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Safety & Accident

Accident Management Costs Trend Upward

July 2008, Automotive Fleet - Cover Story

by Mike Antich & Lauren Colin


Proactive Emphasis Grows

Gaining momentum among fleets, proactive accident management recognizes the value of investing in accident prevention rather than paying liability costs.

“Many companies are now focusing on accident prevention, taking a very aggressive posture for several reasons, including the repair cost factor, downtime, loss of revenue and profits, legal entanglements, and injuries, to highlight just a few,” said Martines of CCM.

In addition, said Martines, fewer accidents mean fewer injuries, and a safer driving force. “Drivers work more efficiently and ultimately drive up company revenues. Basically, spend a little to save a lot and produce more revenues. Any fleet, risk, or safety manager would be pleased to accomplish this,” he said.

Pam Walinski, vice president, PHH Vehicle Accident Services, agreed. “The latest trends continue to be focused on the importance of driver safety and reducing collisions. Even greater emphasis is being placed on reinforcing the importance of road safety and identification of personal driving behaviors that contribute to accidents.”

PHH research indicates a growing awareness among fleet, safety, and risk managers that driver training alone has a negligible long-term impact on reducing accident occurrence. The same research reveals increased acknowledgement that the driver’s manager plays a key role in decreasing crash incidents. A growing number of companies understand sustained reduction in crashes can only be achieved through long-term efforts in creating a culture of driver safety.

Lynn Berberich, VP, risk and safety at PHH noted, “Another trend is a focus on more than just drivers in company-provided vehicles, recognizing that corporate liability extends to anyone driving for work purposes even if it’s in their own personal cars. We see more companies running MVRs annually on more than just their fleet drivers and using that data as criteria for driving on company business.”

More safety-conscious and increasingly interested in preventing collisions, fleets are now scrutinizing accident reports more carefully to evaluate driver behavior. For example, a driver claims his vehicle was hit while parked, or he hit a deer, but the damage isn’t consistent with that explanation.

“Fleets are asking us more often to provide this kind of analysis because they want to get a better handle on identifying higher-risk drivers to reduce accident rates,” said Neuman.

Fleet use of GPS, particularly portable units, is rising as well, said Wolford. “I’m not sure what that means. Some think they make the driver safer; others use it for more efficient route planning and reducing miles by helping drivers avoid getting lost.”

Loss Decisions Impacted

CEI is beginning to spot a reversal of the recent trend in declaring vehicles total losses. Instead, more fleets appear inclined to keep vehicles in service than replace them.

“Typically, fleets declare a vehicle a total loss when the repairs equal 50-60 percent of market value. Now we’re seeing fleets push that, in some cases, to as much as 65 percent. This appears another way to control fleet costs because new vehicles are becoming more expensive,” agreed CEI’s Wolford and Neuman.

Brigidi also noted a slight decline in the incidence of total losses due to extended fleet vehicle life.

Vehicle replacement costs and after market upfitting now influence the decision-making process more than in recent years. While mileage will always remain a factor, the cost of client-specific “accessories” impacts the “fix-or-salvage” decision.

“Once aftermarket parts are factored into a repair price, the average cost increases significantly,” noted Martines. “We have seen an increase in clients factoring the possibility of subrogation returns prior to making a decision on fix-versus-total loss.”

However, he added, CCM “cannot wholeheartedly endorse this philosophy for several reasons. Underinsured, uninsured, policy limitations, shared liability (comparative negligence), and irresponsible regional high-risk insurance providers all contribute to the reasons why subrogation should not factor in the repair/total loss decision process. Insurers have notoriously neglected reimbursing fleet users and we see no end in sight.”

The problem is not limited to less-reputable insurers, said Martines. “Many high-profile insurers are simply trying to pay what they deem is fair by adjusting prices long after repairs have been completed, paying only a specific number of rental days or downtime and nothing more. Clients now realize the imbalance in the process and are asking for more help to obtain additional funds.”

PHH’s Berberich concluded, “As more environmental health and safety and risk departments get involved in driver safety, the focus is less on bent metal and rental costs and more on the total cost of accidents including workers compensation, liability, lost productivity, service, and sales.”

Walinski concludes, “With the rising cost to repair a vehicle, it’s even more important to ensure accident management providers are pursuing every single dollar through subrogation. This includes not only bent metal and rental costs, but additional opportunities to pursue diminished value, loss of use, and recovery through arbitration forums. Through an effective subrogation recovery process, companies could expect to receive 40 percent of their total accident costs returned to their bottom line.

One anticipated trend is more government involvement in driver safety prompted by new corporate manslaughter legislation in the UK that extends a corporation’s responsibility for people driving on company business. The new law clearly outlines the components that must be in place for a company to meet the criteria of effectively evaluating and training drivers, Berberich reported.

“It also extends the penalties that can be imposed. It is expected that this government focus on driver safety will extend to all the EU countries and may eventually cross the Atlantic to North America,” said Berberich.

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  1. 1. Mike Hernandez [ March 23, 2014 @ 08:50AM ]

    Excellent article, important to complete hybrid collision repair & cost research.

    Thank you. mike


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