The average cost of a loss related to vehicle accidents is almost twice the cost of the average...

The average cost of a loss related to vehicle accidents is almost twice the cost of the average workplace injury.

Graphic courtesy of Getty Images.

Safety is one of the top work challenges facing fleet managers. Concern about the safety for both the driver and the vehicle is a perennial challenge; in particular, the lack of compliance by employees with safety policy.

“Safety continues to be a primary concern, from driver behavior to maintenance of the asset to the assets specifications,” said Michael Gates, fleet department manager for Nutrien.

The annual accident rate for commercial fleets is around 20%, with some industries, such as pharmaceuticals, even higher. One reason for the high frequency of accidents for fleet drivers is because of the number of miles they drive per year. A typical non-fleet driver in the U.S. travels 12,000 to 15,000 miles annually, and each year has a one in 15 chance of being involved in a vehicle collision. Most fleet drivers, however, travel 20,000 to 25,000 miles or more each year, and thus have a greater exposure to crash risks.

Fleet vehicle accidents are among the most expensive injury claims for business. The average cost of a loss related to fleet vehicle accidents is approximately $70,000, which is almost twice the cost of the average workplace injury.

Besides property damage, fleet crashes result in lost productivity, lost revenue from missed sales calls, and potential third-party liability claims from an at-fault crash. Since most companies self-insure fleet vehicles and their employee drivers, the company pays these costs directly.

“Motor vehicle accidents are a never-ending battle. We have no control over someone hitting our vehicles, but we really need to find better ways of keeping our drivers focused on the road to avoid preventable accidents,” said Bruce Ottogalli, transportation manager for SUEZ North America.

Fleet safety is currently on the “radar” of senior management due to liability exposure resulting from preventable accidents. This litigation has made senior management more sensitive to the need to enforce employee compliance to corporate fleet safety policies. It is important to establish and communicate written fleet safety policies and procedures in order to set clear and consistent expectations for drivers.

Increase in Vehicle Fatalities

After trending higher for two straight years, traffic deaths in the U.S. decreased slightly in calendar-year 2017, according to a new report by the National Safety Council. In 2015 and 2016, vehicle crash fatalities rose in the U.S., despite the proliferation of vehicle safety technology. The suspected culprits for the increase in fatalities are distracted driving and higher speed limits. In 2017, there were an estimated 40,100 motor vehicle deaths, which was a drop of 1% from the prior year. Distracted driving and higher speed limits are offsetting the benefits of advanced vehicle safety systems.

“For the first time in three decades driver/passenger safety metrics are headed in the wrong direction, even as vehicle safety equipment improves,” said Joe Stergios, strategy and business development manager for Enterprise Fleet Management. “Driving down the frequency and severity of accidents is proving to be harder than it looks, and something a single magic bullet cannot effectively address. This applies to both company-provided and reimbursed options. Somehow fleets have to find a way to devise and implement a comprehensive solution that deploys a combination of policy, technology, and management follow-through. It’s kind of the last frontier for big savings until the wave of automation hits.”

Although fatalities have increased due to higher speed limits, the No. 1 factor contributing to the increase in accidents continues to be distracted driving, especially among company drivers. Employees use company vehicles as their mobile offices and multitasking while driving, which creates more opportunities for distraction.

Related: How Two Fleets Approach Driver Safety

“Cell phones are the biggest threat to any fleet, along with the general public. Distracted driving has surpassed drunk driving and will continue to increase until our government mandates that all OEMs and cell phone providers block cell phone usage while a vehicle is in motion,” said Clay Gaudet, senior global fleet manager for AutoZone in Memphis, Tenn.

Compounding this problem is that companies expect their field employees to be working 100% of the time in the field. Since these employees drive significantly more miles than the average driver, drivers are multitasking while driving because they feel pressure from their immediate management to do more with less and to stay connected.

