Telematics has gained significant momentum in the U.S. commercial auto insurance market over the past few years among both InsurTech MGAs and insurance incumbents.
Executive Summary
Lessons from personal auto reveal that successful telematics programs are those that share value with customers. But understanding what's valuable in the commercial auto space is complicated by customers' varying needs, challenges and ecosystems.Here, Great American's Pete Frey and the IoT Insurance Observatory's Matteo Carbone describe how Great American matches value propositions to customers by first painting a customer "canvas" that profiles each fleet segment, and then tailoring telematics programs to offer appropriate incentives, levels of fleet-adjacent services and loss control processes.
They also offer ways to grow the proportion of agents proactively offering telematics programs to customers—sitting at just about half today. The first step: lead with a compelling why, they write.
Insurers have launched loss control initiatives, and carriers are using telematics data to unlock benefits in their underwriting processes and usage-based insurance (UBI) programs. Even mandates for specific categories of business or particular accounts have emerged.
These market trends highlight the many approaches and strategies for implementing a commercial lines telematics program. Regardless of the particular telematics strategy, the essence of this business capability is to leverage the data across the insurance value chain to create economic value.
The insurance industry’s experience with personal auto telematics has demonstrated that this value creation and its sharing are necessary to deliver a sustainable and appealing proposition to policyholders. However, the complexity of the business model for commercial auto and the heterogeneity of the fleets make it a very different experience than the personal lines space.
