It was more than a decade ago that data-driven insurance became a potential ‘thing’. Heralded as a game-changer that would bring fairness and accuracy to an infamously imbalanced system, it was anticipated with as much interest from insurers as it was by fleet managers and the public. But the idea arrived before the technology to make it a workable reality. With the evolution of AI (artificial intelligence), the full potential of data-driven insurance can finally be realised – as well as all of the savings and benefits that go along with it.
And the best thing is that you don’t need to be a tech expert to benefit from it.
How AI is powering data-driven insurance
Data-driven insurance relies upon the gathering and analysis of thousands of data points. These data points can include, vehicle speed, vehicle control, weather, environmental risk and population. The factors can then be turned into more personal premiums for each and every fleet, for each and every journey.
In its original guise, the data was collected, but there was no way of analysing it. With AI, we now have the tech to extrapolate the data into useful insights. This means that insurers can precisely measure the performance of drivers – often in real-time – in order to levy accurate insurance policies. And fleet managers can gain better control of their assets, having the power to take corrective measures should any given drivers exhibit poor behaviours that put the fleet at risk.
In theory, it sounds complicated. But it comes down to understanding risk at a granular level. AI can assess every journey of every vehicle, generating a risk score. And the risk score links to higher or lower insurance pricing. With the delivery of real-time results, fleet managers are provided with the insights they need to action change, with the potential for an immediate reduction of insurance premiums. This removes unnecessary expense, not to mention unnecessary risk.
Why data-driven insurance holds such potential
With insurance representing up to 25% of the total cost of fleet ownership, the best insurance policies include in-built risk management, allowing premiums to be reduced in real-time in-line with risk reduction, after every trip. Cost reductions based on lower-risk trips are immediately reflected in the price of insurance instead of only at renewal once a year.
The active collection of real-time data empowers fleet managers to improve driver performance. Bespoke driver training can be given based on the data, allowing managers to reduce risk and cost directly and effectively. Dynamic premiums allowing you to reduce risk and premiums during the lifecycle of the policy, instead of waiting for lengthy premium rebates.
Fraud is another key driver of insurance costs. In 2020, the Insurance Fraud Bureau reported a 5% increase in detected fraudulent insurance claims, with motor insurance being the area most commonly exploited. Because AI monitors individual driving characteristics, there is an increased likelihood that a fraudulent claim would be spotted and stopped before it was processed.
Additional cost savings
For fleet managers, data-driven insurance carries other benefits too. The insights delivered can help fuel more efficient fleets, reducing incidents (and therefore costs) and downtime, while increasing revenue generation.
Data and analytics are changing the business landscape across the board. AI is facilitating wholesale efficiencies, with the processing and analysing of vast swathes of information. This use of data moves beyond plain cost-reduction efforts toward smarter business practices, focused on safety, risk level, and claims. For insurers, it means the potential to access critical information and make live service changes, generating efficiency and value. For fleets, it means taking control of the previously uncontrollable.
By Wayne Stuckey, head of Underwriting at Rideshur
Rideshur, by Humn.ai, provides fleets with unparalleled transparency. Through proactive risk management and insights fleets can save up to 20% against typical insurance costs. Reduced road incidents also means vehicles remain on the road delivering for the business.