The Future of Connected Insurance for the Construction Industry

You may not have heard the term “connected insurance,” but chances are you’ve probably seen examples on TV with car insurance companies placing ads about rates based on driving style — vehicle speed, smooth versus aggressive braking, use of turn signals, etc.

In the construction industry the concept is similar — for the most part. These types of customized policies are going to become increasingly relevant in the future. Here’s what you need to know.

WHAT IS CONNECTED INSURANCE?

Connected insurance allows an insurance company to provide new, simplified solutions that reduce costs and support safety. New technologies — like machine connectivity via telematics programs — will allow companies like Volvo Financial Services (VFS) to offer customizable insurance packages for heavy construction equipment that are built on demand and in real time.

We’re not quite there yet, but as you’ll read later, we’re well on our way. The goal of a fully functioning connected insurance model continues to evolve — and as technology advances, what we can offer is enhanced.

We’re currently building on what we have so far, and with our current end goal visualized, we’re more committed than ever to helping construction equipment and mining customers streamline the services they need to simplify their transactions, cut costs where they can and grow their businesses.

WHAT ARE THE PHASES OF CONNECTED INSURANCE?

Currently at VFS, “connected” means many things — and all very different depending on the audience and complexity. Below I’ve described several phases so you can see how connected insurance offerings are born and how they grow and evolve over time.

• Phase 1 (Low Complexity) – VFS customers already work with us on machine financing in one way or another. Insurance represents yet another set of service touch points. To help simplify the customer experience, digitalization is required. This includes things like building online portals to access various accounts, having the ability to quickly e-sign documents and so on. We’re well on our way through this low-complexity phase.
• Phase 2 (Medium Complexity) – From an insurance product-access perspective, Volvo Connected Insurance is an insurance digital on-ramp exclusively available to Volvo customers. Although only current customers of Volvo Trucks can access these offerings right now, we’re working to add Volvo Construction Equipment to the site very soon. This website connects customers immediately to a world of insurance offerings.
• Phase 3 (High Complexity) – Our ultimate objective is to get to data-driven insurance programs. We’re working on these continuously and expect to unveil many of them in the future. Data that our machines produce need to be harnessed, filtered, analyzed and leveraged compliantly to create insurance pricing and coverages that differentiate the offerings. These will occur differently across markets and are being negotiated and built with many different insurance company partners.This is far and away our most difficult, most complex aspiration — but again, we’ll get there in phases. The car industry is quite a bit ahead, but that industry faces different legal, regulatory and business challenges than the commercial side. Getting there will be a huge undertaking, but we intend to do it step by step.

Connected insurance in the future will allow you to proactively manage fleet risk because telematics data that is gathered — such as machine speed, hard braking, operating time, location, etc. — will give us the ability to customize insurance premiums based on exact operating metrics. It also means real-time insurance pricing, faster claims handling, accident assistance — and down the road, things like cyber insurance to cover you in the event of customer data breaches.

And to be clear, this is just one type of insurance available to our customers. You could choose a more traditional policy — or if you think connected insurance is right for your business, you could choose that.

WHAT IS AN EXAMPLE OF CONNECTED INSURANCE?

Let’s say you own and operate a small fleet of excavators and haulers. Some days, operator workload causes them to abort regens, which is bad for your machines. With fault codes (or better yet, case alerts from ActiveCare Direct), you’d know exactly what the issue is, what’s causing it and what will happen if you don’t take action.

This type of data would be used by us to alter your insurance pricing on the fly — higher if the issue isn’t addressed and lower once it’s been resolved (or if no case alerts are occurring in the first place). Simply put, pricing would be based on risk in real time.

WHY USE VOLVO FINANCIAL SERVICES FOR INSURANCE?

• Our insurance programs are available exclusively to Volvo dealers and customers. The competition simply doesn’t have access to them.
• We’re part of your total business solution: loans, leases, rentals, insurance, parts, service, maintenance, warranty and more. Streamlining these types of services simplifies how your company does business.
• Trucking and construction insurance is our day job, our night job — our only job. We’re the ultimate truck and construction insurance specialists. Other agencies are generalists who provide insurance policies for industries from retail and manufacturing to pharmaceuticals and more. Without a sole focus on trucking and construction, they won’t understand your business they way you need them to. A policy could be a best guess versus a recommendation based on years of experience.
• Have a renewal coming up? Great, we’re ready for you! No renewal coming up? That’s okay too. In some cases, it’s even better — it gives us more time to help you plan.
• We work with a multitude of insurers and specialty coverage providers. This independence gives us negotiating leverage to pursue superior terms and rates on your behalf. When we lower your total cost of risk, we lower your total cost of ownership in the process.

Be sure to check back with us regularly as more and more offerings are launched on our connected insurance journey. In the meantime, you can learn more on our Volvo Connected Insurance website, or feel free to reach out to one of our Territory Insurance Managers to better understand what insurance services we offer today to help your business succeed.

By Trenholm Palmer, Director of Digital Insurance, Volvo Financial Services