“Through efficient accident management, you can squeeze every possible dollar out of a repair, but in the context of total operating expenses you achieve very little,” said Vincent Brigidi, director of strategic account services at The CEI Group. “The market has come to realize that the new frontier for significant savings is preventing accidents by installing driver risk management programs.”
Brigidi explained, “Over the last two years, all but one RFP we’ve answered has been led by the risk control issue. Risk management services include vehicle record checks, a program that assesses every driver’s potential for an accident, and proactive intervention through both online and behind-the-wheel training.”
According to David Vance, director of safety services for Fleet Response, driver risk management is now more a focus because previously it didn’t exist. “Now clients are coming in consistently — about 80 percent of them — with that requirement as a part of the intended project,” he said.
“We have found the trend of companies incorporating more ranked management personnel into the decision process is becoming more prevalent,” said Bob Martines, president and CEO of Corporate Claims Management (CCM). “I have attended many meetings with clients and prospects alike in which accident management, while still important, is discussed as an adjunct to risk management and safety.”
Focus on Risk Management Expands Decision Teams
Fleet fatalities and a growing concern for the bodily safety of employees whose jobs entail driving have brought new players from beyond the fleet department into the buying decision.
“The entire decision-making process in accident preventability management has been evolving from being fleet department focused to corporate committees,” said Vance. “In general, participants on these committees include representatives from HR, legal, risk, sales, or operations, and they bring their influence and expertise to handling each situation.”
Brigidi has seen more collaboration between fleets and the corporate legal department. “We are seeing a lot more companies involve HR,” he said.
“Every meeting we have now of any substance involves sourcing groups with new faces. A recent player we often see is the Environment, Health, and Safety Department. They point out that employee safety issues are addressed proactively ‘in our factories, in our retail stores, and through attention to workstation ergonomics in our offices. Fleet generates our biggest expense when it comes to workers’ comp, so we ought to be doing something there, too,’” Brigidi continued.
Brian Colvin, CCM’s vice president, acknowledges the group effort is present, but also that clients are incorporating drivers into the process. “Fleets are looking at ways to make their drivers more aware of the importance of driving safely by offering incentives as well as assessing a deductible for chargeable accidents.”
Senior management is becoming sensitive to this issue because of liability concerns. “In the past year, I have watched an HR department go from totally disinterested to totally involved,” said Vance. “I have watched risk management realize the lost costs involved in accidents, and that is the moment they decide to take over, find out what’s causing it, and stop it.”
While everyone acknowledges the importance of safety, unless senior management is behind it, those programs are not as effective as they can and should be. Vance recalled one company that changed its risk management priorities by incorporating a senior vice president with full responsibility for every driver on the road. “This vice president took it in his own hands to say, ‘I will get control of this.’ He was vice president of operations, two levels above fleet,” said Vance.
Fleet managers may not be as persuasive in advocating a risk management focus to their senior management.
“If they really want to advance risk management, they should go to finance or legal and push,” advised Vance. “Those departments see the problem rising rapidly in dollars. They will recognize the cost increase without a marked increase in the number of accidents. They’ll see it hit the ‘red flag’ point; money always draws attention.”
Management Looks at Preventability
Company executives are recognizing the cost-effectiveness of proactive steps to prevent accidents.
If a fleet has 100 accidents in a year and cuts $100 off each accident, the result is $10,000 in savings. “But if that fleet reduced its accident rate from 100 to 90, the savings jump to $100,000, factoring in liability costs, workers’ compensation, third-party damage, and the company’s own first-party damage,” said Brigidi. “We believe we have managed repair costs to be as low as possible. Now, the real potential for significant cost savings is in preventing the accident.”
One reason cited by fleet management companies for an increased interest in accident preventability is the occurrence of fatalities and management’s reaction to it.
“A significant number of clients are now focused on preventability,” said Vance.
Preventability issues impact vehicle selection. Fleet managers can now access statistics that detail the type of accident and degree of damage to the vehicle and driver injury. Accident data reveals that with some vehicles, people can walk away unscathed, while in other, comparably sized vehicles, the same accident produces injuries.
Clients have acted on such data, removing those vehicles from selectors and substituting safer vehicles, according to Vance. “We know of one fleet that replaced ‘high maintenance’ vehicles because time and effort needed was proving terribly costly,” he said. “The concern was not only the dollars spent, but the frequency of service required to keep the vehicle and its drivers safe.”
The CEI Group encourages fleets to look at a vehicle’s performance in an accident when developing their selectors. “What is the likelihood of that particular make and model vehicle to get into an accident? We have statistics on that likelihood. We can tell you the driving preventability rate, meaning the percentage of claims for that make and model that are preventable by nature,” Brigidi explained. “This statistic may not be the determining factor in an acquisition, but it’s a new and important variable. All things being equal between two makes and models, if they both are four-star rated for safety, but one has a preventability rate of 35 percent and the other 28 percent, that could tip the lever.”
Preventability rates, designations, and calculations are published by NHTSA and the National Safety Council. Both CEI Group and Fleet Response apply preventability criteria to all claims, utilizing the National Safety Council standards. These standards are based on a publication entitled: Guide to Determining Accident Preventability. CEI and Fleet Response say they are willing to work with fleet and risk departments to provide preventability information.
Data Access Helps Analyze Accident Rates
Another factor fueling the growing interest in driver risk management are sophisticated systems that now generate data and more accurately analyze and track accidents. “The data is accessible; people can go in and run their own reports and see the history and track it. This is very much a factor,” said Vance of Fleet Response.
