At a glance
- SMEs face an average of £6,000 in vehicle repair bills and five days of vehicle downtime every year
- Beyond simply keeping premiums manageable, effective fleet risk management can significantly reduce the total cost of risk (TCOR) for SMEs
- We look at the latest technology available to help SMEs reduce fleet risk and keep vehicles on the road
This article counts towards accumulating your annual CII CPD structured learning hours for Claims.
By reading this article, and correctly answering the three questions underneath, you will have achieved the following learning outcome: Summarise latest claims trends and identify how the insurance market is responding.
Visit the CPD Hub to log in and begin accumulating CPD hours.
According to Department for Transport figures, more than a quarter of road traffic collisions in the UK involve a vehicle being driven for work.
Such collisions can have a damaging impact on businesses. SMEs, for example, face an average of £6,000 in vehicle repair bills and five days of vehicle downtime every year. Businesses with larger fleets can face far higher bills.
Fortunately, a raft of digital solutions have become available in recent years – including virtual training and online fleet management and safety technology – much of which has the potential to transform fleet risk for SMEs.
Any telematics solution should capture the key driver behaviours: harsh braking; lane-changing; cornering; fatigue; speed vs posted speed; harsh acceleration; and distractions. App-based telematics solutions recognise the need to capture as many of these behaviours as possible, especially distraction and fatigue.
More advanced telematics solutions are also exploring facial recognition to monitor driver fatigue – with alerts sent to the management team if any fatigue events are detected, enabling the manager to intervene accordingly.
Importantly for SMEs, much of the best new driver assistance and safety technology is already being fitted as standard in modern vehicles. Since 2009, the European New Car Assessment Programme (NCAP) has established a star rating to determine vehicle safety credentials. With manufacturers competing for a 5-star rating and the cost of technology falling, it is not always necessary to retrofit a lot of expensive equipment.
Despite pricing models changing – with many providers now offering free solutions – fleet technology is not always adopted by SMEs.
Limited take-up could also be the result of a lack of knowledge among SMEs of exactly what is available. This situation isn’t helped by the confusing way some manufacturers label their products, with different brand names often used for the same technology. Bodies like NCAP provide useful glossaries and resources for making sense of the technologies on the market.
Considering the total cost of risk
For SMEs to make the most of fleet safety technology, there needs to be a step away from thinking purely in terms of premiums. Louise explains: “SMEs need to consider the total cost of risk (see boxout) and how much difference technology can make to safety generally. If people are driving more safely, they are less likely to crash, and they will also typically use less fuel. This could result in reduced management time investigating crashes and improved miles per gallon.”
When a crash occurs, there is much more than the damage to the vehicle and a potential increase in future insurance premiums to consider. In the event of an injury to an employee, time off work can be particularly costly, especially for SMEs.
Significant resources will also need to be invested in sourcing vehicle replacements and managing paperwork, and this is all before considering factors like the fuel savings delivered through more cautious driving.
Combining technology with organisational change
It is important to remember that fleet technology is not the answer to everything as it’s not as simple as putting telematics in and immediately expecting a rise in driver performance, it needs to be part of the wider risk management structure. For example:
• Are operational processes contributing to unsafe driving?
• Is a driver on a ‘job and finish’ schedule that could encourage risky driving?
• Are managers aware of the risks when their employees are driving for work?
If a business is going to invest in technology to generate the ROI, it’s crucial the data is used and individual driver interventions are deployed. Training on the telematics system should be provided to drivers and managers, with roles and responsibilities clarified. Managers should have interventions available to them to help improve the driving behaviour of their employees.
For more information on any of the subjects discussed in this article, please speak with your usual Zurich contact.