How Good is Your Fleet Safety Program?
Frequently when we talk to propane marketers regarding their insurance loss ratio, the only item discussed is the General Liability. The fact that there are not any explosions, fires or carbon monoxide poisonings showing on the loss run is a reason to be proud. But what about Fleet Safety? How effective are your efforts to hire, train, and manage the men and woman that drive for your company and how can you measure the effectiveness of your efforts?
Insurance company loss ratio’s in Commercial Auto continue to show an upward trend, and many insurance buyers are seeing increasing premiums that reflect auto loss ratio’s have reached unacceptable limits. So how does a marketer look at his efforts towards fleet safety?
A. Crash Cost shown on the insurance company loss runs as a measurement.
A review of your insurance company loss runs is a place to begin to look to see how effective your fleet safety program is performing. Loss frequency should indicate immediately that your fleet safety policy is not working. Frequency and severity are the two measurements that insurance underwriters are looking at when they are evaluating and pricing your company’s insurance premiums.
However, the loss runs only tell part of the story. Frequently, we hear from marketers who tell us that they fix their own vehicles and do not turn the claim into the insurance company when they have a minor single car accident. Or, in considering the true effectiveness of their fleet safety program, they do not consider the cost of having chosen a higher deductible on their auto physical damage. The physical damage deductibles are “eaten” by the marketer. Some marketers even have Bodily Injury and Property Damage deductibles. What ever the case, the cost of “out of pocket” fleet expenses must be added into the insurance company loss runs to give you a more complete picture of your fleet safety efforts.
Also there are other direct and indirect costs involved in a vehicle crash that must be considered:
• Workers compensation – loss time or productivity
• Group Health Benefits
• Vehicle replacement
• Employee time around water cooler talking about accident
• Loss time going to court – auto losses take a long time to settle.
• Loss time to investigate the crash
• Negative publicity
The above approach to viewing how effective your fleet safety program is looking at the negatives – how unsafe your company was. However, to be truly effective management needs to look at warning signs that lead up to accidents and be pro-active in identifying the potential problem areas and work to implement programs to reduce the potential future loss.
B. Warning Signs
It is a proven fact that drivers that are involved in an accident usually have a succession of things that they have done wrong. The propane marketer that understands this principal can then look for the warning signs and then focus their fleet safety program to try and prevent behavior that causes accidents.
Each driver must be looked at carefully. While most managers are concerned with the Motor Vehicle Record of the person applying for a job, they many times fail to recognize the danger signals.
Speeding tickets are too often discussed and laughed off, rather than being a warning sign of an accident waiting to happen. The driver that is going too fast is also the one who will be following too close and will be involved in the rear end accident. Unfortunately, speeding is one of the most prevalent causes of accidents.
The driver that is constantly on his cell phone while driving is an accident waiting to happen.
But there are other indicators that are just as important when measuring the effectiveness of your fleet safety program.
What about the maintence required on the vehicle the driver is assigned to. Is the vehicle requiring new brakes before factory recommended mileage? Are transmission problems cropping up? Are there small dings in the fenders etc that show a brush with an object, all these show a driver who sooner or later will be involved in a serious accident.
How about fuel consumption? Good drivers avoid fast starts; anticipate traffic signals and coast to stops. These actions are reflected in better gas mileage.
Do you insist on drivers wearing seat belts? The incidents of drivers and passengers being thrown from vehicles is on the increase. Start a program now to get drivers to always wear their seat belts. While California law is now requiring seat belt usage on commercial vehicles, many drivers are going to have to be reminded time after time before wearing the seat belt at all times becomes habit.
Propane marketers need to understand the actual cost of crashes and the affect on the bottom line but they also need to evaluate and judge how adequate their fleet safety program is now – before the accident.
by Frank B. Thompson, CPCU
President PT Risk Management