Trend analysis methods and applications

Business Trend Proposal -- Correspondence

Dear Associates:

In the last decade, there had been explosive growth in information technology and the miniaturization and sophistication of global positioning systems (GPS) and equipment. Today, the growing trend among manufacturers, shippers, wholesalers and retailers is to routinely track their products and monitor inventory remotely and in real time through radio frequency identification devices (RFID) that provide instantaneous information relating to the position of products and vehicles. The GPS systems available today now provide various capabilities that have specific applications in the automobile insurance industry that must be considered to maintain competitive positioning and profitability.

Already, many companies employing commercial fleets of trucks, busses, and other company vehicles have incorporated this technology to better manage and track their vehicles as well as to monitor the behavior of their drivers. The capabilities of the GPS-type systems that are now available for such commercial uses provide many of the same types of information that have been used for decades in the so-called "black box" systems installed in aircraft. In this application, those systems automatically record pertinent information of aircraft and pilot performance intended to enable incident investigators to identify the precise circumstances and causes of significant occurrences during flight.

The recent advances in digital and information processing technology combined with the development of reliable GPS systems has now allowed the production of commercially available GPS-based systems that perform the same types of functions for commercial and passenger vehicles that were previously only available in the sophisticated and costly systems used in the black boxes in the aviation industry. Commercial transportation and shipping companies have successfully incorporated these types of systems to monitor the schedule and conduct of their drivers for the purpose of ensuring compliance with the requirements of law and organizational policies and procedures.

At this point, it seems advisable to consider incorporating the same technology in all vehicles insured by our organization. Doing so would allow incident and loss investigators to accurately asses the precise factors responsible for losses, to confirm and verify the information provided by the insured, and to more accurately establish the basis of allocating fault based on objective data that indicates exactly what factors are responsible for losses. Moreover, the real-time capabilities of the GPS technology systems that are currently available for these types of applications would also allow the continual monitoring of driver behavior for compliance with vehicular traffic laws as well as for the purpose of confirming other pertinent information upon which policy terms and pricing are based. In the event of an incident and a covered loss, the information provided by these systems is invaluable.