Effective accident management for your fleet
By Ken Forbes, Head of Sales for Nationwide
The first step towards effective accident management is to consider what your objectives are for this area of your fleet strategy. Most fleet operators are looking to minimise the vehicle off road (VOR) time and reduce exposure to expensive insurance claims involving company drivers. However, these may vary widely from organisation to organisation, depending upon fleet size and composition, which vehicle procurement schemes you use, and your grey fleet responsibilities. In addition, there will be pressure from across the organisation – HR considerations, fleet administration personnel capacity, safety initiatives, driver requests, and financial considerations such as reducing or protecting future insurance premiums, maximising residual values and minimising repair costs.
Some of your priorities may be:
- Keeping your drivers on the road
- Protecting future insurance premiums
- Administering self-insurance or higher excess levels
- Reducing administrative burden
- Creating savings through outsourcing
- Maximising residual values
- Specific help, such as first notification of loss (FNOL) or claims expediting
- Safe guarding against expensive third party personal injury claims
- Consolidating and upgrading management and operating data to identify areas of risk and potential savings
- Improving safety records
- Standardising service across the UK
- Defining critical repair times (particularly important for contractual utility and service vehicles)
- Including mobile repairs as part of a flexible repair strategy
Once you have identified your priorities, you can consider the areas of accident management in which you can potentially make a difference.
Timing is everything
Time costs money. It may have been said many times but it is particularly true with accident management. The actual cost of an accident is far greater than the paint and metal involved in the repair itself. If you consider the administrative cost of handling and chasing up claim information, off-the-road time for the driver of the vehicle, the inconvenience of having to switch to an alternative vehicle, impact on future residual values, excess charges, additional pressure on the capacity of the rest of the fleet, Fleet News itself suggested that total cost per accident could be at least triple the bill for the bodywork.
One of the biggest problems faced by in-house accident management teams is that it is difficult, if not impossible, to plan the work-load from month to month. Accidents, never convenient at the best of times, seem to have a tendency to happen at inopportune moments: over the Christmas period, whenever the fleet manager is out of the office and, if we have a few days of bad weather, all at the same time. This puts a significant amount of pressure on the managers of small and medium size fleets in particular.
However, the impact of this can be far greater than a bursting in-box and a few late nights in the office, as it can have a severe impact on the final cost of the claim, particularly with fault accidents. Research from A LEADING INSURANCE FIRM suggests that the average cost of bodily injury claims is increasing by 30% every year in the UK. A delay in notification of an accident can mean that the third party may already have started progressing a claim which will make a substantial financial impact. Even in non-injury cases, third parties are likely to be offered expensive credit hire vehicles which are then charged back to your insurer. A good third party capture team within an accident management company will contact the third party immediately, sometimes within a matter of minutes, to take action to limit the cost of the claim. When injury is involved, there may even be preferred medical arrangements to help with cost control. It is an accepted rule of thumb that the longer it takes to resolve an accident, the more it will cost. Having a dedicated team on hand to manage every claim, and to expedite every repair, can make a considerable impact on the annual total claims cost. It is important to remember that legislation gives insurers just 15 days for gathering information leading to fast non-litigious resolution. If this deadline is broken, costs can spiral.
For larger fleets, predicting activity is probably somewhat easier. Annual trends and seasonalisation may give an indicative picture of what workload and administration support may be required and when, so that additional resource can be planned for. However, The FN50 in 2011 revealed that an increasing number of larger organisations are also outsourcing, or are looking at outsourcing, their accident management provisions.
Questions to ask yourself
- At present, is there ever a delay in handling the first notification of loss (FNOL) or claim notifications?
- Is lack of administration resources impacting the cost of these claims?
- Do drivers and the claims get the attention they deserve?
Review your insurance policy
This is not just the insurance policy itself, but also what your organisation’s policy is concerning how it uses fleet insurance and works with its insurance provider. Evidence gathered by the Office of Fair Trading has recently suggested that private motor insurance premiums in the UK rose by around 12% between 2009 and 2010, and by a further 9% in the first three quarters of 2011. It is estimated that fleet insurance costs have also followed this trend, with some increases said to reach over 25%.
Two of the biggest influences on the premiums you will pay for you fleet insurance are your historical claims record and the measures you have in place to demonstrate that you will be a better risk in future.
Many insurers now have dedicated and sophisticated fleet insurance packages which can provide flexible support depending upon your requirements. The decision about fleet insurance provision should not be purely based on price, as the service packages included may offer real and tangible value for fleet managers. ARE THE FACTS CORRECT.
In efforts to control rising insurance costs, a significant number of fleet operators now self-insure. Alternatively, they may only pay third party costs, or have raised their excess and now pay for repairs below this level. The downside of this is that all of these solutions lead to extra administrative burden for fleet operators as they have to identify repair options, manage the estimation process, handle deployment and track costs. This need to manage bespoke fleet strategies has led to an increased demand for high quality and professional accident management in the marketplace.
