Be the Risk Manager Your Commercial Auto Clients Need

Fleet vehicle accidents are among the costliest of injury claims for a business. The average cost of a loss related to a fleet vehicle accident is approximately $70,000—almost twice the cost of the average workplace injury, according to the National Safety Council.

It’s simple: Drivers are consistently a fleet manager’s largest exposure to risk, according to the National Highway Traffic Safety Administration. In short, if your commercial auto clients want a safe fleet, they need to start with safe drivers.

“The one area that a business owner can control and which has a major impact on rate and acceptability is driver quality,” says Mike Miller, commercial lines business leader, Progressive Insurance. “With low unemployment rates, a booming economy and a driver shortage, it’s easy for a business to compromise on driver quality. But short-term decisions can impact the affordability and access to insurance coverage.”

But in the midst of an ongoing driver shortage in the commercial auto market, “finding good, qualified drivers is really tough,” says Doug Fairbanks, a commercial auto agent at Hartland Insurance Agency, Inc. in Hartland, Michigan. “We saw more driver turnover in 2019, but many drivers who are still looking for work are generally the ones with less experience or poor history.”

How can you help your fleet managers weed out the good from the bad? Pre-employment requirements are a good place to start, says Fairbanks, who cites screening programs from the Federal Motor Carrier Safety Administration (FMCSA) and both background and MVR checks to confirm drivers meet requirements regarding number of years of experience and experience operating different types of equipment.

“Young drivers and problem drivers continue to cause claims,” Fairbanks explains. “You need to make sure you’re not only hiring qualified people, but doing the research to make sure your assessment is accurate.”

Travelers encourages fleet managers to obtain MVRs for anyone who drives on behalf of their company, then review them regularly to make sure they are up to standards. The MVR policy should apply consistently to all employees who drive.

Once drivers are hired, fleet managers should implement policies and training to prevent driver fatigue—a factor responsible for 100,000 accidents every year, according to the National Highway Traffic Safety Administration. Employers must manage work schedules and monitor hours for all drivers, and require them to adhere to rules regarding proper rest.

Finally, most commercial drivers must also meet minimum medical certification requirements from the Department of Transportation (DOT). Fleet managers should raise awareness with their drivers regarding how smoking, drinking, mental illness and other factors may affect their driving, and encourage them to eat healthily on the road.

All of the above is especially important in the midst of an ongoing hard commercial auto market. “It used to be that the first thing underwriters would look at would be the losses versus the premium dollars over the last three to five years,” Fairbanks says. “But now, the very first thing they look at is inspections from the DOT before they even ask about claims. I’ve had companies decline risks that have no claims but have poor inspection records from the DOT.”

Helping your commercial clients “proactively manage and work on their safety scores” is crucial in ensuring they “don’t get to policy renewal and the underwriter says, ‘Oh, these are awful—we’re not renewing,’” Fairbanks adds. “Keep an eye on it throughout the year so that when you know there’s an issue, you can correct it or at least say to underwriting, ‘We had this really bad inspection, but here’s what we’ve done as a result, and we haven’t had any problems like that since.’”

Moving forward, telematics programs will play an increasingly important role in helping fleet managers monitor driver performance and prevent the consequences of losses, tickets and other violations. Although ride-along evaluations, motorist call-in reports, DOT roadside inspection reports and accident review processes can help ensure drivers are staying safe behind the wheel, telematics devices take it a step further, providing vehicle performance data as well as evidence of speeding, aggressive acceleration, and hard braking and cornering.

“The more you can control who’s going into the vehicle is helpful, but with a good telematics program, you can also find out when your drivers aren’t driving safely,” Fairbanks says. “Ten years ago you never would have known if someone had near-misses, and those are obviously all indications of claims coming.”

“Recommending the use of a telematics program to track driving behaviors can put control into the business owner’s hands,” Miller agrees. “Programs that measure driver actions and can help the owner find poor behaviors before they turn into losses is a nice win, and can also provide more accurate rates for safer drivers.”

And most telematics programs are “pretty affordable,” Fairbanks adds. “By the time you figure in pricing discounts for using the telematics program, and then the long-term savings from better rates because you’re having fewer claims as a result of using your telematics data, that helps the insured in the long run.”

Jacquelyn Connelly is former IA senior editor.