When looking for the most competitive vehicle insurance premiums, the use of artificial intelligence could prove invaluable – and save fleets money. By Peter Smits, managing director, Ashbourne Insurance.

Peter Smits, managing director, Ashbourne Insurance

The insurance industry has a long history of struggling with emerging technologies so, traditionally, underwriters will be working with outdated data. The conventional approach is to work with past data to try and predict future risks and then set a premium for the forthcoming year. But this approach is reactive and only provides information on patterns and events that have already occurred.

While this method is still used by most, if not all, mainstream insurers, there are some emerging technologies that fleet operators could adopt to gain greater control over real-time data and build a more accurate risk profile. We already have technology built into certain vehicle types that can alert the emergency services upon impact in the event of accident or collision. How far of a stretch is it then that similar technology could be used to notify your insurer?

Early claim reporting can dramatically reduce costs for all parties, regardless of fault or blame, so using artificial intelligence to further enhance the ‘first notification of loss’ can only help in the longer term.

There is also existing technology that can profile driving behaviours – for example, eating, drinking, texting, as well as making phone calls, smoking or not wearing a seatbelt while driving. All of these activities can be associated with incidents or claims and, therefore, determine the level of risk connected with such behaviours.

Using this type of AI allows drivers to self-correct once risky behaviours have been identified – improving safety and, ultimately, preventing accidents before they occur. Currently, the use of AI either by the fleet operator/driver or the insurer tends to work in isolation. Therefore, the benefit could be considered one-sided, for either party, rather than a joined-up solution that would benefit all.

More and more insurers are using AI to predict future catastrophes, particularly weather patterns and therefore avoid potential claims – or they put in measures to minimise risk. Fleet operators use AI, more commonly in apps, to help monitor driving patterns and reduce costs.

One of the biggest challenges to joined-up thinking is the cost of such technology and the duration of cover. With an annual policy that could then be transferred to an alternative insurer at renewal, the technology has a shelf-life of 12 months maximum and therefore it is uneconomic to adopt it, given this relatively short time span.

But there are potential AI benefits to the insurance industry that would ultimately benefit fleet operators through reduced premiums.

Four examples are:

• Use-based insurance. Using real-time monitoring and data analytics, AI can help insurance companies offer these policies to fleet operators. Use-based insurance is customised to the specific needs of each fleet, resulting in more accurate pricing and reduced insurance premiums.
• Reduced claims and fraud detection. AI can help reduce the number of accidents and fraudulent claims. This process can lead to lower claims costs passed onto fleet operators in the form of lower insurance premiums.
• Improved risk assessment. Predictive maintenance and driver behaviour analysis can provide insurers with more accurate risk assessments. That information results in more tailored insurance policies for fleets, more accurate pricing and reduced insurance premiums.
• Improved customer service. Real-time monitoring of vehicle performance and driver behaviour can help fleet operators identify needs such as further training or support. This could increase driver safety, reduce accidents and improve customer satisfaction.

Ultimately, the mainstream motor fleet insurance market is still some way away from providing these AI solutions. However, there are signs that the general insurance market is now investigating the use of emerging technologies, meaning that their introduction into mainstream insurance distribution channels may not be a million miles away.

Regardless, any enhanced data that any fleet operator can provide their insurance company or broker would be gladly accepted and used to improve your insurance premium.