Reduce claims and costs by closely managing fleet driver behavior
Enhanced driver screening is an obvious yet underused way to reduce risk and improve road safety among fleet drivers.
In recent years, fleet insurance has presented an increasing number of challenges for the insurance sector. While the exposure risk has always been higher with commercial fleets compared to personal lines, a number of growing factors have made it steadily more challenging to make meaningful profits in commercial auto insurance.
Traditional factors, such as increased exposure risk brought on by multiple drivers, lack of predictability and traceability due to drivers leaving and new drivers joining, and challenging combined ratios, remain. Meanwhile, more recent factors, such as litigation financing, skyrocketing costs of vehicle repair and inflated medical costs, have seen a significant rise in claims being made against organizations for driver-caused accidents and have had a profound impact on fleet insurance over the last few years.
Organizations are being sued more and more as their drivers get into accidents, and the other parties involved are being encouraged to sue the driver’s employer — often on a no-win, no-fee basis. This has been compounded by “nuclear verdicts,” which are being applied to accidents involving fleet drivers, and can see awards running into the tens, and sometimes hundreds, of millions of dollars.
All of this adds up to create an extremely challenging environment for fleet insurers. To tackle these headwinds, insurance companies need to consider how they can reduce their risk exposure and improve road safety and, in doing so, increase customer retention.
The key to this is to carefully manage fleet and driver behavior. There are a number of ways to do this, but all require cooperation and collaboration between insurers and customers.
Enhanced driver screening
Enhanced driver screening is an obvious yet underused way to reduce risk and improve road safety among fleet drivers. Fleet managers and insurers need to be screening drivers more carefully and more regularly via Motor Vehicle Reports (MVRs), which are often used at the point of hiring a fleet driver. However, if there’s a DUI, for example, that happens after hire, the MVR may get updated and go unnoticed if you’re not consistently monitoring it. Insurers should work hand in hand with fleet customers’ operations managers or similar to continuously monitor MVRs. This can help reduce risk within the fleet and also offer improved customer relations via cooperation and collaboration.
Regular touchpoints
Another way to improve customer relations (and therefore, retention) by managing fleet and driver behavior is to ensure regular touchpoints with fleet customers. It’s common only to communicate during contract renewals or if there’s an accident — which will likely be a number of times per year owing to the number of accidents fleets have to deal with annually — but it would serve customer retention well to have regular communications not related to either of these things.
Training
Also, consider working with your fleet clients on regular training for their drivers to help reduce their risk factors and maintain driver engagement with safer driving and individual responsibility. This may help to reduce risk and improve road safety and can be an offset for the customer by more attractive premiums resulting from a lower accident rate that can come from carefully managing driver behavior. While coaching for risky drivers can be challenging, in particular, owing to potential lack of available time and in-house training skills, online training can be an effective way to address this. Work with fleet customers to offer driver training ranging from basic coaching all the way through to highly customized videos that can be sent weekly and have a tracking mechanism to monitor participation and completion.
Telematics
Telematics has been in the fleet driver business for a number of years as an operational tool, but more and more, it can be used as a tool to reduce risk, improve road safety and increase customer retention by carefully managing fleet drivers’ behavior. Elements of driving such as brake timing, speeding, acceleration, cornering, driver scores, and so on can be measured using telematics and used to reduce risky driver behaviors. Likewise, gamification and driver rewards are an increasingly common way to measure and reward driver behaviors. Ridesharing apps, for example, rely heavily on gamification to enhance (and indirectly manage) driver behavior. Self-funded rewards programs put tangible rewards in fleet driver’s pockets. Lastly, real-time driving data completes the circle by assigning training specific to the identifiable areas of driving safety improvement.
When a carrier combines telematics with MVRs and claims data, they create a very powerful tool for helping fleets manage and reduce risk. One fleet telematics solution may not fit all. A driver with several violations and/or an expensive claim may be a good candidate for a camera, while a better driver may be a good candidate for just a basic fleet monitoring device. This data also allows a carrier to have more frequent and meaningful interactions with their insured fleets.
As the insurer, be sure to be fully aware of the relevant telematics solutions on the market. Your value proposition is significantly increased by offering fleet customers advice on the solution they should choose and a subsidy towards that solution. Insurers can work with telematics firms to train fleets for the better outcomes they need to reduce risk and carefully manage driver behavior.
Ultimately, if you want fleet customers to adopt any or all of these behavioral best practices so that you can carefully manage fleet and driver behavior, subsidizing solutions, such as training materials and telematics, as well as working in partnership with operations managers or similar will offer you the greatest opportunity for uptake. Likewise, offering bonuses and considerations of premiums for fleet customers engaging with all or any of these offerings will also encourage uptake, which in turn will lead to reduced risk and improved road safety and, by extension, increased customer retention.
Ananth Rani is CEO of Azuga. The views expressed here are the author’s own.
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