A road awakening

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Statistics show that, for those who drive as part of their job, the roads of the UK are becoming a more hazardous place, but this danger can be mitigated with the use of sensible risk management, as Jane Bernstein discovers

Insurers are increasingly investing in providing risk management resources to their fleet customers. In one of the latest developments, Allianz has signed a deal with the Royal Society for the Prevention of Accidents to provide vital risk management services. But as the roads become more dangerous, and as legislation places growing responsibility on businesses for their drivers, insureds must also steer their fleets towards greater risk awareness.

In many ways, the odds are stacked against fleet operators as there is growing evidence that driving is a dangerous occupation. It has been estimated that up to a third of all road traffic accidents involve somebody who is at work at the time. Brake and Green Flag recently surveyed high mileage drivers about their safety. Findings included the fact that 46% of high mileage drivers said they talked on a mobile phone while driving, compared with 12% of all drivers. And worryingly, 35% of high mileage drivers admitted to having fallen asleep at the wheel due to tiredness, compared with 14% of all drivers.

A target for fraud

There has been more bad news for fleets recently, as the Insurance Fraud Bureau has found fleet cars are now being targeted by fraudsters who break suddenly and deliberately, knowing that the car behind them has no time to stop. The bureau believes fleets are being targeted as they are almost always insured. It also says drivers may not have the same attachment to their company vehicle as they would their own car and this reduces the chance that a claim will be challenged. Detecting fraud against fleet vehicles will be a major focus for the IFB in 2008.

Many insurers are responding proactively to the increasing risks faced by the fleet sector. Keen to encourage their clients to implement effective risk management, they are promoting its benefits and investing significant time and resources into innovative initiatives. Allianz Commercial's partnership with RoSPA is the first of its kind with the association.

Simon Protano, RoSPA's head of driver and fleet solutions, explains: "This is the first partnership that RoSPA has entered into with any insurance company to provide such a comprehensive range of services to assist in the management of occupational road risk. The size and complexity of the products and services offered by RoSPA to Allianz clients, ranging from consultancy to driver training, forms the basis of an exclusive partnership within the industry." So, would RoSPA like to see more insurers putting this kind of investment into helping their clients manage risks? "The short answer is yes," asserts Mr Protano, adding: "Many insurers do focus quite strongly in this area with varying levels of investment and support packages."

Allianz's head of commercial motor and trade, Roger Ball, asserts: "We genuinely believe in risk management and think it is right for our clients. We have been a long-term player in this market and fully intend to stay so, and to do that we have to keep moving and finding ways to service our customers." Mr Ball adds that early feedback from clients has been very positive.

Zurich has also been in the news recently with its involvement in a work-related road safety benchmarking report, produced by Interactive Driving Systems, Brake and BT. Andy Price, risk manager with Zurich's fleet team, says: "In terms of benchmarking, it's important to help our customers actually understand how they are doing and where they are in comparison to their peers."

Insurers are keen to emphasise a tripartite approach between themselves, the broker and the insureds, and to encourage customers to take an active role. Bill Pownall, motor risk manager for Norwich Union, says businesses must be prepared to work closely with their insurers on effective risk management measurers and have the necessary policies and procedures in place. "Failure to do so and not ensuring implementation can have serious consequences for not only the company and the driver, but also others who may be affected by their actions."

Some insurers are prepared to reward fleet operators that demonstrate a commitment to risk management. As Mr Ball observes: "Insurers price according to the exposures presented to them and will take account of measures that have been taken."

Lorna Curran, Royal and Sun Alliance's senior portfolio underwriter, agrees that insurers will reward firms that take risk management seriously, but is keen to point out that managing risks should be seen in a wider context: "It must be noted that the benefits of a good risk management programme will be beneficial to the overall operational costs of a fleet and not just the insurance premiums, with the biggest cost savings being made through fuel savings, reduced maintenance costs and improved residual values."

Andy Hawkes, director at THB Risk Solutions, agrees: "Firms that implement fleet risk management programmes not only meet health and safety duty of care requirements but normally see reductions in claims and accident frequency, reduction in fuel costs, lower CO2 emissions and improved staff morale - there are overwhelming arguments to take this issue seriously."

Groupama offers a range of initiatives. Andrew Fletcher, underwriting manager, Fleet, Groupama Insurances, explains: "As we have statistical evidence to endorse the remedial work undertaken on our behalf by Peak Performance (Groupama's risk management partner), we will offer a range of rewards to policyholders willing to undertake a full programme including reduced up front insurance premiums; profit share deals and/or contributions to the risk management spend. This has proven to be both popular and effective."

Change on the agenda

The good news is that fleet operators do appear to be taking notice. Stewart Whyte, director of the Association of Car Fleet Operators, comments: "Many fleet managers have already invested heavily in reviewing fleet policies and driver awareness to ensure good road safety standards are in place. Road safety is of vital concern to all road users, including fleet operators and drivers. ACFO members have always been at the forefront of best practice in promoting safe, careful driving."

Brit Insurance has recently announced the launch of Brit Risk Management, an online fleet risk management service. Andy Keane, UK portfolio manager, fleet and haulage, reports that fleet decision makers are becoming increasingly receptive to the insurer's risk management offering. Mr Keane adds: "Our brokers have a big role to play in continuing to aid the positioning of available services, but without a doubt the vast majority of insureds do now understand that risk management is no longer just about practical in-car driver training."

