Telematics – the data received from tracking devices in vehicles – has long helped commercial fleet owners maximise the value of their operations. And now it can be used to reinforce positive driver behaviour too.
“Traditionally, telematics has focused on the location of the vehicle and the driver within commercial fleets to improve productivity and to reduce cost,” says Andre Ittmann, CEO of Cartrack South Africa.
“But the range of application is evolving very quickly. Telematics data is proving to be particularly powerful in sparking new approaches to things like insurance.”
Global telematics research anticipates that by the year 2030 nearly 50% of the vehicles on global roads will be insured according to usage-based policies. These policies rely on telematics data to monitor the driver’s behaviour on the road. Better drivers pay lower premiums, while drivers who are potentially more hazardous on the road will see their on-the-road attitude reflected in their monthly insurance bill.
Usage-based insurance policies are good news for insurers and consumers, because they offer a risk framework that is at least partially under the consumer’s control. This is in marked contrast to the traditional age and gender devices used by insurers to price risk, where the consumer has little influence on the price of cover.
In challenging economic conditions, many consumers will be relieved to know that they can take practical steps to reduce premiums by driving well.
In this context, telematics data has another positive spin-off: more local drivers motivated to achieve responsible on-the-road behaviour. In a country where road deaths are a huge concern, this could be an important national development.
“Financial reward is potentially a valuable motivation to change behaviour for the better,” adds Ittmann. “Often, in fact, this can succeed where warnings and threats fail. As usage-based policies become the norm, the country could well see an improvement in driving standards in general.”
Looking beyond commercial fleet management, ordinary business owners will also increasingly be able to use the insights from telematics data to incentivise drivers to improve performance – and reduce operational costs in the process.
“Telematics data can add a lot to the work environment, from the perspective of both employees and employers. The application stretches far beyond the cliché of bosses watching over staff,” says Ittmann. “This is particularly true when it comes to time spent in traffic, which involves wear and tear costs for the business and which can also be a real personal challenge for employees who drive every day.”
According to the South African Journal of Economics, for example, Johannesburg drivers lose over three and a half hours daily to traffic, at a cost of nearly R100 per person per hour. With millions of users on the road daily, the cost is significant to individuals and business owners.
There is already much evidence of the impact of telematics on the global market. For example, telematics data has altered the Dubai metered taxi industry for the better. The technology plays a role in improving driving standards and passenger safety, while Dubai taxi companies also achieve savings on fuel consumption thanks to route optimisation (telematics data detects high traffic zones and drivers are able to divert away from traffic jams well in advance).
Telematics has also maximised the efficiency of the bus transport system in Indonesia, where the application of the technology has allowed passengers to access immediate information about bus arrivals and departures, including updates on delays.
“There are important benefits for fleet owners, business owners and individual drivers,” says Ittmann. “Much of the expense of a vehicle fleet – regardless of size – lies in running costs. Petrol levels and tyre wear are significantly affected by driving style, as are many other consumables. The bottom line benefits of better driving are compelling, and uptake is therefore likely to be strong and sustained.”