Commercial insurance premium rates are continuing to climb and coverage is becoming harder to secure for even the lowest risk companies. According to MarketScout, property and casualty insurance rates increased an average of 7% in the first quarter of 2021. In commercial auto, the rate increases were even higher, at 8.7%, while the transportation industry saw increases of 11.7%.

The reasons behind these increases are multifaceted and complicated: There’s the ever-changing impact of COVID-19; the increasing trend of expensive “nuclear” verdicts in lawsuits against trucking companies; and high cost of repairs as vehicles become increasingly more high tech.

Given the current market conditions, it’s more important than ever for fleet managers to control risks and keep claims down.

Why Fleet Risk Management Matters

According to the FMCSA, and based on data from the Fatality Analysis Reporting System and the Motor Carrier Management Information System, there were 145,518 crashes involving large trucks in 2020. Even with the lighter traffic associated with the COVID-19 business shutdowns and sheltering in place, these crashes resulted in 4,535 fatalities and 67,849 injuries. Because of factors related to COVID-19, these numbers indicate an improvement from 2019, when there were 164,679 crashes resulting in 5,066 fatalities and 81,249 injuries, but likely may not be a trend. The numbers show that there are still many crashes that could have been prevented.

Robust risk management practices can help fleets in three key ways:

1. Preventing crashes can save lives, reduce injuries, and cut property damage costs.
2. With fewer claims, fleets can negotiate better auto insurance rates and coverage.
3. By demonstrating a dedication to safety, fleets can establish a strong defense in case a crash occurs. This can limit liability and reduce the odds of an expensive “nuclear” verdict.

How to Prevent Accidents and Reduce Risk

Having good written policies in place can help prevent crashes and manage risk. Your written policies should:

• Prohibit dangerous driving behaviors, including speeding, distracted driving, drowsy driving and driving under the influence.
• Require drivers to use seat belts and follow the rules of the road, including proper signaling.
• Require immediate reporting of any crashes, including minor crashes.

Such policies are a good start. However, when it comes to claims prevention, it’s not enough to talk about safety – everyone in the organization must live it. Most businessowners say drivers should be safe, but if the daily realities of the job allow – or, worse, encourage – unsafe driving, it’s not enough.

Safety is not a one-and-done task, either. It’s an ongoing commitment. Fleet managers need to take an active role in safety, and drivers need to be given the right resources to avoid crashes.

Below are four best practices to help you take your fleet safety to the next level:

Best Practice #1: Screen Your Drivers

According to Safety + Health, a study from the American Transportation Research Institute found that some truck drivers with prior crashes have a higher likelihood of being involved in a crash. Drivers with a previous conviction of “failure to use/ improper signal” had a 96% greater chance of being involved in a future crash.

Proper screening is essential for all commercial drivers. In addition to background checks, employment verification, license checks and physical health exams, commercial drivers may be required to undergo pre-employment and ongoing driving record checks and drug testing. Employers must make sure they are performing all required screening, as well as securing appropriate consent for screenings.

Two important screenings are the Motor Vehicle Report (MVR) and the Drug and Alcohol Clearinghouse.

• You can make sure your drivers have a clean driving record by securing a Motor Vehicle Report (MVR). This should be done during the hiring process and repeated annually throughout employment. Because MVR checks are done on a state-by-state basis, it’s important to perform a check in each state where the driver has been licensed. Be sure to evaluate each driver’s MVR against an established driver acceptability classification system or matrix for proper qualification.
• Monitoring drivers for dangerous drug and alcohol use is also important. According to the FMCSA, a pre-employment drug test is required before a CDL driver can operate a Commercial Motor Vehicle (CMV). Drug tests may also be required after crashes. The new Drug and Alcohol Clearinghouse is a federal database that provides information on commercial drivers who have tested positive for drug or alcohol use or who have refused to take required drug tests.

Best Practice #2: Implement Dash Cams and Telematics

MVR and Intoxicant Screenings can tell you a lot, but they can’t tell you everything. If your drivers are falling into dangerous driving habits, you might not find out until a crash occurs. With dash cams and telematics, you can discover dangerous driving habits as the occur, giving you a chance to stop them before any incidents occur.

But what if you trust that your drivers are safe? Dash cams and telematics are still a smart idea. If a crash occurs, dash cams and telematics systems may help you prove that your drivers were not responsible. Telematics systems can also help you spot problems with the vehicle to make sure the correct maintenance is performed. As a bonus, telematics programs can also help you improve your fleet’s efficiency and reduce downtime. Most commercial insurance carriers now provide discounted services for telematics use and many will provide an additional premium discount as an incentive for use.

Best Practice #3: Provide Regular Employee Training and Education

Proper training is essential for drivers. This training can come in many forms, including:

• Pre-employment training and licensing requirements
• Refresher training requirements during employment
• Lessons that focus on new risks or dangerous habits that have been observed
• Quick reminders of key safety practices

Don’t facilitate one training and consider yourself done. Fleet safety is an important topic that you must revisit on a monthly basis, at a minimum. Safety must be top-of-mind for every driver.

Best Practice #4: Use Vehicle Safety Checklists

Although many crashes are caused by human error, some are caused by mechanical error. Brakes fail. Tires pop. Lights burn out. If a crash results, your drivers and the other people on the road may be injured – and your company could be held liable for failing to maintain the vehicle properly.

The DOT requires annual inspections for commercial motor vehicles. Outside of DOT inspections – and even if your vehicle type is not required to undergo DOT inspections – it is highly recommend that you use regular vehicle checklists to verify that your vehicles are in proper working condition before they hit the road. This regular inspection may prevent mechanical failure that can lead to crashes. By keeping good records of regular inspections, you’re also creating evidence of your commitment to safety. If your business is subject to the Federal Motor Carrier Safety Administration (FMCSA), be sure to abide by all their regulations, and regularly check the FMCSA Safety Management System (SMS) website for any compliance or safety issues found during a DOT inspection of a vehicle.

Best Practice #5: Operate with a Culture of Safety

A popular pizza chain used to promise delivery in 30-minutes or less – or it’s free. This promotion was cancelled after the promise for speedy delivery was linked to reckless driving and a $79 million judgement, according to Chicago Tribune.

When creating policies, you may be tempted to put productivity and profit above safety, but that’s a strategy that’s bound to backfire. Audit your practices and scrutinize your promotions to ensure that they don’t create unintended consequences. Creating a culture of safety is the best way to prevent crashes and reduce your liability. A culture of safety starts at the top. Make every employee, manager, executive subject to the safety requirements and culture.

The Right Insurance Partner Can Help

At Hotchkiss Insurance, we specialize in helping companies with fleets control their total cost of risk. Contact us to review your practices and for insurance and loss prevention resources.