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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 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 a fleet of five 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, more than twice the national average and fifth highest in the country. (National Safety Council)

There are ways a company can actively reduce claims while at the same time limiting the amount of risk absorbed. 

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.

As of June 2017, 47 states had a law banning text messaging for drivers. Only 15 currently have a ban against the use of handheld devices, but many states are moving towards a handheld ban. During the 2018 legislative session in Georgia, a bill was introduced that would limit “handheld” smartphone use. This was an effort to dramatically reduce accidents caused by distracted driving. 

Some states, such as Missouri, have taken their laws even further by stating that a driver can be convicted of involuntary manslaughter if found to have been texting and driving during a fatal accident. Regardless of whether bills such as these clear their legislatures, companies need to embrace policies and create company behaviors and culture 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). It’s recommended that every company check their MVRs annually, but more frequently would be more effective.

It’s a common myth that insurance carriers check drivers’ MVRs for companies 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 the company to dangerous or concerning behavior (i.e. excessive speeding violations, DUIs, etc.). Knowledge of these trends will enable the company to take appropriate action, such as placing drivers on probationary periods, suspension and possibly termination. 

Telematics and GPS

New telematics and GPS products and services can be excellent tools for a construction company. 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 the company to be aware of hazardous behavior and to act. 

There are several ways these tools can enhance risk management, including, but not limited to:

  • the ability to monitor for hard breaking, speeding, location and other erratic behaviors; and
  • 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 employees. Consider adding bonuses for safe driving records to incentivize safe driving habits. In conjunction, consider offering a deductible chargeback program for employees involved in at-fault accidents.

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 or 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 the company. Along with this, there are new technologies that restrict driver cell phone usage while the vehicle is being operated.

No Exceptions

A seasoned underwriter recently reported that her best managed accounts have one trait in common: consistency. Often, the worst claims are when companies make exceptions to their own rules. Policies and procedures are only as good as their enforcement. Every time a company deviates from its best practices, it increases its risk and erodes the foundation of its safety culture. Companies not following their own stated practices can result in the largest auto losses.

Insurance companies are often more concerned with the number of claims a company has had more than the size of a single claim. One large loss in five years is far less concerning to an underwriter than 10 small losses in two years. Embracing some of the risk management strategies outlined above will help control the frequency of claims, which in turn should reduce rates.

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


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