In order to actually persuade insurers that your fleet will be less of a risk in future than its claims history indicates, you will need to produce comprehensive and convincing information. This will only be possible if you have detailed reporting and management information. If you can not track the data accurately, it will be much more difficult to effect change, and virtually impossible to demonstrate it with any authority. In most cases, you will require some sort of intelligent driving tracking system, or telematic device.
In recognition that a number of fleet operators already use telematics, a number of insurance companies have joined up with telematics suppliers to track driver performance and offer fleets the opportunity to ultimately reduce premiums. Not only can it track and influence driver performance, it can also help against fraudulent personal injury claims, reduce risk, and help identify driver training needs efficiently.
It is worth researching the market, as policies differ greatly by insurer, some based around pay-as-you-drive models and others on driver performance. At least two of the top UK insurers have recently introduced fleet insurance products which take into account these types of strategies. Some of these policies allow fleets to choose the telematic system which best fits its fleet, other are based upon the installation of approved technology in fleet vehicles.
Other fleet parameters that may make a difference to the cost of fleet insurance are restrictions regarding the minimum driving age, vehicle and engine limitations for drivers up to the age of 25, demonstrating a far-reaching active safety programme, and ongoing, effective driver training.
Questions to ask yourself
- How many claims in 2010 and 2011 would have been lower if there was a different excess level or internal policy for handling claims?
- How recently were the insurance policy and internal repair processes reviewed?
- How could we demonstrate that we are actively working to reduce accidents?
- Would it be feasible to restrict the fleet policy by driver age or ability?
- Would there be benefits for the business in introducing telematics or increasing the use of them?
- Have we discussed our current telematics and risk information reporting with our existing insurance provider?
Reduce accidents – not just claims
Of course, the ultimate aim of any accident management strategy should be to reduce accidents, not just to reduce the cost of insurance claims. Active safety and accident reduction initiatives which are supported across the business can produce significant improvements, lower accident costs and, more importantly, save lives and prevent injuries.
Although we tend to laugh at the fact that the UK seems to shut down after a couple of inches of snow, there is no doubt that accidents do occur more frequently in bad weather. Banning journeys to non-essential meetings during snow and icy periods may well reduce the number of serious accidents, as could providing driver training or winter tyres for essential users. Driving in the snow and ice can be challenging for even the most experienced driver and increased awareness and good preparation can considerably reduce the likelihood of an accident.
Also, consider training for drivers who have a large number of points, maybe even at their own expense to act as a deterrent and to reinforce the fact that it is unacceptable.
Here, again, detailed management reporting is critical. Data about your fleet will provide insight into your specific risks and where there are inconsistencies which need investigating. With driver error still accountable for the vast majority of accidents, telematics can contribute greatly both by measuring the drivers’ actual capability and also as a deterrent for risky driving practices.
Some of the initiatives which could be considered include:
- Targeted training for drivers who have been involved in accidents historically, who have points on their licence, who cover high mileage per annum, or who are flagged as ‘risky’ drivers through a telematic system
- Age related policies such as prohibiting any company car drivers under a certain age, restricting young drivers to essential users only, and limiting engine sizes available
- Create a ‘Safety Schedule’ which explains what the business is trying to achieve through increased accident prevention activity, what the organisation is committed to delivering, and what is expected of the drivers
- Offer free eye-tests to drivers, or make them compulsory as part of regular audits alongside driving licence checks
- Introduce a bad-weather policy with clear guidelines about reducing non-essential travel in very poor driving conditions
- Make the rules clear – remind drivers what the company policy is if they get to 12 points or if they are discovered to be driving inappropriately
- Make sure that non-personal cars are not being used outside of working hours
- Introducing or increasing the use of telematics
Questions to ask yourself
- Where are the areas of risk for this fleet?
- Does our fleet reporting provide enough information into safety risks?
- Do we have a definitive safety policy for our fleet?
- Has everyone in the business read it, and do they support it?
Manage your fixed site repair network
The automotive repair industry is changing. Historically, the key relationship for bodyshops was with the insurance providers, and the majority of drivers and policy holders took their vehicles to be repaired at the insurer’s approved repairer. Use of the dedicated repair network is no longer obligatory with many insurance policies, most fleet management and the vast majority (but not all) accident management providers having their own network of repairers. With insurance premiums rising, an increasing number of repairs now take place outside of an insurance claim. As the market has opened up, bodyshops have had to dramatically up-their-game in terms of quality of repair and customer service. The relationships with insurers are still critical, but there is now an understanding that with choice, comes the need to compete.
