There are many reasons why a business that is primarily fleet based would want to implement a prudent driver management program. Most importantly of course is to protect the large investment that the business makes in the vehicles and equipment. But another reason is to minimize the effect that poor drivers have on insurance premiums.
Remember that one of the few tools an insurance company has in underwriting and managing "wheels based risks" is to underwrite and help manage the operators that are assigned the responsibility of using those vehicles on a daily basis.
The purpose of this article is to outline some of the underwriting procedures that the insurance companies use when reviewing accounts for acceptability and pricing. We will also demonstrate some practical approaches to driver review and training.
Access driver history
All things begin with the operator interview process. The most important issue to be aware of is that all businesses must adhere to the Federal Drivers Privacy Protection Act.
This federal mandate dictates in general that a state department of motor vehicles, and any officer, employee, or contractor working for the state department of motor vehicles, shall not knowingly disclose or otherwise make available to any person or entity, various personal information, or highly restricted information, unless in compliance with the permissible uses as defined within the act, (MV-15DPPA (5/02).
But information about a prospective employee's driving background is important to contractors and to the insurance companies who underwrite policies. So it is recommended that the business owner insert a disclosure and release statement on the company employment application to be signed by the proposed operator. By signing this release the prospective employee enables the contractor and insurance company to obtain information from the motor vehicle bureau that can and will be used for purposes of employment review and underwriting of insurance.
Contractors should also have their current employees sign this disclosure as well because their motor vehicle records also are reviewed by insurance companies for purposes of internal loss control procedures and insurance renewal pricing.
Keep in mind that this act varies between states and the business owner should obtain the Driver Policy Protection guidelines for his respective state.
Evaluating driver history
To determine whether or not an operator is deemed acceptable by an insurance company, the underwriters use what is called an "MVR Grid," which is basically a point system driven by the number of infractions within a given period and the severity of those infractions.
If any individual's combination of number of infractions and severity of infractions exceeds the allowable points based on the grid, the operator would be determined unacceptable. However there are instances where with proper explanation to the underwriter, a driver can be considered acceptable. An example would be if an accident appeared on the driver's report and the driver was not at fault for causing that incident, the underwriter could discount that incident.
In most cases when there is adverse activity on an MVR it usually stems from personal vehicle use as opposed to business operation of a company vehicle. Unfortunately the insurance underwriters do not differentiate between the two.
Internal safety policy
Once the acceptable drivers list has been established, the insurance company then looks for proper internal loss control procedures to be in place.
1. Train your drivers. Most importantly insurance companies look for effective driver training.
Most all insurance companies are more than willing to assist a company in setting up such programs and in most instances they will set them up at no cost to the contractor.
Contractors should insist their agent play an active roll in assisting you in the process. Albeit the pavement maintenance industry is unique from most others in terms of the type of equipment being operated and the hours of the operation, there is more reason to properly train drivers.
2. Maintain your equipment. The old saying, "a craftsman is only as good as his tools," holds true for any well-trained drivers and equipment operators. If the equipment they are operating is poorly maintained, then it is hard to expect the best performance from the driver, not to mention more importantly the safety factor. Therefore all contractors should implement a sound vehicle maintenance program. The insurance company will look for this to be in place during and after the underwriting process.
3. Invest in a global positioning system (GPS). One of the other aspects that we have found to be a key component for sound operator performance is the use of GPS systems. It has been proven that when the operator is aware that his work is being monitored and recorded, he is less likely to stray into dangerous territory. Our insurance program has now recognized the use of GPS systems as a tool so beneficial in the reduction of losses that we are rewarding the businesses that have made that investment by offering a credit on their automobile insurance pricing. You should request that your carrier consider the same.
4. Join industry associations. Another good resource for a pavement maintenance contractor is the national associations.
The North American Power Sweeping Association (naPSa), for example, has developed a Certified Sweeping Contractors Program which is designed to heighten the professionalism of those that adhere to the certification criteria. Most insurance companies feel that contractors who adopt and implement various procedures in an effort to minimize losses should be rewarded, and the naPSa certification process has been recognized in our insurance program to be a tool for crediting insurance premiums.
Establish driver incentives
Now that you have spent all the resources necessary to develop a good stable of operators with proper loss control and risk management practices in place, how do you retain them? Establish an incentive program that encourages your drivers to operate vehicles safely.
There are various driver incentive programs available. Understandably it is always easy to "arm chair quarterback" others businesses, however there are various and proven methods of incentive programs that can be tailored for your individual company.
Look to your insurance companies, trade associations, and more importantly networking with your business counterparts that have already developed such programs.
Your agent is a resource
The practicality of the matter is that it is difficult for any contractor to find utopia with this process. By no means is it a perfect world and therefore important that the relationship with your insurance agent is such that they act as liaison between you and your insurance company.
Your agent should become as familiar as they can with your business so that they can properly present you with the most comprehensive coverage and pricing available.
Scott Cerosky, president of Pavement Maintenance Insurance Agency (PMI), will present Control Your Costs: An Insurance Q&A at National Pavement Expo West, Nov. 17-19, in Las Vegas. He will present Improve Driver Management to Reduce Insurance Costs at National Pavement Expo, Feb. 15-18, 2006, in Charlotte, NC. For more information visit www.nationalpavementexpo.com or contact email@example.com or call 800-656-3919.