Small investment, Big return

“Could any fleet manager ignore the opportunity to make a small investment that could return 16 times that amount, improve legal compliance and reduce the chance of accidents?”
Tony Greenidge

The occasion of this question was the annual conference of the Institute of Car Fleet Management and the speaker who posed the question was Tony Greenidge of IAM RoadSmart. Both organisations are registered charities. 

Let’s look at the numbers Tony presented, which show how a change in driver behaviour can dramatically cut costs.

He assumed a fleet of 80 cars and 20 vans, averaging 15,000 business miles per annum, having a 15% chance of an at-fault collision every year and a four-year replacement cycle. A fairly typical medium-size fleet.

He presented well-sourced stats that showed that 37% of leased cars and 40% of leased vans are returned with unfair wear and tear, for which the leasing companies charge an average £308 and £414 respectively. That’s a cost of £3,107 for our example fleet, a fair chunk of which might be down to driver behaviour.

The average motor insurance claim is £2,839 (Source: ABI, 2017), and this figure is rising as cars become more complex. If 15% of our assumed fleet is involved in an at-fault collision every year, the cost to the fleet will be £42,585. How much of that could be reduced by changes in driver behaviour? Presumably rather a lot, as these are at-fault claims.

Tony assumed that his fleet of 100 vehicles driving 15,000 miles per annum had an average 44mpg under WLTP, but that the fleet actually averaged 40mpg. He showed that a cost saving of £18,908 was achievable if the driver could be encouraged to drive in a fuel-efficient way.

Then we came to the interesting part, which I hadn’t been aware of. The EST provides a subsidy to approved training organisations for every driver they put through an ecodriving course.  This can reduce the per-head cost of a standard 90-minute course to £30-£40, depending on the provider.

For the assumed fleet of 100 vehicles, the potential savings from ecodriving is £64,600, or £646 per driver. Let’s say the 90-minute ecodriving course costs £40 per head, or £4,000 for all of the drivers. That’s a potential return of more than 16 times the investment.

Fleet World reporter Colin Tourick ended the article by asking: "Costs reduced, emissions reduced, accidents avoided, lives saved, all for £40 per head and 90 minutes outside the business. Why isn’t everyone doing this?"

Source: Fleet World 31 July 2018

DriverFocus comment:

Indeed, however there are some additional points to ponder, such as:
1. What uninsured losses would this sample fleet also face?  Typically, this is a multiple of 2X (or significantly larger multiple) of the "bent-metal" cost
2. If EST funding is not an option, the commercial rates for in-vehicle driver training is significantly higher (again a multiple of 3X or more), which reduces payback. Still, the business case for being proactive is strong.
3. Aside from training everyone, a targeted training programme - based on telemetry, fuel card data and/or risk assessment data - could reduce the training cost and improve return on investment.

Collision Costs - Is Your Head in the Sand?

When crashes occur, fixing the bent-metal is relatively easy and low-cost.  Just as the human cost can be significant, so too can the hidden costs.

In a recent Fleet News article, several UK industry experts shared their views on the true cost of collsions:
* Paying the cost of vehicle repair or insurance excess is just the tip of the iceberg
* Below the surface costs include losing key personnel to injury or ill-health, loss of business, potential loss of reputation and the expense of hiring replacement vehicles while company cars or vans are off the road
* “One of the challenges is that many of these figures never appear on a balance sheet,” says Andy Price, director of consultancy Fleet Safety Management, adding that “all the CFO sees is the insurance cost and maybe the cost of the excess. They don’t see that the employee was absent for seven hours trying to sort the issue out with the leasing company, or worse that they are off injured as a result of the collision"
* While the true cost can be many multiples of the insured cost, even a more believeable 2X rule of thumb can be an eye-opener
* Andy Price also uses another technique: he calculates how much revenue a company with an average claim cost of £1,000 would have to make to pay for its collisions. If that company has a claim frequency of 25% and profitability of 10%, every vehicle on the fleet – not just those involved in a collision – has to generate £5,000 of revenue to fund the uninsured losses associated with the collisions it is having
* Minimising the cost of crashes can start with vehicle selection. Cars or vans fitted with advanced driver assistance systems (ADAS) such as blindspot warning and parking assistance will reduce the likelihood of being involved in a collision, with Thatcham Research saying that autonomous emergency braking (AEB) can reduce the frequency of front and rear crashes by 40%
* But the technology also increases the cost of repair. As well as the expense of the equipment, the work becomes more involved than before
* The Association of British Insurers says the average cost of a car repair bill has risen 32% over the past three years to £1,678, and, while ADAS may not account for the entire increase, it is definitely a major contributor
* Thatcham estimates ADAS technology is currently fitted to around 6% of vehicles on UK roads and expects this to increase to around 40% by 2020, meaning that while, in theory, fewer cars will be in accidents, the costs when they do will rise
* “Once you’ve been involved in a collision, there is a whole industry out there trying to make money from that incident,” added Price. The speed of response after a crash is critical to minimising this cost. Delays in reporting the incident to an insurer or incident management company drastically reduces the opportunity to capture and control the third party costs, such as excessive replacement vehicle costs
* In terms of the human cost, a driver’s well-being should also be considered. Clare Cain, group insurance/risk manager at Kelly Communications, says: “You have to offer support following a collision, not just to improve the driver’s skills, but also to ensure they aren’t suffering from stress or depression"
* Colin Hartley, managing director of risk consultancy Driive, adds that the “ripple effect” means the impact of an incident goes far beyond the driver.

