There’s this young truck driver on the road, nine hours into a 12-hour shift. His eyelids are heavy, drooping regularly over bloodshot eyes. His concentration is waning noticeably.

And then his truck veers off the road – safely, of course – courtesy of a prompt from an artificial intelligence (AI) computer system that’s been watching his eyes for signs of fatigue the entire shift.

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Sound far-fetched? It’s already happening.

“This is a revolutionary technology,” says Nick Dendrinos, head of motor underwriting at Zurich Australia.

“It monitors your eyes the whole time – their shape, your pupils, where you’re focusing – even if you’re wearing sunglasses.

“And when it detects you’re fatigued it buzzes the chair or sends out a beep saying ‘slow down, you need to pull over’.”

Dendrinos believes the telematic-based technology has already saved lives, pointing to an example where they have installed this kit in their long-haul fleet.

“One driver in his mid-20s was doing a straight run north to Queensland, and he was obviously fatigued and this kit buzzed his seat.

“He felt the buzz, pulled over, and then continued his trip later. His mum rang the transport company and said, ‘You’ve helped save my son’s life’.”

The rising use of telematics

This is but one example of the recent advancements in telematics.

“Telematics is devices that are monitoring your vehicles and driver behaviours,” explains Dendrinos.

“When a company invests in telematics, in improving the safety and efficiency of their fleet, that’s a company an insurance company wants to be associated with. You can really see a swing within claims data using this technology.”

Steven Hamilton, Business Development Manager at Fleetsure says other examples of telematics technology include vehicle tracking – which also helps reduce theft exposures – and dash cams to provide an impartial adjudication of at-fault disputes.

CASE STUDY: DRIVERLESS CARS AND THE ROLE OF BROKERS

“By embracing these technologies, a fleet operator will improve their efficiency and bottom line,” Hamilton says.

However, Chris Hogarty, Chief Underwriting Officer of NTI, adds that telematics is only useful for fleet owners if it’s integrated into the management processes of the business – something brokers should be mindful of when advising a motor fleet company to help add value.

“For example, if driver monitoring does not lead to performance management feedback and improvements in driver training then the power of that visibility is lost,” he says.

Glenn Lambert, Managing Director of GT Insurance, agrees that applying what telematic data implies is a major challenge for some fleet owners.

“Operating costs are increasing, management of operational staff is never easy and probably getting harder due to the driver shortage,” Lambert adds.

The advent of driverless fleets

Perhaps a solution to the driver shortage isn’t too far around the bend.

Big advancements are being made in the field of semi-autonomous and autonomous cars and trucks. Look at Uber, for example (see case study on page 32). The ridesharing company has never hidden its goal of having a driverless fleet in the future.

“We are already insuring driverless trucks and buses in specific applications,” adds Lambert.

“The driver aids that are common in passenger cars – such as collision avoidance, lane guidance, stabilisation technologies and fatigue alerts – are already in use in trucks and buses.”

Other trends and risks

One thing is certain, however, and that is without telematics and automation, many fleet drivers find it difficult to slow down of their own accord.

“Drivers in general appear to be taking more risks. Our statistics indicate an increase in at-fault accidents, particularly rear-end collisions, with speed, fatigue and possible mechanical related failures involved,” says Lambert.

When a company invests in telematics, in improving the safety and efficiency of their fleet, that’s a company an insurance company wants to be associated with.

Adds Hamilton: “The great density of fast urban highways and motorways is seeing an increase of average speed and, in turn, severity in loss costs.” Meanwhile, Dendrinos notes that there’s also been a spate of fires over recent years.

“I’ve never seen so many truck fires. Margins are squeezed so all of a sudden they’re cutting corners,” he says.

“They’re using cheap, inferior parts from overseas. It’s also directly linked, in my opinion, to excessive wear and tear of brakes, hubs and tyres.”

Hogarty warns that the transport sector is highly competitive and an industry of tight margins operating in an uncertain regulatory and economic environment.

“When the safety of operators or financial performance is compromised, this will tend to lead to increases in premiums for those businesses,” he says.

What else is driving premiums?

Technology might be making vehicles safer, but it’s also contributing to claims inflation, says Dendrinos.

“Claims inflation is something that’s caught Australia and the industry globally by surprise. It’s blown out excessively to the tune of 10 per cent to 15 per cent over the last 12 to 24 months,” he says.

“A windscreen used to cost $350 to $500 for repair. It can cost up to $2,000 to $3,000 now. Why? Because of calibration: you’ve got light sensors, rain sensors, all this stuff that’s connected to other systems in the vehicle.”

There are two main aspects to a regular fleet insurance policy, says Dendrinos. The first is covering damage to your own vehicle, and the other is third party property damage.

If driver monitoring does not lead to performance management feedback and improvements in driver training then the power of that visibility is lost.

Policy wordings are usually written to also include downtime cover, loss of use, hiring of vehicles and free windscreen replacement, however, traditional business interruption insurance isn’t generally included in policies. Lambert adds that the premium pool is inadequate to meet the insurance claims.

“The reasons why are many, but certainly a change in operating environment/conditions is one, insufficient understanding of the risk is another, plus an increase in weather-related losses,” he says.

The role of brokers

These issues all add up to one thing: brokers have a huge role to play for both fleet owners and insurers.

“Small fleets in particular are run on price, however in my experience, the medium to larger fleets are looking for advice,” says Lambert.

“It’s a tough time in the industry for everyone but it’s a terrific opportunity as well.”

And as technology continues to evolve rapidly, advice around risk assessment will only become more valuable, adds Dendrinos.

“If you’re driving a vehicle that’s in autonomous mode and that vehicle has an accident, who’s going to be at fault – you, or the manufacturer? That determination of liability is tricky,” he says.

“So from that perspective, the role of an informed, valued broker is going to become a lot more prominent with this changing landscape.”