“A cultural change is necessary if we want to truly change behavior. I have seen our accident rate slightly increase year-over-year due to distracted driving, so it’s not only for the company employees, but for all drivers on the road,” said one fleet manager who asked for anonymity.

In addition to the changing driver behavior, a more comprehensive approach to the elements to include in a fleet safety program is necessary.

“Reversing today’s accident rate trend requires companies to undertake a customized, integrated safety program rather than relying on a traditional piecemeal approach,” said John Wysseier, president and CEO of CEI. “Predictive modelling is driving more targeted prescriptive solutions that combine the most effective mix of driver training, communications, and engagement.”

In the increasingly connected world that company drivers and their customers live and work, it is becoming more and more challenging for fleet managers to enforce safety policies prohibiting the use of cell phone usage while driving.

“Today’s vehicles are essentially mobile intelligence platforms. Operators and occupants can access a virtually unlimited amount of data at any time in almost any location,” said Frank Dankovich, director of fleet sales for FCA US LLC. “Figuring out how to limit the source and volume of data distractions during driver-controlled operation, will increasingly become the No. 1 way to improve driver safety. Along with all the other challenges, this issue will squarely fall in the fleet manager’s lap.”

The problem of distracted driving will become more complex and has evolved beyond using cell phones and texting to where today’s drivers are equally distracted by various smartphone apps while behind the wheel. Likewise, many individuals hold their smartphones for GPS navigation dividing their attention between the device and the road while driving with one hand.

“As we continue to load more and more technology and easy access features into the driver space, is it even possible not to be distracted?” said Ralf Wessel, manager global security, global fleet and corporate facilities at AGCO Corp.

A similar observation was made by Dankovich of FCA. “Each fleet will need to identify and manage data that enhances their drivers’ performance versus data that potentially distracts them. There is a time and a place for everything, including data. Fleet managers will find this seemingly minor issue to become a major concern in the coming years,” said Dankovich.

Another complexity that will further challenge future fleet safety management is the shift to greater use of mobility management programs.

“Safety is always and will continue to be a huge challenge. As we see the shift starting to move to mobility management and ride-hailing services, how do we keep our associates safe? In ride-sharing programs, the vehicles used will require us to take a sharper focus on the crash integrity of the vehicle since it is now carrying multiple occupants,” said one fleet manager.

Related: 4 Pillars of a Fleet Safety Program

Today, the National Safety Council estimates that 26% of all car crashes involve cell phones. “The challenge with distracted driving is controlling drivers’ uses of technology in-vehicle, supplemental, or hand-held while moving,” said John Brewington, CAFM, president of Brewington & Company, a fleet asset and management company.

Actually, the 26% statistic may be an under-estimate since it is difficult to track all cell phone usage. “I’ve been told that when you want to pull someone’s records to see if they were texting and driving, telecoms don’t report iPhone-to-iPhone texting because those are ‘i-messages’ that go through Apple and telecom companies cannot track them. If you want to track them, it will require you to physically examine the Apple device,” said one fleet manager.

The problem of distracted driving promises to become more prevalent in future years as the next generation of employees who grew up texting join the ranks of company drivers. “Distracted driving is contributing to more fatal accidents, especially among the younger age group – 21 to 30 years old – who are replacing older drivers,” said another fleet manager who asked not to be identified.

Identifying Your Driver Universe

It is important for a company to identify all employee drivers, even occasional drivers who are not assigned a company vehicle. Businesses are often not completely aware of the full extent of their non-company vehicle exposure. Insurance companies urge companies to identify everyone who drives on behalf of the business, even those employees who use personal or rented vehicles.

Even with the recognition of increased risk in driving a company vehicle, there is inertia in implementing corrective actions. It’s an ongoing struggle to get senior management to authorize the extra expenditures for driver safety, such as ordering new safety tech on company vehicles, driver training, the adoption of telematics, and other safety programs.

