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More Accidents, More Dollars – What’s Driving Commercial Auto Loss? 


 

 

 

 

 

 

According to the Insurance Services Office (ISO), auto loss costs increased a cumulative 20 percent from 2012 to 2015.  As the economy improves and businesses expand, it means there are more vehicles on the road covering more miles. So what’s driving the increase in commercial auto coverage?

 

1.    More Traffic - in Texas, vehicle miles driven increased 4.0% year-over-year in the first half of 2016. More vehicles equal higher frequency of accidents.

2.    Distracted Drivers – according to the National Safety Council, one-quarter of crashes involve drivers talking on the phone or texting.

3.    Escalating Medical Costs – medical care costs are climbing 1.5 times faster than other costs.

4.    Increasing Accident Frequency Plus Severity – commercial auto rising claims costs stem from both increased frequency and severity. Texas’ fatal accident rate of 1.43 deaths per 100m miles exceeds the national rate of 1.28.

5.    Inexperienced or Undesirable Drivers – a shortage of skilled commercial drivers with good driving records equals greater odds for accidents.

6.    Rising Auto Repair Costs – record U.S. auto sales mean garages are often servicing newer cars with more expensive parts. Even minor repairs can cost big bucks.

 

To better manage the total cost of commercial auto insurance, companies should focus on the driver, not just the vehicle.

 

1.    Implement a Fleet Safety Program – document the program and communicate expectations to all employees.

2.    Enforce a company-wide policy for vehicle usage – follow practices such as limiting personal use and monitoring who can use company vehicles.

3.    Hire qualified drivers – don’t be tempted to let your risk management practices slip. Focus on proper driver screening and training. Then document standards and call for medical evaluations, references, and road tests.

4.    Use a company fleet vehicle whenever possible – be aware of extra risks when drivers use personal vehicles on the job.

5.    Train your drivers – even the most seasoned drivers can become complacent in their driving habits.

6.    Regularly check driving records – set a schedule for checking employee records and stick to it.

7.    Monitor drivers with telematics – traditionally used to improve business performance by managing maintenance and routing to better control fuel costs, these can now be used to focus on the driver. Look for indications of aggressive driving that may lead to accidents, such as speeding, sharp turns and hard or sudden braking.

8.    Review every accident – use a vehicle accident kit and learn how to prevent repeat incidents.

 

 

 

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About Us

BCH has a unique approach to advising our clients on how to control their Total Cost of Risk, not simply insurance cost. The Total Cost of Risk (TCOR™) includes preventive, direct and indirect costs associated with operating a business. The BCH approach includes collaborating with our clients to create a long range written plan for controlling their TCOR ™.