Scout InsurTech Spotlight with John Ehinger

John Ehinger is the President of Orion Fleet Intelligence, a telematics service provider that works with insurance companies to help their insureds drive more safely and operate more efficiently. John was interviewed by Andrew Daniels, Co-Founder at Scout InsurTech and Co-Founder and President at CrashBay.

John, commercial auto continues to be one of the most challenging segments in insurance. From your perspective, what’s really driving the rate pressure, and why can’t pricing alone solve the problem?

“Commercial auto is, frankly, the 'Superfund site' of the insurance industry right now. There are a lot of factors at play. Inflation is pushing costs higher across the board. Vehicles are more complex than they used to be, so repairs that were once straightforward are now much more expensive. Even replacing a bumper isn’t just replacing a bumper anymore.

Litigation is another big factor. Certain classes, like trucking, have become prime targets for the plaintiff bar because of the high policy limits in play. Nuclear verdicts and funded litigation are adding enormous costs. Litigation funding alone is projected to cost insurers between 13 and 18 billion dollars over the next five years, which is a major hit when you consider the commercial auto segment brings in a little over 70 billion in gross written premiums. That’s a huge amount of pressure on the loss ratio.

And then there’s the way the industry is perceived. Small-scale insurance fraud has become almost accepted in society. If you take your car to a shop after an accident, you might be asked if you want the price bumped up to cover your deductible. All of this combines to create a situation where even high single-digit or low double-digit rate increases just can’t keep up. A $250,000 claim from five years ago might cost $750,000 today, and what used to be a $750,000 claim could easily be three million now. Without addressing these underlying issues, pricing alone won’t solve the problem.”

What are some of the biggest misconceptions insurers or operators still have about how GPS and camera tech actually help on the road?

“A lot of people think installing GPS or cameras is a plug-and-play solution. The reality is a lot different. Cameras are incredibly valuable when it comes to exonerating drivers, especially when trucks are only at fault about 30 percent of the time, but end up being sued closer to 80 percent of the time.

The bigger issue is that the technology is only as useful as what you do with the information it provides. If you don’t act on unsafe behaviors, nothing changes. And if there’s a documented pattern of risky driving that you ignore, that will come out in court, and it will not be in your favor. The real value comes when companies use the data to consistently coach and correct behavior. Without that follow-through, the tech isn’t doing its job and could even create more risk.”

There are plenty of telematics providers out there, but not many speak the same “language.” What would it take to create a more unified framework, and why does that matter for insurers?

“It actually would not take much to get started. We have been working with ACORD and several insurers on a standardized framework for commercial telematics, which does not currently exist. Right now, one telematics service provider might call a certain data point one thing while another calls it something completely different.

If everyone used the same terminology, insurers could compare data more effectively and know exactly what they were looking at, no matter who the data came from. It would also reduce the risk of being locked into a single vendor, since it would be easier to work with multiple providers. Starting with consistent terminology and a few quick wins, like improving first notice of loss processes, would make a big difference and lay the groundwork for bigger advancements.”

Looking ahead, what opportunities do you still see in the telematics and commercial auto space? Where can the industry go from here?

“I think the biggest opportunity is in changing driver behavior. Having all the data in the world doesn’t matter if it just sits there. The real impact comes when companies use it to prevent accidents in the first place and, when accidents do happen, to reduce the severity of the outcome.

Even small reductions in speed can have a huge effect on the energy involved in a crash, which can change the result significantly. The companies that focus on using telematics to actively engage with their drivers and change how they operate on the road will see the most improvement in both safety and the loss costs that ultimately drive their premiums.”

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