“Fleets consistently say that safety is their number one concern and that they want to keep drivers safe and reducing corporate risk associated with the fleet,” said Matt Betz, vice president of fleet channels for SambaSafety. “In a number of cases, they struggle for a way to take action that will make meaningful impacts. Most realize the huge risk associated with operating a fleet, but don’t know what specific steps to take to lower that risk. It appears to be one of the biggest disconnects that I’ve experienced in 40 years in the fleet industry.”

Related: 5 Steps to Ensure Safer Drivers

Another obstacle in the implementation of safety initiatives within corporations is disagreement pertaining to the chain of authority and responsibility.

“Safety is a key element within every fleet but sometimes upper management can’t agree on who should take the responsibility for running the MVR, issuing the safety training, etc.,” said Dan Chengary, manager of client services at Merchants Fleet Management in Chicago.

Many view senior management as not taking fleet issues seriously. “I am stunned that some company executives still consider accidents as the cost of doing business. Most of the people with this attitude are so detached from the fleet and risk segment of their companies that they make decisions purely for financial reasons,” said Bob Martines, CEO and founder of Corporate Claims Management (CCM). “They think that if they buy a safety program it is similar to buying a product off the shelf at a store where there is instant gratification or results. The first response we get from an executive is: ‘What is my ROI for the safety program?’ When you explain the steps required, the timeframe, and then the achievable results, they think that somehow you can backfill the past and wipe out the incidents that already occurred. I truly feel bad for fleet, risk and safety managers who have to deal with individuals who have such a narrow focus.”

OEMs Expand Safety Technology

OEMs are responding to fleet manager concerns by migrating more safety technology that previously was only available in upscale models to vehicles typically ordered by fleets.

In-vehicle safety technologies will have a dramatic impact not only on driver safety, but also on the total cost of ownership of these vehicles. “The quick advancement of passive and active safety technologies will have a beneficial impact on TCO and risk management,” said Clem Ciufo, corporate sales marketing and operations manager at BMW of North America, LLC.

Safety features in cars and trucks are being demanded by more companies. Some safety options are simple to order through the manufacturer, while others are bundled into packages containing extraneous equipment that is not sensible for work vehicles.

“At a minimum for work trucks, we like to see them equipped with backup camera systems, proximity sensors, automated braking systems and cameras facing forward and rear,” said Ken Gillies, senior truck consultant for Element Fleet Management.

However, additional technology is needed to prevent texting while a vehicle is moving. “One challenge facing fleet managers is trying to identify OEM or aftermarket technology to eliminate texting and driving from a vehicle in motion,” said Joseph Lukacs, The Americas Group - global director of fleet operations for The Sherwin Williams Company.

Related: Technology's Essential Role in Fleet Safety's Future

A corollary concern is the difficulty in getting the latest safety tech in lower-trim level models or full-size vans.

“Our biggest challenge is waiting for the OEMs to trickle down the new safety options to the base vehicle models,” said Ginny Liddle, corporate fleet administrator for Terracon, who retired from the company last May culminating a 32-year career in fleet.

Similar observations were made by other fleet managers. “We expend a lot of effort in deciding what new safety technology to add to new vehicles when ordering, such as backup cameras, backup sensors, blind spot technology, and hands-free communication for cell phones. Keeping this at a reasonable cost is very important and somewhat difficult. Some of the technology is becoming standard equipment, like backup cameras, but more needs to be provided by the manufacturers,” said Ottogalli of SUEZ North America.

According to fleet managers, significant strides have been made by OEMs in adding safety equipment to lower trim level vehicles; however, more needs to be done. As one fleet manager mentioned: “I’m sure this will change in the future, but how long will we have to wait? Backup cameras are becoming standard equipment, but backup sensors are not. Crash avoidance systems are still only available in high-end vehicles.”

Other fleet managers voiced similar concerns. “We are trying to spec commercial vehicles that comply with or offer the same safety features as passenger vehicles,” said Lukacs of The Sherwin Williams Company.

