Customised vehicle insurance in the connected mobility era

As fleet managers embrace mobile telematics, the real-time driving data being harvested enables insurers to offer more precise, personalised underwriting, dynamic pricing and proactive risk mitigation via usage-based insurance (UBI). JULIA TEW explores how these shifts affect claims management, driver safety and regulatory compliance.

Commercial vehicles today are increasingly connected and intelligent: embedded telematics units, GPS, driver-behaviour sensors and diagnostic systems generate streams of usage data. Research by S&P Global estimates that connected vehicles can generate nearly 25GB/hour from over 100 distinct data points – offering insurers fresh insight into how, when and where vehicles are operated.

This data underpins “pay-how-you-drive” or “pay-as-you-drive” models, enabling insurers to better align premiums with actual risk, thereby rewarding safer driving, timely maintenance and more efficient usage. By 2034, the global insurance telematics market is forecast to reach around US$30 billion, demonstrating strong momentum. 

Public awareness around UBI advantages is also growing. Trakm8, a UK-based insurance telematics company, found that nearly 60% of drivers in the UK would prefer a usage-based insurance policy to better manage costs associated with fluctuating mileage and vehicle usage.

Real-world impacts, from savings to safety

Fleets can benefit from this approach in multiple ways, such as more accurate risk pricing, earlier detection of risky behaviours, faster claims resolution, theft prevention and reduced non-incident costs like fuel waste or idling time. UK-based Lowes Transport reduced its insurance costs by an impressive R1.6 million (£70,000) after partnering with Trakm8 and adopting 4G-integrated telematics cameras and remote tachograph data collection across its diverse fleet of over 70 vehicles.

In South Africa, Cartrack shares the case of Concord Cranes, which was able to monitor crane usage more accurately and establish preventive maintenance regimes by deploying telematics devices plus power take-off sensors. The result? Fewer breakdowns, better asset utilisation and improved risk profile for insurer assessments. TG Tracking reports that another logistics fleet cut fuel costs by around 30% after installing smart alerts, route optimisation, sensors and behaviour-tracking – eliminating idling, speeding and fuel theft.

According to Webfleet’s 2023 Road Safety Report, over 80% of South African fleet managers surveyed said using a telematics system is effective in reducing collisions. Similarly, US-based SambaSafety reported in 2024 that 72% of fleets experienced a reduction in crashes and claims thanks to the combination of telematics and training – leading to lower insurance premiums for one in four respondents. In Western Australia, the Royal Automobile Club experienced a 60% drop in mobile phone-related distracted driving after implementing a Safer Driver app.

Evolution driving expansion

A critical factor driving the growth of UBI adoption is the introduction of sophisticated technologies that expand the volume and granularity of data available to insurers. This enables a transition from simple “track-and-trace” units to advanced underwriting models.

The innovations can be found embedded within the vehicles, in devices on the driver’s person and/or integrated into the systems used by telematics providers.

OBD II, for instance, is the next generation of on-board diagnostics (OBD) that enables fleets to monitor engine health, fault codes, battery status and more.

Smartphone-based solutions like those from Zendrive and Sentiance measure phone usage, detect stop-sign violations and distracted driving and automate driver coaching through gamification and incentivisation. By collecting and processing data directly on the user’s smartphone, privacy concerns and integration requirements can be minimised and insurers can avoid ongoing processing fees associated with cloud infrastructures.

Predictive risk scoring uses sophisticated algorithms and machine learning to spot hidden risks that traditional underwriting methods might miss. It combines telematics with behavioural risk models and external factors such as weather, traffic patterns and vehicle maintenance records.

Modular, cloud-first architectures are favoured by some telematics providers and insurers, as these plug-and-play, cross-platform systems can be deployed across varied vehicle categories and shared mobility services. Modularisation supports streamlined integration with diverse vehicle OEM systems, enabling faster rollout of insurance telematics programmes and consistent data standardisation.

Where South Africa stands

South Africa has a relatively mature telematics market, with roughly 2.3 million active fleet management systems in commercial vehicles as of late 2023. This is projected to grow to about 3.8 million by 2028. A notable share of these, however, consists of basic GPS or other low-end trackers like stolen vehicle recovery (SVR) devices, which can’t generate rich enough data to reliably price risk.

Key local telematics and fleet management players include Cartrack, Tracker, MiX by Powerfleet, Netstar and Webfleet, many of which are initiating insurer integrations and partnerships. Large installed bases of OEM fleet telematics systems have also been achieved by manufacturers such as Volvo Trucks, Daimler Truck, UD Trucks and Scania.

