Highlighting News, Trends and Best Practices in Risk Management and Property & Casualty Insurance

Auto Related Costs Accelerating…Here’s How to Stay Ahead of Them

Posted by Matt Hene on Oct 20, 2017 5:03:34 PM
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Company auto-related costs are accelerating as new technology becomes available, creating more expensive cars with more distracted drivers. The distractions come in various forms: from high-tech computer systems integrated in the car to the already dangerous situation of using a cell phone while driving. Because the cost of vehicles continue to increase, the cost of repairing damaged vehicles is also increasing. Companies that operate a fleet of vehicles should be aware of all the risks and have plans in place to reduce these risks.

Company policies and prevention measures should be closely examined to determine if they need to be updated to reflect today’s environment and to reduce potential risks to mitigate costs. 

The most common factors that lead to losses

While auto-related costs due to accidents continue to grow at a rate of 12% and the number of auto related fatalities has increased by 6% since 2015, we continue to see rate increases in the market. Vehicle windshields, bumpers, and headlamps can all run into the thousands to replace, tempting companies to neglect these costly maintenance items in order to boost their profits. These poor safety decisions potentially open the door for risks of injury, or worse, which could have been mitigated with proper and proactive safety measures.  

Risky and distracted behavior

There are many distractions on the road, but the most common culprits are eating, grooming or applying makeup, and texting while driving. Cell phone usage increases your chance of an accident by 23 times, making it the most dangerous distracting behavior by far.

Over the years, safety technology located within the vehicles themselves has made great progress, but with this progress also come drawbacks. Whether the car is driverless or has rearview cameras, the distractions can be difficult to manage for someone without proper training.

How to mitigate these problems

The old adage of “an ounce of prevention is worth a pound of cure,” could never be truer than when automobile insurance premiums are in play. Keeping these points in mind could not only reduce your insurance premiums, it can save lives as well.

●   Provide training for employees with facts and statistics about distracted driving and how these situations can be avoided when operating a vehicle.

●  Keep all vehicles in the fleet maintained to avoid any potential malfunctions. A small effort to save money by overlooking preventive maintenance can have devastating results.

●  Review loss records and communicate with drivers to assess risk.

●  Evaluate employees by checking previous driving records and employment files and consider implementing drug screenings and driving tests.

Prepare ahead of time for a successful renewal

When your insurance policy is up for renewal, it is important to understand what is driving higher commercial auto losses and the outlook for the insurance industry. Insurance carriers and organizations continue to experience negative trends; however, understanding your risk and coverage, along with enforcing effective preventive measures, can help companies identify opportunities to manage their insurance costs and protecting their financial interests.

 

1 Motor Vehicle Deaths in 2016 Estimated to be Highest in Nine Years – NSC News Releases. (n.d.). Retrieved from http://www.nsc.org/Connect/NSCNewsReleases/Lists/Posts/Post.aspx?ID=180

2 USA, NHTSA. (2017). Early Estimate of Motor Vehicle Traffic Fatalities For the First 9 Months of 2016.

Washington, DC: NHTSA’s National Center for Statistics and Analysis.

Topics: claim, losses, auto, insurance premiums, auto costs