This concern was repeated by Cox Enterprises. “Our biggest challenge is getting advanced safety features in our standard package vehicles,” said Jim Bigelow, senior director, enterprise fleet for Cox Enterprises.

Getting advanced safety technology in service fleets is difficult. “Service fleets tend to use the lowest base trim level package on trucks and, as such, we do not always have the option to order OEM safety options, such as forward collision/automatic braking or lane departure warning. This often means we go to aftermarket products that can be challenging to coordinate,” said Brenda Davis, strategic sourcing commodity manager Baker Hughes, a GE company.

The proverb cautioning care as to what you wish for comes into play with expensive safety equipment. Some fleet managers take this contrarian view. “You can spend thousands on the new safety features, but you should really look at the cost benefit before you add any of these additional features,” said one fleet manager who wanted to remain anonymous.

The availability of safety technology is a two-edged sword for some fleets, who complain that it is expensive to load up a company vehicle with the latest safety tech.

“How can you acquire all the latest safety tech while being fiscally responsible?” asked one fleet manager. “Getting approval for the added expense of available safety features can be extremely difficult. Even if you show procurement how much they are spending on collisions and the overall savings provided by adding a specific feature, they don’t want to approve the cost as those dollars come out of a different ‘bucket.’”

Other fleet managers say they have difficulty justifying the ROI for additional safety equipment to their management.

“Driver assistance technologies are finally working their way down from the higher trim levels, and in fact many manufacturers are making these technologies standard across their lineup. However, there are still many models where the technology is included at higher trims or included in expensive equipment packages. This leaves the fleet with a difficult choice of deciding between ROI and driver safety,” said Tim Cengel, manager, manufacturer relations for Wheels. “There is not a lot of data to show how effective these technologies are in reducing collisions and injuries. The emergency braking feature is the most researched and shows a potential 40-50% reduction in collisions when equipped.”

Some fleet managers are concerned that employees will drive less carefully, assuming automated safety technology will protect them. Fleet managers notice drivers become overly reliant on these technologies, especially when using of backup cameras, and not walking around the vehicle prior to backing up or looking over their shoulder.

This concern was repeated by other fleet managers. “With the introduction of all of the technology and safety enhancements, I believe there is a tendency to rely on the technology rather than take proper precautions. With more cameras and sensors, I believe drivers are physically turning their heads to look less than they have in the past. I love the technology, but it can definitely change driver behavior,” said Adam Orth, CAFM, manager, fleet services for General Mills Inc.

In addition, the number of suppliers, programs, and technology in the fleet safety area can be overwhelming. “What is the right level of protection and training for our drivers?  Telematics, in-cab cameras, lane departure warning, auto braking, etc.? There are so many different programs and options out there. How do you select the right avenue to protect your driver and still get the desired accident free outcome?” said David McCauley, North America fleet manager for Service Experts.

Another supplier segment offering safety equipment are aftermarket companies.

“New safety features are flooding the automotive market. For corporate fleets, they present many opportunities to avoid accidents or minimize the impact of an accident, but come with a high cost.  For auto manufacturers, they can influence the purchase of specific options and models and present sales opportunities as well as an increased price,” said Charlie Szymanski, manager, global property casualty insurance & auto fleet for PPG Industries. “It is also a fast moving area that requires attention in order to optimize cost and benefit.”

Related: How to Keep Fleet Accident Rates Low

Evidence shows that safety technology can reduce the frequency and severity of accidents. “Fleet driver safety continues to be one of the forefront topics in the commercial fleet industry. Advancements in technology and vehicle design have reduced the severity of injuries and fatalities during motor vehicle accidents,” said Joe Birren, senior truck & upfit engineer for Merchants Fleet Management. “Commercial fleet managers have been implementing telematics programs to monitor real-time driver behavior, vehicle speed and status reporting.”

One unintended consequence to the proliferation of onboard vehicle safety equipment is the increased cost to repair accident-damaged company vehicles.