Telematics is increasingly viewed as a route to more transparent, fairer vehicle premiums in South Africa. Absa, one of the country’s largest financial services providers, has been running its UBI programme for five years in partnership with global tech company Sentiance. Focusing on the driver instead of the vehicle, Sentiance harnesses artificial intelligence (AI) on-device technology to deliver the driving, mobility and lifestyle insights that lead to smarter decisions and improved loss ratio. Analysis revealed that Sentiance’s risk indicators outperformed traditional proxies, significantly enhancing claim-prediction accuracy. By identifying high-risk drivers more precisely, Absa can adjust premiums to improve loss ratios, while rewarding safer drivers with discounts. Key predictors include miles driven, time of day and road type.

Constraints and tensions to overcome

There are, however, challenges and limitations associated with this trend.

High initial hardware and setup costs can impede market expansion, with some commercial fleets viewing telematics as more of a luxury than a necessity. For small fleets, the cost or complexity of telematics might outweigh the incremental benefits. Smaller insurers may also struggle to compete against larger firms with established telematics capabilities, so bridging this technological gap will be essential for wider acceptance of UBI.

Data security and privacy issues can also be a constraint, given the significant amounts of sensitive business information collected. Fleet owners may be reluctant to share telematics data for competitive, privacy, or cost concerns. In one industry report, 75% of insurers cited convincing fleets to share data as a major barrier. The protection of fleet datamust be prioritised, and insurers in South Africa are required to comply with the country’s Protection of Personal Information Act (POPIA) when gaining access to telematics data. This helps prevent misuse or unauthorised sharing of data, and ensures transparency on what data is being collected.

Variability of regulatory frameworks across the globe could complicate insurer operations and affect market competitiveness. New pricing models based on algorithmic scoring must conform to fairness, auditability and non-discrimination standards under evolving conduct regulation. This includes the proposed Conduct of Financial Institutions (COFI) Bill in South Africa, intended to build a consistent, strong and effective market-conduct legislative framework for financial institutions. “Today’s financial customers demand more personalised, transparent and accessible services,” explains Unathi Kamlana, commissioner at the Financial Sector Conduct Authority – the new body tasked with managing market conduct risk. “These expectations require financial institutions to adapt, while also compelling regulators to prioritise fairness, protection and inclusivity across industry practices.” 

A roadmap for insurers

There are several ways in which insurers can tackle some of these hurdles.

Modularised or flexible policies can be offered in lieu or ahead of UBI, adapted more precisely to use case, client risk profiles and shifting risk exposure. In the commercial fleet domain, this may mean policies that distinguish by vehicle type (light, medium, or heavy), use (delivery vs long-haul trucking), region/route risk, cargo type, seasonal use, or driver profiles. Add-on endorsements, such as for hazardous or refrigerated cargo, enable more dynamic pricing. Time- or usage-limited coverage allows fleet managers to insure a vehicle only during its active dispatch window, while “on demand” or subscription models provide daily insurance for extra trucks during high-demand periods.

Hybrid models can also be offered for a specified period, incorporating some telematics and some classical underwriting until clients are comfortable and ready to move to full UBI-based coverage.

Insurance brokers are often uniquely positioned to shape the dialogue between fleet manager and commercial carrier, thanks to their understanding of the nuances on both sides.

More than a competitive advantage

As the insurance telematics market matures, UBI looks set to evolve from being a competitive advantage to becoming a strategic imperative. The union of connected mobility and digital insurance is paving the way for hyper-personalised, real-time insurance products – transforming vehicles into “nodes of intelligent risk intelligence”. Continued collaboration between fleet managers, insurers, OEMs and technology providers will help bring to life scalable, secure and customer-centric solutions that define the future of vehicle insurance.

How do fleet insurers determine your premium?

• Number of vehicles: The larger the fleet, the higher the possibility of claims. However, insurers usually offer discounts to larger fleets due to reduced administration costs, as they often calculate premiums using a single risk profile instead of having to assess each vehicle’s risk separately for each individual insurance policy.
• Usage and mileage: The more time vehicles spend on the road, the more exposed they are to accidents and the greater the chances of wear and tear. For this reason, insurers want to know how far vehicles travel daily.
• Travel zones: Vehicles that travel across borders are charged higher premiums due to the risks associated with being out of the country. Vehicles that operate in high-risk areas attract higher premiums.
• Type and value of vehicles: Assess the age, condition, model and make of vehicles, as well as how much each vehicle currently costs. Some vehicles are of higher risk than others.
• Driver record: Drivers with more experience reduce the chances of accidents. For that reason, insurance companies also check the type of drivers you have in your fleet.
• Claims history: A history of frequent claims is more likely to result in higher premiums.
• Type of goods: Insurers usually include the cargo being transported. If it is of high value, then there are more risks associated with the fleet. Taxi and shuttle businesses should have liability cover, given the risk of personal injury and death when transporting people.
• The presence of security measures: A fleet equipped with tracking devices and telematics capabilities reduces the risk of accidents, resulting in fewer claims, and hence lower premiums.

(Source: Cartrack)