Telematics – the combination of telecommunications and informatics, used to gather data about a vehicle’s movements and condition – can be an incredibly valuable tool in the leasing industry.
Tech-agnostic telematics devices such as SmartLink provide centralised and consistent data, enabling:
- Improved risk management
- Increased vehicle/driver visibility
- Better decision-making
Why Use Telematics in the Leasing Industry?
Leasing companies can use SmartLink to aggregate data on a vehicle’s location, speed, acceleration, and braking, as well as the vehicle’s condition (including fuel consumption, engine temperature, and battery life). This allows you to proactively address issues before they become major problems.
Telematics also improve risk-management strategies; by collecting data on driving behaviour, leasers can identify high-risk drivers and take the necessary steps to reduce accidents, claims, and insurance premiums.
Visibility into fleet operations is also improved by tech-agnostic telematics.
For example, you might use geofencing to set up virtual boundaries around certain areas (such as airports or rental car return locations), and receive alerts when a vehicle enters or exits the designated area. This can help reduce unauthorised use of the vehicles, improve customer service, and ensure your vehicles are where they should be.
3 Types of Telematics Schemes for Leasers
So how can leasing companies implement telematics in a practical way? Here are three types of schemes that leasing companies can set up relatively quickly:
- A rebate-led scheme
A rebate-led scheme is an effective way to reduce risk exposure and incentivise safer driving behaviours.
Under this type of scheme, you offer rebates to customers who exhibit risk-averse, diligent driving behaviour: for instance, you might offer a rebate to a fleet manager who implements a training programme for their drivers, or to individual drivers who maintain a good driving record over a certain period.
The benefits of this are two-fold.
First, it can help to expand your client base, by attracting new customers looking to reduce costs. Second, it can enable you to take advantage of improvements in loss ratio, due to a decrease in claims frequency.
- Risk-focused schemes
A risk-focused scheme involves using telematics data to identify risky driving behaviours, and address them through proactive conversations with customers.
By using data to identify areas of concern, leasing companies can work with clients to address problematic behaviours in a non-confrontational way and reduce the risk of accidents.
A risk-focused telematics scheme creates the conditions for increased visibility and better risk management. By anticipating potential issues, leasing companies enable a more proactive approach to managing risk, ultimately leading to lower claims costs.
- Dynamic pricing schemes
Dynamic pricing schemes are more complex to set up, as they involve creating complex algorithms that can process large amounts of data. However, by offering variable pricing dependent on vehicle usage (such as number of miles driven) and driver risk events, leasing companies can encourage improved behaviour and mitigate risks.
As a simple example, you might choose to offer a lower rate to customers who drive fewer miles, or who have a better driving record.
This paves the way toward improved profit margins and more accurate underwriting.
By using telematics data to assess risk, leasing companies can make more informed decisions about underwriting new business, which can ultimately lead to a better bottom line.
A Single Source of Telemetry Truth
By implementing telematics schemes, forward-looking leasing companies gain a wealth of insights into how their vehicles are being used; this enables them to identify areas where they can improve performance and reduce risk.
Whether you choose a rebate-led, risk-focused or dynamic pricing scheme, the benefits of a ‘single source of telemetry truth’ are clear: centralised and consistent data, improved risk-management, increased visibility and better decision-making.
By embracing tech-agnostic telematics, leasing companies can position themselves for long-term success and provide customers with a more effective, efficient, data-driven service.
Talk to us now about setting up a tech-agnostic telematics scheme. Contact us today on 0161 441 1001, or get a quote here.