As organizations struggle with how to appropriately manage the full spectrum of risks facing their organizations, an often overlooked exposure is the one associated with employees out on the road.

It’s not unusual for CFOs to downplay auto risks for organizations that do not operate a large fleet of trucks. But a potentially more significant source of risk exists in non-traditional fleets. For example, a firm may have both a traditional truck fleet to ship its products, along with a fleet of sales representatives driving vehicles to meet with customers nationwide. If an employee is involved in a collision on company time, the organization may be liable for the cost of the collision and resulting property or workers’ compensation costs.

By taking a proactive approach to fleet safety management – one driven from the top of the organization down – companies can effectively protect the health and safety of their employees and their businesses.

Consider that the most preventable — and most common — type of collision is the rear-end collision, with costs averaging more than $30,000 per incident. The risk most organizations’ retain on their auto insurance will be higher than that, meaning that they will pay the full cost of the collision. Assuming that the company expects a 6% profit rate on its activities, an organization would need an additional $500,000 in revenue to cover just one average-cost collision.

Rich Bleser, fleet safety specialty practice leader, Marsh Risk Consulting

Motor vehicle operation is one of the least accounted for risks in most industries. According to the U.S. Labor Department, vehicle collisions are the leading cause of workplace fatalities in the United States, accounting for 22% of all workplace deaths in 2013. Not surprisingly, sales professionals and truck drivers consistently rank among the deadliest jobs in America because of the the dangers of being on the road.

There’s no need to be blindsided by motor vehicle risks. The following are some considerations for managing a fleet of company-owned and personal vehicles.

Driver Qualifications

The C-suite should review and confirm that its risk management team has written policies that describe the qualifications needed for employees to be able to operate vehicles on the company’s behalf. It is important to examine driving records, and policies should clearly state what constitutes an acceptable record. Policies should consider such questions as:
• Has the employee had two or more preventable collisions in the past three years, on the job or otherwise?
• Has the employee ever been convicted of driving under the influence (DUI) or reckless driving?
• Can a family member drive the vehicle during off hours?

Policies should apply to all members of the organization, including executives. Safety starts at the top: even members of the C-suite might not be allowed to drive on behalf of the organization.

Fleet Maintenance

In addition to having qualified drivers, a fleet must be well maintained. Since many drivers may not arrive at a central location each day to have their vehicle maintained, the drivers themselves should perform an inspection before each trip. This may be as simple as a quick walk around the vehicle to make sure there is adequate air in the tires, no debris under the car and that the lights are working.

Employees should also be educated in reporting maintenance issues and in how to get their vehicles fixed. The most proactive employers cover the cost of personal vehicle inspections and maintenance. Further, standards should outline how often a vehicle should undergo maintenance, and require that it is tracked. Best practices suggest a 50-point inspection at least once a year, in addition to inspections during regular oil changes.

CFOs and risk managers should also consider the safety ratings and records of the vehicles in their fleet, and should use that information when making fleet investments. They should consider a written policy that does not allow motorcycles as a viable means of company transportation, since most collisions involving motorcycles cause extensive bodily injuries. These policies should have sections covering the safety standards of personal vehicles for company use as well.

Similarly, organizations should invest in driver training to help correct habits developed over time. Companies should remind drivers to wear seat belts, which are required by law. In 2009, more than half of fatally injured drivers of passenger vehicles were not wearing seat belts at the time of the crash, according to the National Highway Traffic Safety Administration. Best practices require training at least once a year or, at a minimum, every two years. Some organizations may do in-class training yearly and behind-the-wheel training every two years. No matter the exact schedule, it is important to invest in driver safety.

Collision Investigation Protocols

Collisions will happen, and when they do, employees need to be versed in the best practices for reporting them, including who to contact and how to record the details, such as taking photos of the scene. Organizations also should educate employees on how to speak to the authorities so as not to incriminate themselves. Vigilant organizations should engage auto accident reconstruction specialists to help determine the cause of a collision and mitigate any false claims.

Following a collision, the risk management team should conduct a review focusing on such questions as:
• Was the collision the result of improper training?
• Was the driver properly qualified?
• Should the driver lose driving privileges or even his or her job?
• Should the written policies be reviewed?

Be careful not to simply revoke a driver’s access to a company vehicle. The employee may assume it is OK to use his or her personal vehicle on organization business. The organization would then likely be liable for future incidents.

Risk managers and CFOs need to recognize the risks associated with their fleets. A culture of safety with written protocols can help keep employees and others safe on the roads. The costs associated with motor vehicle fleet risk can be mitigated through a proactive approach to fleet safety management.

Rich Bleser is the fleet safety specialty practice leader in the Workforce Strategies Practice of Marsh Risk Consulting, based in Milwaukee.