“Collision repair costs will increase dramatically. With OEMs adding all kinds of collision avoidance devices and sensors to vehicles, it will dramatically increase the cost of repair from collisions. And may force an ever increasing growth in total loss insurance claims,” said Randy Gold, data acquisition manager for CARFAX.

Changing Driver Behavior

How employees drive a company vehicle determines how safe they will be on the road. If you change driving behavior, you have a direct impact on the safety-consciousness of your drivers.

“It seems that safety is on everyone’s mind today – and for good reason. But not everyone realizes that safety starts with a focus on driver behavior,”  said Bryan Calloway, director - North Carolina at Enterprise Fleet Management in Charlotte, N.C. “How robust is your company’s driver training policy? How effectively do you implement and hold your drivers accountable to the policy? Training drivers during onboarding is not enough. Are you providing ongoing training, updates and guidance? Do you have a no-cell-phone-use policy? A list of best practices? Regular vehicle inspections? Driver monitoring? Your employees represent your organization when they’re on the road. Are you doing enough to ensure their safety and your reputation?”

Managing driver safety will positively impact a company’s bottom line for the better.

“There is no question that risky driver behavior leads an increase in accidents, additional wear and tear on vehicles, and increased fuel costs due to poor driving habits. At the same time, poor driver behavior puts organizations at an increased opportunity for risk every time that driver gets behind the wheel. And it isn’t just the cost of the accident that can impact your budget. The additional soft costs that often get lost in the discussion revolving around risk, compliance and safety include the expense related to the repair of the vehicle, lost productivity and vehicle downtime. Simply put, a vehicle that needs repairs is not out on the road generating revenue for your business,” said Anthony Foursha, senior vice president, sales for ARI. “Companies need to tackle this challenge head on, making safety a priority within the organization’s culture by implementing a proactive, well communicated safety program supported by training and regular monitoring.”

One option is to develop a driver incentive program. “We’ve seen examples of driver incentive programs producing successful operational practices as a component to an overall effective risk management program,” stated Gillies from Element.

Similarly, technology will play a greater role in enhancing fleet safety programs. “Advances in technology are also making training more impactful, gamification more viable, and communications among all stakeholders more pervasive,” said Wysseier of CEI. “Going forward, these are the building blocks of a sustainable foundation for driver behavioral modification and enthusiastic support of a safety policy that goes beyond compliance.”

Another growing trend is the convergence of safety and sustainability. There are many similarities between eco-driving techniques and safe-driving techniques. In fact, there’s a direct correlation between safe driving and greenhouse gas (GHG) emissions. It’s been proven: the safer the driver, the lower the GHG emissions.

Although two very different factors, they are playing a larger role in fleet consideration because they are being influenced by directives from the top. Companies recognize the value in both safety and sustainability to their employees, customers, and shareholders. Fleet managers need to understand and somehow quantify the value of both to their company.

Safety Risks of Moonlighting in a Company Vehicle

A growing number of employees are using their company vehicles as a tool to generate supplemental personal income for themselves. According to the National Labor Bureau, almost 6% of employees engage in side jobs, commonly known as moonlighting.

One trend in unauthorized usage of company vehicles is working as an Uber or Lyft driver. Other moonlighting activities involve the secretive use of a company vehicle for part-time direct sales, such as Avon, or for pizza delivery by children of employees, who, as a family member, are authorized by company fleet policy to drive a company vehicle.

Unauthorized use of corporate assets increases a company’s liability exposure to vicarious liability or negligent entrustment lawsuits. Even though a moonlighting employee may be acting as an independent contractor when engaged in outside work, he or she may still be driving the employer’s vehicle, using the employer’s tools, and possibly even wearing the employer’s uniform. Moonlighting employees often do not carry general liability insurance coverage. In the event of a lawsuit this increases the prospect for a plaintiff’s lawyer to include the moonlighter’s employer in the lawsuit, which is viewed as the deep-pocket defendant.