Ringing alarm bells

Mr Keane points out that extensive coverage in the media keeps road safety and managing occupational road risk - and the responsibilities involved - high on corporate agendas.

Many predict that the Corporate Manslaughter and Corporate Homicide Act, which comes into force in April, will also serve to focus corporate attention on the issue. According to Kathy Dwyer, divisional partner, accident and injury, Davies Lavery solicitors, the act places a firm obligation on 'senior managers' to know whether the organisation is failing to comply with legislation. "The executive committee must, therefore, make it their business and take responsibility to know about 'near misses' and 'continuing failures'," explains Ms Dwyer.

Ian McCubbin, insurance partner with law firm DWF, warns it is inevitable that the police are going to take more of an interest once the new corporate manslaughter offence comes into force. He believes it is more important than ever to show that employees are competent drivers and have well maintained and serviced vehicles, which are the subject of proper inspections, adding: "A cursory check of a driver's license may well be deemed insufficient. It should be checked against the DVLA's own records and driver training or assessment made part of the induction programme."

Terry Bartlett, managing director of Inchcape Fleet Solutions, which operates more than 53,000 vehicles in the UK on contract, puts forward the view that too many companies are getting bogged down in the minutiae of existing and forthcoming legislation. He explains: "In reality, every company's health and safety policy should include at-work driving. Just as it is dangerous to work at a machine in a factory without rules governing its use being in place, or sit at a computer keyboard for endless hours without a break, so it is vital for businesses to have policies and procedures in place governing drivers, vehicles and journey schedules."

Keith Allen, managing director of ALD Automotive, has a similar message: "The new law will further help to reinforce a feeling that is already prevalent among many fleets - that a comprehensive occupational at-work driving health and safety police is essential."

Room for improvement

Despite rising awareness and ever more reasons for risk management to be taken seriously, there is still room for improvement. "Fleet risk management is still not high enough on the agenda for most companies," asserts Mr Fletcher. "They might have a driving at work policy that will include a driver's handbook and some risk management advice that ticks a few boxes but, in terms of active risk reduction programmes, too few businesses have a really proactive approach to seeking out a specialist risk management provider."

Paul Dunkley, claims manager, motor claims at QBE European operations, says motor fleet employers, like a lot businesses, do not review their operations often enough. He asserts it should be a constant process with a constant focus on the requirements of the operator and their responsibilities under the Health and Safety At Work regulations to their own staff and the public.

There are reports that smaller companies continue to lag behind their larger counterparts. As Ms Curran explains: "Generally, the larger companies tend to be more proactive as they have a better understanding of their responsibilities and will tend to employ a full time health and safety person or fleet risk manager. Small to medium-sized companies will tend to nominate someone who will have a range of duties and priorities, thus less focus on risk management and health and safety issues."

Mr Dunkley agrees: "Clearly, as a general rule, larger national multi-national or global companies have a greater awareness and financial budgets to recognise and comply with current legislation and are more proactive on fleet risk management."

Certainly, smaller firms continue to face age-old challenges such as lack of resources, but new approaches to risk management offer hope for the future. Steve Kinghsott, director of commercial underwriting at Royal Bank of Scotland Insurance, reports a trend in risk management being adopted by smaller firms and says this appears to be driven by the emergence of technology-based packages providing a good deal of the benefits associated with on-road driver training at a fraction of the cost.

It also helps that perceptions have changed from the days when options were largely limited to blanket on-road driver training for all drivers, often at considerable cost. Mr Price says that while driver training has a place, the use of driver training as the primary means of reducing risk is a very short-lived intervention. He recommends understanding what the risks are, carrying out a risk assessment, for example, looking at drivers collision history. Once that data has been collated appropriate measures to eliminate or reduce the risk profile can be decided. Mr Price adds that driver training is normally right at the end of the process rather than right at the beginning. "As an example, if a driver is identified as high risk because they clock up 60,000 miles a year, the prime recommendation would be to reduce the mileage profile," he observes.

Information gathering

Tim Rankin, managing director of WNS Assistance, also emphasises the increasing importance of gathering the relevant information. He emphasises the need to assimilate information from accidents that take place in order to inform risk management approaches going forward. He adds that technology is playing a key role in swifter reporting of incidents and in enabling the relevant data capture to take place. "Fleets want the ability to electronically capture claim information direct from their drivers. What the fleets are then looking for is the management information that then gives them."

The road to effective fleet risk management is certainly a bumpy one, but it seems that insurers, brokers and insureds are jointly beginning to navigate a way through. New technology as well as innovative approaches are emerging and the drive to minimise the risks is gaining momentum.

TIPS FOR AVOIDING PROSECUTION FOR CORPORATE MANSLAUGHTER

Assess the driving capabilities of all new drivers

A summary of the main points is now being compiled and is due to be published on the Law Commission's website by April 2008

Routinely screen driving licences of all drivers - not just company car drivers

Implement vehicle spot checks - analysing general condition, roadworthiness and service history

Monitor all drivers working hours including travelling time

Record, classify, group and statistically analyse all accidents

Undertake a full risk assessment to identify problems

Act on the information gleaned and prioritise solutions

Design a management plan to implement the solutions and communicate it to all staff

Provide targeted education and training for drivers.

Source: Drivetech.

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