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In the insurance world, telematics refers to devices which can provide real-time information about an insureds behavior. For example, devices can be plugged into vehicles to provide accurate information on miles driven and statistics such as the number of times a driver hard-brakes. You might be familiar with products like Progressive’s Snapshot, which are well established in personal auto insurance. Such user-based insurance (UBI) programs are also increasingly present in the trucking insurance industry, providing clear benefits in pricing risks. Premiums can now be based on a truck’s true mileage instead of an estimate. UBI also brings risk control and claim development benefits. When a driver’s safety performance is being tracked, it may incite him or her to drive more cautiously or pay more attention to risky behavior. Fleet managers can identify their riskiest drivers and provide training to improve their performance. UBI devices can also be used to collect key information at the time of an accident to paint a more reliable picture of what actually occurred and to improve claims handling speed. Telematics clearly has enormous potential to affect loss development.
Wearables like the Apple Watch are also gaining traction in the trucking world. Device-based apps can provide real safety-enhancing features for truck drivers. Wearables can send alerts or real-time feedback right on a driver’s wrist when he or she is going too fast, or they can assist in navigating the driver through upcoming road hazards. These kinds of alerts keep the driver’s eyes on the road, not on a phone or GPS device. Wearable headsets with sensors that signal drivers when they are showing signs of fatigue or falling asleep can also reduce this major cause of trucking accidents.
Even more futuristic, but moving rapidly toward reality, are driverless trucks. Vehicles on the road today already have automated features like collision avoidance and lane detection. Taking things a step further, Daimler has developed a “piloted” truck, the Freightliner Inspiration, which is designed to run on auto-pilot mode on the highway. The Freightliner will automatically maintain a safe speed, distance and lane position and will alert the driver to take over when bad weather hits or when the truck needs to exit the highway. If the driver doesn’t respond, the truck automatically pulls over. News recently broke about a new competitor in truck automation. Former Google employees have formed Otto, a company focused on building a device which could turn any truck into an automated vehicle. The cost of such a product would be relatively low when compared with the price of a new truck. Although both the Daimler and Otto plans still require a driver in the vehicle when traveling local roads, we are moving much closer toward fully automated trucking, which would, in turn, mean a sizeable reduction in accidents resulting from human error.
As new technologies develop, we gain information and automation that help improve safety, reduce claims and change the way we think about trucking. Actuaries must understand these changes and think critically when using past indications to price and reserve for future risks.
is a Consulting Actuary with Pinnacle Actuarial Resources, Inc. in the Chicago, Illinois, office and has over six years of experience in the property/casualty
industry. He has considerable experience with the analysis of unpaid claim
liabilities and ratemaking/funding indications for a variety of personal and commercial
lines of business. Zach is a Fellow of the Casualty Actuarial Society and a
Member of the American Academy of Actuaries. He serves on the CAS Examination Committee,
CAS University Engagement Committee and is the Vice President of the
Midwest Actuarial Forum.
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Pinnacle is an actuarial firm focused on property/casualty insurance, including alternative markets, captives, self insureds, enterprise risk management, predictive analytics, commercial lines and more. We serve trucking, insurance, health care, medical professional liability, reinsurance, workers compensation, public entities and other companies and concerns.
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