This is good news in the fleet market, as repair cycle times are being squeezed and service levels are improving dramatically to meet the demands of fleet decisions makers. However, there is still huge disparity in the market place. As with the automotive service industry, independent bodyshops vary greatly in terms of capability, quality and standards. The better ones will have already have identified that the fleet market offers a wealth of opportunity and have developed relationships with local fleet managers. However, some national fleet managers face difficulties when relationships with local, independent businesses, which have developed over time, mean that it can be difficult to gather consistent management reporting and costings.
Some independent bodyshops look to resolve this issue by forming consortiums to provide networks of coverage but, again, always ask for examples of reporting and pricing structure as it is important to ensure consistency.
One of the benefits we have here at Nationwide is that we have the largest chain of wholly owned repairers in the UK, providing unparalleled coverage and standardised pricing. Our accident management team use exactly the same IT platform as our repairers, our claims handlers and our mobile repair and Motorglass teams, so we can guarantee consistency and a streamlined process.
However you access your repairer network, whether directly, via an insurer or through a fleet company or accident management provider, it is critical to establish detailed and specific KPIs around service, cycle times, reporting, automatic approval levels and price. Ensure that the bodyshops are PAS125 approved as this is the British standard for bodywork repairs and gives additional peace of mind. Do not be afraid to ask for a solution that suits you and your business, particularly if you have clear service level requirements, such as very quick turn-around time or out-of-hours collections. Having clear objectives up front can help you measure success and will ensure that accidents are managed with as little stress as possible.
Ensure that your repair network is ‘engineering’ your quotations. This means checking the accuracy of every bodyshop report with accepted industry software. Not only is this a useful method for preventing fraud, it also gives you peace of mind that you are paying the right price for the damage to the vehicle, and, from a safety and quality perspective, ensuring that the correct repair methods are being used. In addition, discuss matrix or standardised pricing to see whether this would benefit your fleet. In our experience, we’ve found that many organisations which move from an estimating system for smaller repairs to a matrix pricing model reduce down time, increase transparency, cut administration time, and avoid VOR delays.
Many fleets are also future-proofing their repair network at the moment, to ensure that there is adequate provision for the repair of hybrid and electrical vehicles.
Finally, one area which surprisingly can often get missed in agreements directly with accident management providers or body repairers, is access to courtesy cars and commercial vehicles. Make sure that you have a written agreement in place to avoid your drivers being left without suitable transport if the bodyshop is particularly busy.
Questions to ask yourself
- Is our repairer network PAS 125 approved?
- Does the repair network match the coverage required for drivers?
- Is the reporting consistent and comprehensive?
- Do we have agreed KPIs and cycle time agreements in place?
- Are our repair quotations checked using ‘engineering’?
- Would standardised pricing have saved us money on our repairs over the last 12 months?
- Is there a courtesy car and van agreement in place?
- Can our repairer handled electric and hybrid vehicles?
- Do they have a Mobile Repair option for small repairs?
Use mobile repairs
Over the past twelve months, mobile repairs have risen to the fore. These are not traditional smart repairs for paint chips and dents, these are repairs carried out by highly sophisticated mobile body repair vehicles and fully enclosed capsules to exactly the same standard as in a fixed site bodyshop.
At the point of FNOL, your accident management provider should be able to ‘triage’ your repair, in a similar fashion to an injury in A&E. Experienced call handlers will be able to advise whether a repair would be suitable for mobile repair. If this is the case, rather than being off the road for a number of days, the repair could be carried out at a time and place convenient to the driver in no more than one day. This can save time, money and inconvenience and will really contribute to a flexible fleet repair policy.
For fleet operators who are managing repairs below excess or outside of the insurance policy, a mobile repair offers the benefits of dramatically reduced vehicle off road time – just one day - and therefore negates the need for a courtesy car or expensive loan vehicle. This will also keep extra costs over and above the repair to a minimum.
It is important to ensure that, should the damage be more significant than originally thought, that there is a clear referral process back in to a fixed site bodyshop, and that the mobile repairer is not tempted to do work which is out of scope for mobile repair.
Questions to ask yourself
- Would a triage approach to repairs, including a mobile option, save time and money for our fleet?
Manage your information!
Comprehensive management (MI) reporting is absolutely critical FOR effective fleet management. Without it you can not identify risk, track claims, demonstrate efficiencies or even manage costs. There seem to be two key problems – not enough information, or too much.
Step one is to take stock of the management information you currently have access to and then find out what reports are available from you insurer, your repairers, your accident management partner, your fleet management company, your telematics, and from your HR and finance teams. Remember to include information about the personnel time and budgetary costs involved in managing and administering the fleet to give you a comprehensive view.
Step two is two work out what information you actually need to run your fleet and accident management more efficiently. Many accidents management providers now have comprehensive management information available in real-time on line, and will provide bespoke reports to meet your criteria.
Questions to ask yourself
- Do we act upon the management information we already have?
- Do we have enough or complete information?
- If not, what pieces of information do we need to complete the picture?
