Employers, who manage a fleet of vehicles or have auto coverage for employees who use their personal vehicle for work, are feeling the effects of rising auto insurance premiums. The increase is a direct result of “driving losses” that have outpaced the auto premiums collected. This industry-wide challenge has prompted commercial auto insurers to analyze the causal factors behind the losses. What they found isn’t necessarily surprising, but there are auto risk control measures employers can adopt to minimize frequent, high-cost claims that drive premiums.
What affects driving losses?
- Escalating medical costs: Climbing more than 1.5 times faster than other costs, medical care expenses from automobile accidents involving injuries significantly increase the total cost of a claim.
- Rising auto repair costs: Record spikes in U.S. auto sales have garages servicing newer cars requiring expensive parts, making repairs costly for even minor damage.
- More traffic: With more Americans finding employment and commuting to work, vehicle miles driven has reached an all-time high nationwide. More vehicles on the road equate to a higher frequency of accidents.
- Distracted drivers: It should come as no surprise that distracted driving continues to be a problem on the road. Of all reported crashes, one-quarter involved a driver talking or texting on a phone.
- Accident frequency and severity: Increasing claims costs usually originate from the growing frequency of accidents or their severity — but as of late, the commercial auto industry is experiencing both.
- Inexperienced or undesirable drivers: Commercial drivers lacking the experience, skills, and good driving records mean greater odds for accidents.
What can employers do?
- Enforce company policy: Monitor who utilizes a company vehicle and limit personal use to cut back on the quantity and frequency of company vehicles on the road.
- Check driving records: Set a schedule for a regular check of employee driving records.
- Training and safety: Implement a safety program and require mandatory training for drivers on key topics such as distracted driving and driving under the influence.
- Monitor drivers: Utilize available technology that focuses on controlling risky behavior like speeding and aggressive driving.
- Review every accident: If an accident occurs, analyze how and why it happened and who was involved to help prevent repeat incidents.
- Consider a company fleet: Depending on the extent of business travel, it might be worth considering a company fleet. Extra risks arise when employees use their personal vehicle on the job as opposed to a company-owned vehicle.
While employers may not be able to control accident or medical care costs, there are solutions available to help manage factors that can be controlled.
For more information or help implementing a claims management plan, contact our commercial auto experts at 913.647.3978.