5 Ways To Reduce Commercial Auto Insurance Claims

The best way to keep the cost of commercial auto insurance as low as possible is to not have claims.

Easier said than done, right?!

Statistically across the country, commercial auto claims are on the rise which is leading to major rate increases.

Because of this, some large and well-known insurance carriers have decided to drop commercial auto as product offering altogether.

Commercial Auto Insurance Claims on the Rise

There are several factors, when combined, create the perfect storm for rising commercial auto claims:

  • Heavier Traffic,
  • Distracted Driving,
  • Aggressive Driving,
  • Shortage of Experienced Drivers,
  • Increased Frequency of Accidents,
  • Increased Medical Costs, and,
  • Rising Repair Costs of Vehicles.

The best way to prevent expensive commercial auto claims is to prevent accidents before they happen.

The following graphic breaks down the primary reasons that commercial auto insurance claims are rising year after year…

5 Ways To Reduce Commercial Auto Insurance Claims

NOTE: image courtesy of Liberty Mutual.

How To Reduce Commercial Auto Insurance Claims

While it may be impossible to guarantee you’ll have no commercial auto claims, (there are just too many variables when it comes to driving), there are ways to significantly reduce the chance of a claim.

Implementing a basic Commercial Auto Loss Control Program will help your business establish policies and procedures to ensure driver safety, reduce on-the-road risks and prevent accidents.

Here are 5 key components to an effective commercial auto loss control program:

Management Involvement

Managers should fully understand and be committed to their workplace responsibilities regarding road safety and risk management. A lack of management and manager-level buy-in is one of the key reasons loss control programs fail.

5 Ways To Reduce Commercial Auto Insurance Claims

Management must be actively involved in promoting an overall safe driving culture and maintaining regulatory compliance with all applicable federal, state and local driving laws.

Consistent reinforcement of policies, adding driver safety to performance reviews and unscheduled ride-alongs with drivers are few ways management can get actively involved in promoting safe driving.

You can also benchmark accident frequency against expected rates, based on criteria like vehicle type, location, and industry, and compare it against that of peers.

This is something we help with as a Rogue Risk client.

Driver Qualification Requirements

Standardize driver qualifications and screening and continuously monitor driving records via state programs or other commercial applications.

Commercial driver applicants should be required to provide a valid driver’s license, list professional references, outline previous driving experience, allow for a detailed examination of their motor vehicle record and be able to pass a road test.

This is another area where unscheduled (or scheduled) manager ride-alongs with drivers can help reinforce safe driving programs.

Telematics & Smart Sensors

Consider using telematics data to help identify driver behaviors—like speeding or sudden breaking—that can contribute to accidents.

5 Ways To Reduce Commercial Auto Insurance Claims

Leverage onboard diagnostics to capture data on your most critical vehicle-use parameters, such as speed, fuel consumption, and mileage to optimize routes and schedule maintenance.

Equip vehicles with “smart” sensors that can measure changes in light, temperature, and pressure and provide alerts to mechanical problems with brakes, electrical systems, tire pressure, and more.

Review telematics data and conduct interviews with drivers, managers, and others to identify the root causes of poor driving—such as fatigue, distractions, or tight delivery schedules—and develop action plans to address them.

Well-Communicated Policies

All workplace safety policies should be properly distributed to drivers, use clear language, and be easily enforceable.

important policy topics to consider include:

  • Aggressive driving
  • Alcohol and drug use,
  • Vehicle maintenance and security,
  • Electronic device use,
  • Personal use of company vehicles, and,
  • Crash response.

Post driver safety program information in common areas, use email or text messages to regularly share new performance driver data and hold driver meetings to talk about issues, obstacles or challenges drivers are having on the road.

Open communication and peer support can drivers focus on safety in their day-to-day work.

Safety Training and Meetings

New drivers should receive extensive training to help them successfully acclimate to their role in your business.

In addition, all employees should be required to complete refersher training on workplace policies and procedures, as well as attend routine driver safety meetings.

Employees involved in a crash or traffic violation should be required to pass a remedial training course before returning to their role.

Develop formal policies on distracted driving, driving schedules, use of personal vehicles, refresher training, and accident reporting protocols. Monitor for compliance, follow through on consequences for those who are non-compliant, and update policies as needed.

Good Record Keeping Practices

Managing a commercial auto fleet (even if it’s just a few vehicles) requires detailed record-keeping.

Driver documentation should include driving routes and schedules, employee training records and post-crash investigation reports.

Vehicle documentation should include maintenance and inspection information.

It’s also important to document all workplace safety incidents, even if they don’t result in an insurance claim.

The Rub

Instill the importance of safe driving behaviors, such as using seat belts, not driving aggressively, or driving while impaired.

Formalize a fleet management program that meets your company’s needs by partnering closely with an insurance agency partner that understands the spectrum of commercial auto risks – and has the consultative support and tools available to manage them.

When it comes to reducing your company’s commercial auto risks, engaging with a trusted insurance partner can help maximize safety and control loss-related costs. Learn more about what’s driving commercial auto cost trends in our article, Commercial Auto Insurance Trends in 2019.

By focusing on hiring good drivers and implementing a solid training program you can take control of the cost of your commercial auto insurance.

We can help.

If your current insurance professional has never addressed issues like this with you before, then I’d encourage you to reach out to us today.

I look forward to introducing you to a new way of viewing your insurance program.

Thank you,

Ryan Hanley

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