Remarketing and ongoing wear and tear
When it comes to returning your vehicle at the end of a contract period, or selling it on, the damage which has the most impact on the value of the vehicle is the wear and tear and minor scruffs and dents rather than repaired accident damage. Alloy wheel and bumper scuffs, dents and scratches, and windscreen chips can all lower the residual value or result in additional payments to the contract hire or leasing company.
However, it is often wiser to maintain bodywork throughout the vehicle life as minor damage can become major repairs if left over time. Scratches can result in paint lifting, and windscreen chips, which can often be repaired for free with fully comprehensive policies, can quickly turn into expensive cracks.
In addition, the condition of fleet cars and vans will reflect on the organisation itself. A shoddy looking delivery van, with a dented door and a scuffed bumper does nothing for promoting a professional company image.
Both of these situations concern relatively minor repair work and are therefore ideal for mobile repairs, some rental companies actually have an agreement with us which involves a dedicated Nationwide Mobile Repair van being on site permanently to manage on-going repairs. Fleet operators may be able to negotiate discounted rates with mobile operators if there are a number of vehicles to be repaired at the same time.
This can also save time at the end of the life of the vehicle, when the priority is usually to return or dispose the vehicle quickly, and negates the need for the vehicles to be sent to a bodyshop as the mobile repairs take less than one day to complete and can be done, conveniently, in a company car park.
Questions to ask yourself
- Is the appearance of our commensurate with our company image and values?
- Could we save money on reconditioning our defleet vehicles?
- Does our repairer offer pre-defleet checks?
- Are there a number of minor repairs we could batch together for repair?
- Do our drivers know who to call as soon as they get a chip in their windscreen?
Driver information and training
For any accident reduction programme to be effective, you need to have the buy-in and co-operation of the people behind the steering-wheels. How far you can go in terms of making unilateral decisions which affect driving practices within the business will largely depend on how the fleet is currently run, what the vehicles are used for and the culture of the organisation. Even though telematics are commonly used in commercial vehicle, service or utility fleets, they are still relatively rare in car-fleets, particularly in the executive sector. Some operators are concerned about data protection, or “big-brother” issues, others are unconvinced that insurance-related telematic devices will deliver long term savings as they are still relatively new.
There are benefits. Latest telematic equipment is an unbeatable tool for monitoring driver behaviour and driving efficiency. Drivers with poor performance can be identified and provided with adequate training, rather than offering blanket training across the fleet. Drivers with telematic devices in their vehicles are more likely to slow-down and consider their driving actions – particularly when they know that this is being monitored and acted upon. Many may actually value the opportunity to find out more about their driving skills. In the event of a theft, telematics can help with the speedy recovery of a vehicle and in the event of an accident its ability to contact the emergency services can save lives.
Other fleets have produced driver information pack which explains the standards to which the fleet is operated and what is expected from them. These include numbers for windscreen repair partners which can be organised directly, and bump cards containing information about what to do in the case of an accident. Clear, consistent and compelling internal communication demonstrates the commitment to good fleet policy.
It is vital to explain to drivers what is expected from them in the event of an accident. Make it crystal clear that you expect them to be honest about their involvement in an accident – it will inevitably end up costing you more in the long run if they knowingly deny they were at fault when they were.
If you do make changes to the fleet policy, explain why you are doing it. It may seem obvious to you, but change is not always happily accepted, particularly as vehicles can prove extremely emotive. Is there also any information in the public domain which you can pass to drivers to encourage better driving skills? Many drivers associate high motorway mileage with an increased risk of fatal accident however, statistics prove that 65% of all fatal and serious crashes occur on single carriageways compared to just 10% on motorways.
If you do not use telematics, high quality accident management reports will provide information about risk areas, and problems with particular areas of the fleet or even individual drivers which can be used to create individual action plans or to identify training needs. If there is a high tendency for speeding during business hours or the accumulation of parking tickets in your organisation, you may have to consider whether the culture is a contributory factor in this.
Questions to ask yourself
- Are drivers kept fully informed of fleet decisions?
- Do we explain fully what to do in the case of an accident?
- Can we provide literature to aid better driving skills?
Your Grey fleet
Fleet managers have a responsibility towards their grey fleet. Many accident management providers will provide accident management support, and even arrange contractual rates, for grey fleet drivers, ensuring consistent support. We’ve recently introduced standardised rates for a number of our customer’s grey fleets and they have been extremely well received by driver and fleet managers alike.
Questions to ask yourself
- What provision is in place for accident management for grey fleet vehicles?
Accident management is a complicated area of fleet management but, managed correctly, can offer scope for major cost savings. Comprehensive analysis and reporting can help you identify areas which help you improve safety and business efficiency, and reduce the burden of administration. To find out more about Nationwide’s accident management services, call our Business Support Team on 01606 562352 or email email@example.com.