February 2012, Automotive Fleet - Feature
It’s a service that made its debut in the early ’70s; accident management (or collision management). Prior to the 1970s, drivers were on their own to report accidents, obtain shop estimates, and, if needed, get a replacement rental while the company vehicle was in the shop. Some of the process was handled by the fleet department, some by risk management. The purpose of the service was to get the driver out of the process and back on the road, while providing the fleet manager with resources and expertise that few, if any, had. All with the simplicity of a single, toll-free phone call.
Has it worked well? It sure has. More fleets than ever now take advantage of one of the various suppliers’ programs available to them. Repair costs are down, subrogation recovery is up, and drivers’ hands are held throughout the entire process.
However, many fleets are now looking for more: They’re looking to prevent accidents from happening in the first place. Accident management is becoming risk management, and suppliers are working hard to provide the tools.
What’s The Difference?
First, a quick comparison of the two concepts. The difference between managing accidents and managing risk is clear: the former is reactive, the latter is preventive. One is in no way “better” than the other. Accidents, once they’ve occurred, do need to be managed, or at least the process does. The effects are well known.
First, there is shock, especially if the driver is injured. Then there’s that sick feeling of finality — it has happened, it’s not possible to rewind and start over. Next is anger — at yourself, if you are at fault, or at other parties, if someone else is. This is followed by confusion: “What do I do now? I have meetings to attend.”
Shock, anger, confusion: it isn’t a pleasant experience.
What accident management brings to the process is first the knowledge and comfort that the driver is not alone. Someone on the other end of the phone is trained to calm the driver down, walk him or her through the process, ask the right questions, and gather information on the driver’s behalf. The goal is to get the driver back on the road as quickly and safely as possible. What it brings to the fleet manager is similar with additional resources he or she doesn’t have available.
Risk management, on the other hand, is a process in which the goal is to prevent, or limit, the occurrence of accidents in the first place. It uses data to determine which drivers, or types of drivers, are most likely to have accidents, and what actions to take to prevent them.
Accident and risk management, therefore, are not in conflict, but are complementary. Work to prevent accidents, and if they occur work to smooth and expedite the process of managing them. Successful, efficient fleet operations need both.
A typical accident management program consists of the following services/processes:
- Accident reporting. The supplier will, based upon the drivers’ call, produce a standard format accident report (the Association for Cooperative Operations Research and Development [ACORD] form is most commonly used), and distribute copies to parties as instructed by the fleet manager.
- Repair management. The supplier provides a national network of pre-screened repair facilities, arranges for a tow if needed, obtains the estimate, negotiates agreed pricing, tracks the repair progress, and pays the shop when repairs are completed. Repairs are usually guaranteed for the life of the vehicle in the fleet.
- Replacement rental. The supplier will arrange for the delivery to the driver of a replacement rental vehicle, so that the driver can remain on the job while repairs are being performed.
- Subrogation. The process of pursuing recovery from other parties begins almost immediately. Suppliers are well versed in all states’ liability laws, and will pursue recovery of costs on behalf of the customer.
- Reporting. Records of all costs and all subrogation recoveries are made available to the customer to track loss ratios, average repair costs, etc.
The goal of an accident management program is to reduce all costs related to accidents: physical damage, rental costs, and maximize subrogation recovery. In and of itself, this process is not preventive; it is reactive.
There are numerous definitions of risk management. Essentially, risk management from a fleet perspective is the process of identifying, developing processes to deal with, and mitigating the risks associated with the provision of company vehicles. Fleet risk management deals with risks associated with drivers, the vehicles provided to them, the job they do, and where they do it.
While accident management is a well-defined service, risk management is more amorphous, less definitive, and lends itself to a more customized solution.
First, a fleet manager is interested in balancing the skills and experience of new hires with the risk of putting them behind the wheel in the first place. This process begins with MVRs.
As part of the hiring process, the company should review the driving record of any candidate who will be assigned a company vehicle. The existence of violations or records of accidents can be a red flag, more so if there is a pattern present. However, there are two schools of thought as it pertains to such records. First, from a purely statistical standpoint, if a driver has had an accident, he or she is not likely to have another (i.e., if 20 percent of all drivers have accidents, this driver has “already had one,” and thus is a lower risk than one who has not). The other view is that if a driver has had an accident, he or she has, thus, been shown to be a risk, and the company should proceed cautiously.
Most fleet managers will tend to view the accident as a risk, which is probably a smart position to take (or at least a careful one). MVRs should be checked on all new hires, as well as any family members who may also have the privilege of driving the vehicle if policy permits.
Trends are more important here than the mere presence of negative events. A driver who is cited for violations over a period of time (no matter how minor) would likely be a greater risk than one whose record shows only one serious violation. The fleet policy should also call for regular MVR reviews on all existing drivers, as well as clearly defined consequences for the appearance of violations or accidents.