How Telematics helped ICICI Lombard reduce marine cargo loss by 40%

Loss of cargo has left organizations floundering like someone running in deep sand. Now, ICICI Lombard has found a way out with the use of telematics.
How Telematics helped ICICI Lombard reduce marine cargo loss by 40%

Truck driver Sangram Singh was cruising down the highway, ferrying goods of a company from Saharanpur to Ahmedabad. It had been a long journey for him. And as dusk deepened into night, he drove towards Ajmer.

Singh had hit a theft prone route that often turned into a highway to hell by the night. Highway robbers and miscreants enjoyed a free run on the route. They hijacked trucks and looted their cargo. Recently, there had been a spurt in cargo thefts of the route.

Singh’s worst nightmare came true when a jeep carrying four strangers asked him to halt. The four men identified themselves as the officials from the Narcotics Department. They insisted that Singh open the cargo and let them check the content. But Singh who was fearfully aware that the area was notorious for incidents of cargo theft, realized that something fishy was going on.

Thankfully for Singh, his company’s private insurer salvaged the difficult situation.

He was carrying the goods of a company that had a marine insurance policy with ICICI Lombard. The back-end team at general insurer was monitoring the route of Singh’s truck. While monitoring, the ICICI Lombard executive noticed that Singh’s truck had come to a halt near Ajmer. He felt that something was woefully wrong.The executive called Singh and enquired about the unscheduled halt.

Singh, then, informed the four men (posing as the officials from Narcotics department) that the trucks were being remotely monitored in the back-end system. If they wanted to check the content, they needed to have a word with the ICICI Lombard executive monitoring the vehicles.

On being informed about this, the four miscreants vamoosed. Singh then continued the rest of his journey, secure in the knowledge that if he ever encountered such a situation then a proactive team from the private insurer would come to his rescue.

This is not a stray incident. The graph of cargo thefts has witnessed an upward swing. With woefully inadequate surveillance activities even the police have left cargo- laden trucks to their own fate. Meanwhile, loss of cargo has left organizations floundering like someone running in deep sand.

Safe Passage

So, general insurance company ICICI Lombard resolved to take things into its hands. “Isolated trade routes have become the fiefdom of miscreants who are on the prowl for easy prey. And cargo thefts have become a routine affair,” cautions Girish Nayak, Chief - Service, Operations and Technology, ICICI Lombard General Insurance.

Taking a serious note of the problem, ICICI Lombard felt it necessary to beef up its technology backend to battle this scourge. The insurer resorted to the use of telematics to curb the disconcerting trend.

Telematics in general insurance usually deals with monitoring the driving behaviour of a vehicle owner. Telematics devices are provided to private car customers who collect data on the driving habits/ patterns, aberrations, speeding tendencies and distance covered while driving their vehicle. Based on the data points collected from the device, motor insurance companies extend discounts to their customers for the next cycle of motor risk covers.

But if you consider the adoption of Telematics technology in the Indian context for motor customers, it sounds like a daunting proposition. One of the prime deterrents is the cost of the Telematics device, which ranges from Rs 5000-6000.

When ICICI Lombard first toyed with the idea of implementing Telematics solutions it had to bear a cost of Rs 5000-6000 per device. “If you look at the average premium that a motor insurance customer in India shells out annually, then it is somewhere around the same range i.e. Rs 5000- 6000. So, it was prudent for our business to not implement the solution for our retail motor customers,” informs Nayak.

Tracking down

ICICI Lombard started exploring other areas where telematics technology could be put to use. After much brainstorming, they narrowed in on the Marine Transit Business.

However, the insurer also realised that, while the technology itself was great, in order to be successful the company would have to build the entire operations supporting it. Right from tracking of the devices, to where and how to place the device inside the vehicle, everything was thought through.

To start with, it had to get the buy in of the insured’s (client) logistics team. And the tracking mechanism had to be designed and built.

“For the vendors with whom some of the transporters had already contracted with, we had to get their tracking systems adapted to our needs. Finally, with an eye on future scalabilities, we thought it was prudent to invest in a common tracking platform for all vendors and devices,” he says.

The insurer identified customers who had the highest frequency and severity of hijack cases while transiting their cargo from one place to another.

It collaborated with a client (a tobacco company) to convince them that the solution can help them mitigate risk as well as reduce their losses.

Here’s looking at you!

The insurance company did a PoC and showcased the client how the solution functions. It set-up the entire backend infrastructure and took control of monitoring.

In case there is a loss of signal, the insurer’s response team gets in touch with the designated people identified at the clients end. It has a defined response protocol for each trigger/alarm raised by the system.

During such unfortunate instances, the monitoring team would get-in-touch with the driver of the vehicle to understand the reason for the duration of the halt of the cargo vehicle. If there is no response from the driver, the team touch base with the transporter or the insured’s logistic representative. If there is a hint of something suspicious, the response team activates ICICI Lombard’s claims team, investigation team as well as the local police machinery.

It was important to get the model right in terms of setting the tracking mechanism. For example, there is a check done on a daily basis to reconcile the shipments that are projected to take-off during the next day with the shipments that will be tracked. There are people who are monitoring this all the time and they are evaluating if there is any suspicious activity.

ICICI Lombard had to put the backend operations in place which enables all signals to seamlessly flow to the monitoring center and trigger an alarm in case of any suspicious activities.

The transit path of the cargo vehicle is clearly laid out at the start of the journey. If there is a deviation in the defined route, an alarm is triggered at the backend monitoring center.

The proactive response team swings into action like arrows speeding from a bow. It has been trained to take the appropriate action as per the process laid out during such incidents.

For instance, each cargo vehicle has scheduled stops for fuelling the vehicle and for refreshments of the driver. If the vehicle is halted for a longer time than required, an alarm is sent to the monitoring center. ICICI Lombard representatives reach out to the driver to seek the reason for the extended halt.

In case, there are any unscheduled stops, they get reported real time thus reducing incidents of hijack, theft, pilferage and accidents.

Insured against cargo loss

With telematics, tracking of goods during transit is achievable as well as it ensures that the carrier doesn't deviate from the course. The tracking mechanism acts as deterrent to highway robbers and miscreants. Remote monitoring instills fear among hijackers of being caught at a later stage.

ICICI Lombard has also seen a higher recovery of cargo post hijack.

For the shipments tracked, the insurer has seen a reduction in loss history by 40 percent.

By providing and implementing such solutions, ICICI Lombard has a competitive advantage in the industry. The private insurer claims to be the only general insurance company in the country to use telematics for its marine cargo tracking.

The system has enhanced customer satisfaction. ICICI Lombard is able to sell this as a value added service to its customers who are large transporters and have a lot of shipments moving around from one part of the country to another.


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