Source: Fleet News - What is the True Cost of a Collision - 24th April 2018

ETSC Warns Of "Hype Surrounding Automated Driving"

In a recent article in the Financial Times, the ETSC was very clear in warning of the delays in improving the minimum safety standards of vehicles for almost a decade.

"The hype surrounding automated driving threatens to hold back progress over the next few years in reducing the 1.25m deaths that occur annually on the world’s roads.

By 2030, there may well be a few million self-driving cars globally, but there will also be more than 1bn cars driving that do not have such features. Many of those vehicles are the ones that will leave factories this year and next. The issue is that policymakers, as well as carmakers, are becoming so obsessed with the dream of an autonomous future that they are ignoring many of the causes of road collisions that could be avoided today through the use of existing, widely available and affordable technologies.

Autonomous Emergency Braking, Intelligent Speed Assistance and Lane Keeping Systems could be as effective for reducing road deaths as the seatbelt has been. But, like the seatbelt, we will only see the biggest safety gains when all cars are fitted. Offering them as optional extras, or only on premium models, as today, is not good enough.

But delaying or avoiding action now would be a disaster. Especially so if, as is likely, full autonomy faces huge practical obstacles to implementation along the way."

Source:  ETSC 26th Feb 2018

Why The Indo Article Misses The Point

In my view, last Sunday's article in the Irish Independent completely misses the point of the RSA #Drivingforwork TV ad. The fact is that employers and staff who drive at work actually have JOINT responsibility to show duty of care. 

The reason this ad campaign is happening now is because research shows many employers seem to be unaware of this joint responsibility i.e. they are not or are only in a limited way, managing driving for work.  

Perhaps understandably, they assume there is not much they can do to lower road-risk, aside from checking driver licences (maybe), servicing company-owned vehicles and buying motor insurance.

While it may be a "common sense" view that it is unfair to expect employers to "be there", the fact is that there are many ways an employer can positively influence driving behaviour and outcomes. Technology too is making this easier all the time and insurance companies already incentive proactive risk-management measures by businesses.

The article writer correctly points out that training (i.e. "blanket-training" everyone) can be costly and incidents still happen. This is to be expected.  Driving is a complex activity and training alone can only do so much.

Similarly, asking "how many of those accidents were down to carelessness on the part of the driver, or how many were down to the employer being at fault" suggests a very simplistic view of this risk. We know that some 90% of collisions (the term prerferred by the RSA) are due primarily due to driver error. It is not hard to see how joint fault can occur. For example, when a serious crash happens and the use of mobile device by the employee is deemed to be a contributory factor, it is entirely possible that this may have been actively or passively encouraged by the employer.  In fact, some employers have lost court cases due to not having an appropriate mobile phone policy in place.

So the purpose of this TV ad is to simply "nudge" employers to consider the human consequences of not managing driving and to find out how to make a positive change by visiting www.drivingforwork.ie. 

It is also worth remembering that driving is for many staff, the single biggest risk they face while at work. In fact, driving at work is more risky than driving privately, especially if the employer has a toxic, short-sighted culture. So doesn't it make sense to require all employers to take reasonably practicable steps to positively influence and mitigate this significant risk? After all why should driving be treated differently to other potentially life-changing at-work activities?

As long as an employer takes reasonable steps - preferably a series of steps which can include the Safety Health and Welfare at Work Act, 2005 guidance of "instruction, information, training and supervision" - then not only will the employer be compliant with this Act, they can also reasonably expect to avoid business disruption through less collisions, reduce fuel-use and save on motor insurance.

Granted it may not seem like "common sense", but employers who are proactive about managing road-risk, generally benefit much more than those who don't and the www.drivingforwork.ie website (among others) showcases some compelling testimonials.

Rather than "wrapping up employees in cotton wool" as the article also suggests, employers need to be aware of both the risks that employees face and create when driving for work and the positive business opportunities that exist to avoid the many negative consequences.

This RSA TV ad does help raise employer awareness and so should be welcomed. Instead, the article seems to challenge the ad on the basis of intuition and bias. A more open-minded, research-based article could have discovered that over-reliance on "common sense" leads to inertia, complacency and loss - the very things which the ad is seeking to avoid.

Author: Ron McNamara

Hallmarks of Fleet Risk Management Best-Practice

Whether your business is just starting to manage Driving for Work or you've been proactively doing so for years, we can always learn from others. While every work environment is different, there are common best-practices across all sectors. 

Here's our view on "what good looks like".

These 16 "Lessons Learned" are based on what we've seen in 10 years helping 100 companies create "an environment that allows and expects safe driving".

If you Like it, please Share it - you never know, your nudge might save someone!