Canadian Underwriter
Feature

Value in Safety


October 1, 2015   by Mandip Hullait, Director, Commercial Insurance, Auto, RSA Canada


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Mandip Hullait, Director, Commercial Insurance, Auto,  RSA Canada

If commercial clients are questioning whether or not it is worth the time and resources to develop a fleet safety management program, they should remember that, as noted by Alberta Transportation in 2011, distracted drivers are three times more likely to be in a crash than non-distracted drivers. Traffic collisions may result in costs related to repair, emergency response, health care, fines, lost productivity and the investment of time to investigate crashes.

There is no industry-wide data available that speaks to the specific number of insurance claims or associated costs flowing from distracted driving-related collisions.

Whether a legislative requirement or internal best practice, and whatever the specific costs, the best way to minimize the risk of driver distractions is through a dedicated commitment to fleet safety.

RSA Canada reports that in 2008, it assigned a “good rating” to approximately $5.1 million earned premium/fleet policies that were inspected. Of those policies/earned premium, the loss ratio was 46.9%.

That compares to a loss ratio of 68.3% for those surveyed and assigned a less than good/”other” rating, representing approximately $1.8 million earned premium/fleet policies. In this situation, the fleets surveyed by risk managers that were considered “good” also performed better than those risks they assigned as “less than good,” illustrating the importance of risk services.

While driver distraction is not the only safety concern facing fleet managers, it certainly tops the list in terms of significant safety risks to all drivers. For example, drivers of heavy vehicles or trucks who text message while at the wheel are 23 times more likely to be in a crash or near-crash event compared to non-distracted drivers, notes research released in 2009 by Virginia Tech Transportation Institute.

The Canadian Automobile Association (CAA), for its part, reports that drivers who are reaching for a moving object are nine times more likely to be involved in an accident than those paying attention to the task of driving. In fact, CAA points out that the top three driver distractions are from an outside object, person or event, adjusting the radio, and other vehicle occupants.

COUNTRY-WIDE RESPONSE

Several broad measures have been put in place in response to these alarming statistics to curb fleet-related accidents. For example, Transport Canada regulates commercial vehicles, drivers and motor carriers through the Canadian National Safety Code (NSC) standards, which help bolster road safety by regulating practices such as commercial driver licence requirements and inspection criteria.

Additional measures include government regulations across the country, in place to oversee safe fleet vehicle operations and to respond to new safety risks as they evolve. For instance, the Ontario government announced in June that an amendment to the province’s Highway Traffic Act that will include tougher regulations aimed at reducing distracted driving is scheduled to become law this fall.

It is important for brokers to stay informed of provincial and federal regulatory changes that impact commercial fleet operations, and then use that information as an opportunity to remind fleet clients of the importance of developing a safety program.

Finally, the insurance industry can act as a key partner to commercial clients by offering risk management expertise and by helping fleet managers understand their role in reducing the chance of vehicle collisions.

NOT ALL CLIENTS SAFETY-READY

Despite regulations, guidelines and support services, road safety incidents continue to occur. The Government of Canada reports that economic losses in 2011 caused by traffic collision-related health care costs and lost productivity are at least $10 billion annually. That represents about 1% of Canada’s gross domestic product.

In some cases, businesses – especially small and mid-sized firms – do not have a formal driver safety management program in place. Small business owners, in particular, may feel anxious about the anticipated time and resources it will take to develop and execute a safety program.

EDUCATE COMMERCIAL CLIENTS

There are ways to educate commercial clients on the importance of developing a driver safety management program. To get their attention, brokers can share numbers and statistics that may surprise fleet managers.

For example, research funded by the Federal Motor Carrier Safety Administration (FMCSA) in the United States shows that 28% of commercial truck drivers taking part in the study have some degree of sleep apnea, a sleep disorder that can cause daytime sleepiness and impaired alertness.

The FMCSA study found that untreated sleep apnea can make it difficult for drivers to stay awake, focus their eyes and react quickly while driving. It was also discovered that studies suggest people with untreated sleep apnea have an increased risk of being involved in a fatigue-related collision.

To date, however, there has not been research done to suggest a direct link between sleep apnea and a specific number of insurance claims and/or costs.

Without a formal fleet safety protocol in place, which includes a medical exam and/or reporting, serious safety concerns related to a driver’s history, such as being prone to sleep apnea, may be missed or overlooked. Brokers can advise fleet managers to ensure they check provincial medical reporting requirements for commercial drivers.

Preparing drivers for safety on the road begins with three main areas: hiring, ongoing safety practices and lessons learned from collisions. Brokers can help guide clients through these three key areas of developing a driver safety program.

Hire the best team for the fleet

One of the best ways to minimize the risk of collisions is to put quality, competent drivers behind the wheel. While it is known that 93% of collisions are caused by driver error, the CAA reports, a formal and consistent hiring program can reduce the chances of these collisions happening within a fleet.

Several key hiring practices can help fleet managers get the best results possible. Some processes include having detailed job descriptions available for each type of driving position, completing a background check of any new hires (including reference checks), asking candidates to complete a road test to assess their driving skills, and maintaining a current driver qualification file for each fleet driver.

Maintain ongoing fleet safety performance

It is not enough to simply hire a qualified driver; all fleet employees must be fully committed to fleet safety on an ongoing basis.

Constant and consistent monitoring of driver policies, as well as embedding a strong safety culture, allows fleet managers to review safety practices to find areas for positive improvement. Managing a formal maintenance plan and providing regular defensive driving training for employees are importance aspects of this monitoring process.

Brokers play an important role in driver risk management by working with commercial fleet clients to continuously review and update driver safety programs as required. Implementing these practices can have a positive impact on driver safety.

Learn lessons from collisions

Despite best efforts, collisions do happen. In fact, Transport Canada figures show that distraction-related accidents are on the rise – increasing by 17% between 2006 and 2010. These accidents involve distractions such as using electronic devices, reading maps or directions, grooming, eating or drinking, talking with passengers or visual distractions outside of the vehicle.

If a vehicle incident happens, important lessons can be learned to positively affect future driving practices.

All incidents should be investigated, even if they do not require formal reporting. Without laying blame, it is a chance to analyze what happened, identify the cause, and share learnings with the fleet team to prevent the accident from reoccurring.

When a collision happens, drivers may be under extreme stress. Procedures and reporting forms that are straightforward and easy to understand will help ensure information collected at the time of the incident is as accurate as possible.

Regardless of fleet size, it is imperative that a driver safety management structure is put in place with resources at hand to meet regulatory requirements, execute consistent and committed driver safety plans, and, subsequently, mitigate risk and economic loss.

Brokers play an important role by walking commercial clients step by step through the process and educating them on how the right safety program can reduce collision frequency.