“We have one client for whom we reviewed 36 months of past data and re-evaluated their preventability based on the data we had,” he said.
These types of driver risk management programs didn’t exist five or six years ago. They are a relatively new phenomenon, Vance noted. Results are rapidly attainable. The data is not only accessible, but it can also be reviewed and analyzed to determine problem causes and focus attention on them.
New Approaches Identify Risky Drivers and Train Proactively
At the driver level, effective risk management involves identifying drivers who present the greatest potential for accidents and proactively intervening with them. Fleet management companies have developed programs to pinpoint high-incident drivers using risk-profiling and online tools. Fleet managers can review compiled data to monitor driving behavior, then meet with high risk drivers to take preventive action, including training or possible sanctions.
“I think more of our fleets are being proactive by using past claim data. Many fleet and risk departments we work with are starting to put together what happened before and what is going on right now to create real solutions and ways to help their drivers,” said Vance.
Companies are beginning to provide direct driver supervisors or branch and cost center managers the tools to hire smarter, to make sure they understand MVRs and how to analyze them properly, and determine whether that driver is acceptable or not, said Vance.
In the service industry, however, high employee turnover presents an obstacle to efficiently use these tools, he noted. “But where people are willing to stay on board for a number of years, those supervisors are beginning to use better tools to prepare drivers better. They’re learning that putting a young employee with no experience behind the wheel of an International 4700 is not a good move. We had clients literally flip their Isuzus because the drivers had very little experience in how to manage those kinds of vehicles and they handle so much differently than even a van does. Fleet managers are beginning realize and take hold of this issue,” said Vance.
In terms of blanket risk profiling, Fleet Response is seeing even the small fleets with a one-person fleet department at least trying to order the MVRs or starting to look at their policies even if their fleet only has 65 drivers, said Vance. Technology is making that information readily available, providing electronic MVRs and eliminating the process of examining piles of paper.
Review Committees Examine Accident Causes
Fleet managers are much more interested in examining the cause of an accident. There is closer consideration of whether the cause was chiefly a mechanical situation, according to Vance. “If the driver says something was wrong with the brakes, the brakes will be tested. It is not just he-said, she-said situation.”
Fleet management company clients are establishing in-house accident review committees to determine whether an accident was preventable, said Vance. One has even gone so far as to obtain the support of an off-duty police officer who participates in the review. In others, he noted, particular claims in question are reviewed by the safety committee.
“They discuss more than just causeand-effect for each accident,” Vance explained. “They look at the actual facts of the incident and try to clearly determine whether the driver should be charged and, if so, to what degree. This effort is beginning to emphasize counseling and other actions that may be appropriate for the driver. This approach helps committee members and management realize that if they frequently look at their drivers’ accidents, they will begin to have a pretty good handle on how to stop them from happening.”
Many CCM clients maintain review teams that include a fleet representative and risk, safety, and legal personnel who review accident activity to be sure appropriate guidelines are followed and true assessments are made regarding specific accident types, said Martines. “Understanding that not all fleets are created equal, many review boards look to industry standards to be measured by, yet still desire to establish their own criteria so they can set themselves apart from like comparisons, especially if they differ dramatically.”
OSHA Enforcement Prompts Attention to Accident Analysis
Government regulations and oversight have prompted a growing attention to accident analysis. “We are seeing a strong interest in getting a better handle as to why the accidents occur,” said Vance. “The dominant reason is that the Occupational Safety and Health Administration (OSHA) is penalizing employers for not having drivers properly trained. This is based on the general duty clause. OSHA has been using the general duty clause to institute penalties in situations where an actual standard or rule does not exist. If the employer fails to provide a specific element of training, that either wasn’t done or was forgotten, then OSHA can cite the general duty clause 5a, part of the standard 1910.”
These penalties come into play at the time of an OSHA inspection and/or when an accident or injury occurs. The American National Standards Institute (ANSI), with the American Society of Safety Engineers (ASSE), has revamped an old driver management program, updating it to current practices. Instituted in April, this new program, ANSI Standard Z15.1, is accessible through ASSE. OSHA uses ANSI standards as references for many industrial and construction safety standards.
A complete list of ANSI standards is available in the OSHA standards. The new standards permit OSHA to generate citations and penalties without having an actual OSHA standard because the agency can use the reference to the ANSI standard. This rule is applicable to all fleets. OSHA is not yet targeting any particular segment, according to Vance.
Total Loss Rates Gaining Some Interest
While the percentage of vehicles declared total losses has remained fairly steady, there has been some interest in reviewing the practice.
“Total loss has been flat last year, but we are really looking at it and the way our reports work,” said Eliot Bensel, manager, accident management services for PHH Arval. “Do we close that repair, simply not repair the vehicle at all? When technically the vehicle is not a total loss, we’re beginning to question whether it is simply a vehicle that we don’t want to move forward with repairs because safety can be jeopardized.”
New safety feature technologies are becoming a factor in determining total loss. “The seat-sensing airbags systems actually sense your position in the system and your weight in the seat and deploy the airbag accordingly,” said Bensel. “But that feature must be calibrated to the vehicle system. So you can’t just replace the parts and reset the system and be done with it. It actually has to be calibrated in a special process. If not done properly, you will deliver a vehicle to a driver that will not perform the same way in a second collision as it did in the first,” he explained. Let me know what you think. firstname.lastname@example.org
Originally posted on Automotive Fleet