Moonlighting is a safety risk. If an employee is working multiple jobs, it is inevitable that they will be fatigued and sleep deprived, resulting in poor attentiveness, both on the job and behind the wheel. Employees exhausted from moonlighting over the weekend or after-hours are injury prone. If injuries occur during moonlighting, they may get misreported as on the job accidents, driving up workers’ compensation costs.

Related: Parked Vehicle Damage Leads Fleet Accidents

The best way to control moonlighting that involves corporate assets is through fleet policy that specifies permitted usage. 

It is important to make fleet policy flexible enough to cover unanticipated situations. If fleet policy lists prohibited vehicle uses, be sure to include the qualifying phrase, “including, but not limited to.” No fleet policy can be 100% successful in preventing employees from abusing personal use privileges, but, it can inhibit them and spell out the consequences of doing so.

Implementing Fleet Safety Policy

A fleet safety program establishes the policies and procedures that are needed to help ensure a safe work environment for employees. It can also help protect against liability from vehicle accidents.

An effective fleet safety program must be comprehensive, up-to-date and instituted as a part of your company’s safety culture. It should be thorough, reaching each employee who gets behind the wheel, and the commitment to a fleet safety program has to start at the top.

Creation of a consistent, sustainable culture of safety throughout an organization - CEO to driver. It is critical to get management commitment and leadership support of the program can help assure that the program is used.

A key component to a corporate safety program is an ongoing driver training system. However, driver training is difficult for fleet managers to get management approval.

“Management doesn’t want guys off the roads for any length of time, online training is time-consuming and, frankly, boring, but we need to provide meaningful training especially post-incident,” said one anonymous fleet manager.

Driver training helps prevent accidents. Through driver training a company is able to standardize processes for communicating safety regulations, effective driving habits and general rules of the road specific to your fleet’s vehicle types.

“Driver and fleet safety is our main challenge. This includes driver training on vehicle, on the road safety program implementation, and vehicle preventive maintenance,” said Joshua Chamuler, director of transportation for ThriftBooks in Seattle.

This challenge was echoed by Wessel of AGCO Corp. “Our challenge with driver safety training is determining the best ways of how to continue to improve driver behavior and ensure safe driving techniques.”

When looking to manage fleet safety and risk, it is important to focus on the fundamentals of safety management. “There is a need for all fleets to spend more time here – to ensure annual (if not semi-annual) MVR runs and associated driver safety training – this is essential to understand what is going on within your fleet and to mitigate risk accordingly,” said Chengary of Merchants Fleet Management.

It is important for HR to carefully screen and select prospective employees who will drive company vehicles. Without safe drivers, no organization is likely to have a good long-term safety record. Establish clear hiring standards and a thorough screening process for anyone who drives on company business.

In addition, there are sophisticated driver assessment programs in the market that can assist in identifying high-risk drivers before an incident occurs.

“Companies can also use technology to help pinpoint at-risk drivers before costly collisions can occur. By continually monitoring MVR infractions, driver risk levels, critical behavior data points from telematics and fuel usage, companies can take immediate action to improve high-risk drivers before incidents ever happen,” said Foursha of ARI.

The use of driver safety measurement tools was cited by other fleet professionals. “Connected car devices allow fleets to measure the driving skills of their drivers. Fleets need to access these tools and eliminate fleet availability for drivers that do not drive safely. Eventually, unsafe driver’s will create larger legal issues for companies and the question will come up in the courts about whether a company should have eliminated a recurring unsafe driver from their fleet when there were tools to weed them out,” said Gold of CARFAX.

Related: How Top Fleets Manage High-Risk Drivers 

Originally posted on Automotive Fleet

About the author
Mike Antich

Mike Antich

Former Editor and Associate Publisher

Mike Antich covered fleet management and remarketing for more than 20 years and was inducted into the Fleet Hall of Fame in 2010 and the Global Fleet of Hal in 2022. He also won the Industry Icon Award, presented jointly by the IARA and NAAA industry associations.

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