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Overall, in 2009, an average of 18-23 percent of fleet vehicles were involved in accidents in 2009, on par with 2007 (20.5 percent) and 2008 (19 percent) figures.
According to Bob Martines, president and CEO for Corporate Claims Management (CCM), the percentage of accidents varies dramatically due to factors such as the type of company, age of drivers, years of service, areas traveled, and miles driven.
The impact of repair costs, the economic downturn, and added safety programs on accident management costs is discussed.
Repair Costs Impact Accident Management
In 2009, the Cleveland-based fleet and risk management company Fleet Response saw overall vehicle repair costs decrease slightly from 2008 numbers. "Several factors contributed to the modest decline in repair costs," explained Stuart Braun, adjuster and maintenance supervisor for Fleet Response. "Clients are declining certain cosmetic repairs and requiring use of more alternative parts, such as used (LKQ), reconditioned, or aftermarket." Rental costs have also declined, which Braun noted is "due to a decreased cycle time of repairs."
Overall repair costs at Ivyland, Pa.-based CCM also dropped slightly. "I believe the drop was minimized because parts prices did increase from the manufacturer's side, which affected the cost to collision shops buying parts. Paying more for the parts drove costs up slightly," said Martines of CCM.
According to Martines, contained cost increases can be attributed to an increased use of used and aftermarket parts, plus willingness of shops to do whatever was necessary to keep a job, rather than total a vehicle.
"Severities among our accident management clients varied according to vehicle mix and repair parameters," said John Wolford, senior manager of provider network services at CEI. "For some, severities declined, while for others they remained flat or increased slightly." CEI officials said the results were a combination of offsetting trends, some of which are driving repair costs higher, while others pushed the amount fleets spent on repairs lower.
Wolford explained that getting damaged vehicles back on the road is getting pricier because they're built to be safer and more fuel efficient. Greg Neuman, CEI quality control supervisor said, "today's vehicles have more computer hardware, more light-weight parts made of aluminum and plastic, and ever-increasing amount of sophisticated safety equipment, all of which is creating fewer opportunities to repair parts." This changing content is also tending to make damage diagnosis more difficult and time-consuming, resulting in longer cycle time and greater chances for supplements. "There's more and more damage that estimators can't detected in simple inspections and doesn't become evident until vehicle tear-down," Wolford noted.
On the other hand, 2009 was marked by economic trends and increasingly common fleet tactics CEI officials said were holding down the amount fleets actually spent fixing vehicleds. "Avoiding low-dollar repairs that don't affect vehicle or driver safety is a trend that intensified in 2009," Neuman said. "We saw quite a few fleets doing this in 2008, but the number grew last year and now almost all fleets are."
Some fleets also shrank in size in 2008, Wolford said. "A number of fleets had fewer drivers on the road, and because of that had fewer accidents," he noted. This resulted in some fleets having surplus vehicles, which enabled them to swap them for damaged units and postpone repairs. "This year, though, some fleets now have fewer surplus vehicles on hand, and we're seeing them doing more repairs than in 2009."
Pressure on fleet finances were also softened last year by rising salvage values, according to Chris Villella, CEI senior manager for loss recovery and insurance services. "We saw average salvage value rise by nearly 90 percent last year over 2008," Villella said.
Economic Downturn Influences Costs
According to PHH Vehicle Accident Services statistics, however, accident costs rose slightly, about 2 percent in 2009.
Contributing to the changes in accident management costs is the "stagnant economy," according to Martines of CCM, who "receives calls weekly from shops looking for more work - to the extent they will travel a significant distance (over 25 miles) to pick up vehicles, just to have work for their shops."
According to PHH, the impact due to the economy was two-fold.
"Many fleets decided not to replace vehicles right away, then ended up paying more for vehicle repairs," said Eliot Bensel, director, PHH Vehicle Accident Services, based in Sparks, Md. "Clients decided not to fix vehicles that had cosmetic damage as a result of collisions and instead focused on repairs needed to maintain crashworthiness."
Wayne Smolda, founder and president of CEI said, "The economy is forcing field managers to cut costs everywhere possible. The issue is, how do these cost savings decisions affect safety? Most likely there is no standardized process to evaluate if field managers are making precise and good choices. Saving money for this year's budget is not the problem, but unintended consequences can be."
Because of the economy, parts distributors held down inventories of spare parts, explained Wolford of CEI.
"As a result, it can take longer to obtain parts, and shipping costs can be higher, resulting in higher repair expenses and longer cycle time," said Wolford.
New Factors Affect Fleet Accident Management Expense
The addition of a safety program may impact fleet accident management costs, according to Allison Lanzilotta, VP, business development for Fleet Response. "Even with setup and training costs, the return on investment tends to be pretty quick, thus reducing overall vehicle repair costs. By training the entire fleet on company-wide accident issues or targeting individual drivers on their deficiencies, companies can decrease their preventable accidents, which can lead to less repair dollars spent overall," said Lanzilotta.
"Technology continues to evolve and challenge repair facilities, adding to cost," said Bensel of PHH.
PHH pointed out that some factors are reducing costs, rather than adding to them. For example, electronic tools used by the fleet management company to search for alternative parts (such as aftermarket, remanufactured, or recycled parts) can mitigate accident repair expenses.
In-depth understanding of collision repairs is crucial in making a repair/replace decision. It's imperative to know which repairs to authorize (for safety reasons) and which ones to forego (for cost management reasons), and to consult with the client on best practices and policies to walk this fine line, said Bensel of PHH.
The DriverCare Risk Manager service helped achieve significant reductions in CEI's accident-related costs by preventing accidents from happening, noted Smolda. According to CEI, a basic risk management solution does three things:
1. Identifies high risk drivers by tracking their driving history.
2. Holds drivers accountable for safety policy violations on a timely basis.
3. Provides training to improve driving safety awareness, knowledge, and skills.
"What's important to remember is that preventing accidents can save many times more money than an efficient accident management program," said Smolda of CEI.
Reducing Fleet's Preventable Accidents
Fleet Response takes a "consultative approach to safety by reviewing a company's existing safety policy and expanding its scope to include driver profiles, risk assessment, motor vehicle records (MVR) on all authorized drivers, and a way to combine accident history with MVR results and training assignments," said Braun of Fleet Response.
Martines of CCM similarly advised the combined use of MVR reports and a safety program.
"The most aggressive action any fleet, risk, or safety manager can take that will produce results is developing and adhering to a first-class safety management program," said Martines. "A combined interactive program [should] incorporate ongoing driver monitoring, regular MVR checks (twice per year), accident/incident monitoring with a rating system, and automatic training recommendations."
Strict compliance to a program of this nature will produce results that will off-set the costs at least $3-$4 dollars for every dollar spent, plus, the most important concern, it keeps drivers safe, noted Martines.
According to PHH, three objectives are necessary to reduce accidents:
1. Management support. Is safety a core value of your organization?
2. An effective driver safety policy.
3. Clearly defined and consistent consequences for noncompliance with the fleet's accident policy.
"MVR checks are invaluable in understanding who is driving company vehicles and what kind of risk each driver brings. It helps to have a comprehensive profile of each driver, which combines the MVR with information on accidents they've had, training they've received, and so on," said Bensel of PHH. "Training about attitude behind the wheel is even more important than skills-based training, we've found."
Doing 'All You Can' to Prevent Accidents
"Some fleets are taking full advantage of advanced risk management technology, but most aren't," said Smolda of CEI. "In this economic environment, with emphasis on controlling spending, new safety program costs can be an obstacle. The fleets that implemented successful accident avoidance programs found ways to overcome that obstacle."