells me, if I’m driving from Sydney to Canberra, that I’m going to be arriving in three hours and 43 minutes.”
He said he nearly always arrives within a few minutes of this arrival time, regardless of how he responds to the traffic warnings on his navigator.
“Even if I’m encountering works on the road that slow you down to 35 kilometres an hour in 110 km zone,” said Saunders. “Or if there’s no traffic at all, maybe I’ll speed up.”
He said it makes very little difference.
“For the stress associated with adapting your driving, including possibly speeding, to the navigator’s warnings, it just wasn’t worth doing it in the first place,” said Saunders.
Telematics, by contrast, he suggested, encourages more relaxed, safer driving.
“I’ve come to realise that telematics’ application,” said Saunders, “if we start understanding how it all works, is that you arrive with less stress.”
He said the arrival at your destination comes without being tempted to avoid road congestion, accidents or police speed traps
“Maybe driving a little bit slower may well improve your reaction times,” said Saunders.
The telematics also provides useful, actionable data on how a driver is actually driving.
“We know that less hard braking, less hard acceleration, rolling your car around the corner rather than accelerating around the corner is going to decrease the wear of your brake pads, it’s going to increase the life of your tires, it’s going to reduce your fuel consumption and it’s likely going to make you a better driver,” he said. “So these are all good things.”
For this customer, he said, these safer driving conditions carry an extra layer of importance because of their responsibility for transporting children.
Pathfinders is about one month away from renewing its telematics motor insurance policy with Fuse. Saunders couldn’t resist the temptation to advocate for a reduction in premium.
“If Pathfinder’s renewal premium isn’t looking better than it was when it was first offered to them last year, I believe that the reaction from Pathfinders will be something along the lines of, ‘The premium is still good, we’ll take it because we’re not sure that we’re going to get better anywhere else but it would have been nice to have received some sort of financial reward at the end of this road for having employed these telemetric applications to the nth degree.’”
Simon Donovan, executive general manager of commercial for Fuse, could be sympathetic to this argument.
Pathfinders seems to have done something with it.
One year down the track, if this case is indicative, the early results from telematics-based motor insurance are very positive.
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