First, some definitions will help.
Telematics typically refers to a blending of telecommunications and informatics. The technology sends, receives,
and captures driver and vehicle data via
telecommunications devices in conjunction with controlling remote objects
(like company cars or trucks). So, view
telematics as the integrated use of telecommunications and informatics applied to company vehicles to control or
monitor company property in transit.
The term has evolved to refer to company fleet systems that blend GPS tracking and wireless communications for remote diagnostics and monitoring.
Smart Technology for
For more information about EDR technology, be sure to check out this month’s
feature article, “EDRs and the Adjuster.”
It begins on page 26, and Peter A. Lynch,
an attorney at Cozen O’Connor, and Paul
Blanchard, a large loss adjuster at Fireman’s Fund, dispel the negative “Thought
Police” connotation. They explain why
EDRs and smart technology are gaining
popularity as positive mechanisms when
used properly and consistently with state
ROI from Telematics
Fleet vehicle telematics can capture
data including: drivers’ hours of service,
vehicle location, speed, vehicle/engine diagnostics, hard braking and acceleration,
and vehicle dynamics such as roll stability. The data can help analyze employee
safety practices, driving habits, vehicle
durability by manufacturer, and so forth.
As a risk tool, fleet telematics may offer
significant returns on investment (ROI).
Safety is the overarching concern. Reduc-
ing vehicular crashes is priceless. Some
companies reduce crashes by 25 percent
or more after instituting telematics. Addi-
tionally, some fleets see reductions in risky
driver behavior of 50 percent or more.
Regardless of the technology used, propo-
nents say that most fleets realize a positive
ROI within six months to a year. Some
fleets capture upwards of a 200-percent
ROI within a year. Others see a minimum
significant risks because of injuries, equip-
ment loss, and adverse environmental
impact. While the company instituted en-
hanced driver training, this helped modest-
ly but did not produce the results desired.
Thereafter, management added a roll stabil-
ity control (RSC) module to its commercial
truck market. RSC uses sensors integrated
with advanced braking systems to detect
rollover potential. The RSC system inter-
vened for the driver, reducing truck speeds
below their rollover threshold.
Telematics Speed Bumps
As with any risk management approach, there are plusses and minuses.
Having already outlined some of the potential benefits of using the technology,
let’s look at a few countervailing factors:
Big brother-ism. Some drivers may
balk at having their employer electronically monitor their every turn-signal and
location. It smacks of Orwellian surveillance. To the extent it degrades employee
Some companies reduce crashes by 25 percent or more
after instituting telematics. Additionally, fleets can see
reductions in risky driver behavior of 50 percent.
of eight to 12 percent in fuel savings alone.
Telematics can offer new avenues for
driver supervision, allowing companies
to manage drivers in ways they have never been able to before. Further, telematics can curb unsafe driver behaviors and
crashes, thus improving fleet safety, reducing its cost of risk.
For example, one company was plagued
by periodic cargo rollovers. These pose
morale, it can undercut employee recruit-
ment and retention. In turn, high em-
ployee turnover or discouraged employ-
ees may exact a toll on fleet vehicle safety
and other costs in constantly having to
replace drivers. (On the other hand, many
drivers understand that they relinquish
some privacy by using company property.
Most of us work for firms that reserve the
right, for example, to monitor employee
Internet use on company computers.)
Charles Hunter McRee is a claims expert and
risk management executive. He has more
than 30 years of claims experience and works
for a division of a Fortune 500 company.