Managing your auto fleet risk

The rebounding economy has brought with it a significant expansion in business auto fleets, with companies in construction, transportation and logistics putting more vehicles on the road. That’s generally very positive, but there is a downside: as more technology comes into our vehicles, there is an increase in the number of driving distractions and new challenges for fleet management. 
Crowded roadways, new monitoring devices and services, and sometimes weak corporate policies surrounding fleet operations are leaving many insurance companies with no option but to raise rates. As a company, many executive teams’ first concern is the rise in insurance premiums, but that shouldn’t be the only concern. Whether you have a fleet of 5 or 500, it only takes one major accident to harm a company’s balance sheet. Insurance cost, as always, is driven by loss experience.

By the Numbers:

• In 2011, losses for commercial automobiles were reported at $744.8 million. (a.m. best)
• Losses rose to more than $2.9 billion in 2016. (a.m. best)
• Motor vehicle related fatalities in the state of Georgia jumped 33 percent from 2014-2016. This is more than twice the national average and fifth highest in the country. (National Safety Council)

There are ways your company can actively reduce claims while at the same time limiting the amount of risk you absorb.

Technology doesn’t operate in a vacuum. Positive and negative reinforcements can have a great effect on your employees.

Reduce Distracted Driving
Distracted driving on the roadways has become the number one cause of accidents. With crowded roadways and the cost of medical care and vehicle repair rising, the rise in auto rates is likely to continue as insurers try to limit losses.

For example, during the 2018 legislative session in Georgia, a bill was introduced that would limit “handheld” smartphone use. This is an effort to dramatically reduce accidents caused by distracted driving. Regardless of whether this bill clears the legislature, companies need to embrace policies and company behaviors to reduce employee use of electronic devices while operating a vehicle.

Motor Vehicle Records
Companies should more regularly check their employee Motor Vehicle Records (MVRs). We recommend checking the MVRs annually, but more frequently would be more effective.

It’s a common myth that your insurance carrier checks your drivers’ MVRs for you every year. Most, if not all, insurers are beginning to push this responsibility back upon the company as they want to see their insured taking ownership over their safety. A regular check would alert you to dangerous or concerning behavior (i.e. excessive speeding violations, DUIs, etc.). Knowledge of these trends will enable your company to take appropriate action.

Telematics and GPS
New telematics and GPS products and services can be excellent tools for your business. Innovative technologies have given companies the ability to not only track the location of their vehicles, but also monitor the behavior of the drivers behind the wheel. These technologies allow your company to be aware of hazardous behavior and to take action.

There are several ways these tools can enhance your risk management:

• The ability to monitor for hard breaking, speeding, location, and other erratic behaviors
• GPS location features also allow a more robust system of time tracking for hourly employees

Company Policies
Technology doesn’t operate in a vacuum. Positive and negative reinforcements can have a great effect on your employees. Consider adding bonuses for safe driving records to incentivize safe driving habits. In conjunction, you might offer a deductible chargeback program for employees involved in at-fault accidents.

Last fall, we partnered with Travelers Insurance on a symposium at Georgia State University to discuss the role that work plays in distracted driving and what business owners can do to establish an effective safe driving program.

While it might seem smart to have a “no cell phone use” policy for employees driving company vehicles, a policy can only go so far. Employees are inclined to pick up the phone when members of their executive team or a client calls/texts.

Creating a culture where it is okay to return the message once parked or pulled over starts from the top down and can significantly decrease distracted driving incidents for your company. Along with this, there are new technologies that restrict driver cell phone usage while the vehicle is being operated.

While there are many ways to enhance your risk management program for your auto fleet, it all begins with creating a culture of safety to drive strong behaviors amongst your employees. Consider discussing with your risk management team, insurance broker, and insurance company how you can better manage this risk and take more control over your company’s roadway activities.

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Joey Maxwell is a client advisor with Sterling Seacrest Partners, specializing in construction, manufacturing, real estate and nonprofits. You can reach Maxwell at jmaxwell@sspins.com.