Managing a fleet of commercial vehicles can be a tough balancing act. You're working to accomplish two seemingly opposing goals: ensuring driver safety while keeping business costs low.
So, how do you strike that balance?
The good news is that we have already outlined strategies to improve driver safety and reduce accidents.
The even better news is that these goals sometimes align: a strong safety record reduces fleet insurance premiums, saving the business money.
Fleet insurance is on the rise. Commercial insurance rates rose by an average of 3.75% in 2024, and the average claim cost per vehicle is around $6500. For those companies with a less-than-stellar safety history, insurance is a costly expense.
It doesn’t have to be. While some factors, like the industry you’re in, are beyond your control and impact insurance costs, we’re focusing on what you can manage: your claim frequency.
In this blog, we'll explore several strategies to help reduce your claim frequency, including the key to success: optimizing employee training.
Let's get to it.
Before we provide our strategies, it’s important to first offer some context. Our suggestions will make a lot more sense once you know what factors contribute to insurance rates.
You may have zero claims next year and still have higher insurance premiums than another fleet manager who had multiple. There are reasons for this, and they can be divided into three categories:
This is one of those things outside of your control. Regardless of your safety record, your trade will always influence your insurance premiums.
Insurers use average claim data for each industry to help determine premiums. For example, businesses involved in vehicle recovery often pay higher premiums due to the perceived risk of their job. Couriers also pay high premiums due to the amount of miles they cover and the time-critical nature of deliveries.
Insurers care not just about your past safety record, but also about the risks you face moving forward. They want assurance that safety will remain a priority and that you're actively working to prevent future incidents.
Are your vehicles well-maintained? Are your drivers properly trained? Do you track driver behavior to pinpoint potential issues? Risk management measures, like dash cams, vehicle inspections, and telematics, can impact your premiums.
The frequency and severity of past claims, typically over three years, play a big role in determining your insurance premiums. If your fleet has had few claims and low costs, insurers will see you as less of a risk. And if this pattern continues over time, insurers will be more confident in your safety track record, which can lead to lower premiums.
But severity and frequency are not made equal, which brings us to our next point.
If I asked you what insurers care about more—severity or frequency—you’d probably say, "Whichever resulted in a bigger payout." After all, the insurance business is about making a profit.
But, you'd be mistaken.
While the amount paid on past claims is important, it’s not what carries the most weight. This is because insurers often consider a severe or catastrophic incident as an unordinary, or isolated, incident.
Whereas a history of frequent smaller claims indicates you’re a liability on the road, and it’s only a matter of time before that big claim comes along.
In an ideal world, you’d minimize both frequency and severity, and that’s exactly what some of our strategies are designed to achieve. However, there are also steps businesses can take to handle smaller incidents without increasing their claims count.
Driver selection plays a crucial role in lowering your insurance premiums. The entire profile of your driver will be considered by insurers, including:
Make sure your recruitment process is robust and background checks are extensive. And remember, your job doesn’t stop after recruitment. Every driver, regardless of skill, requires an optimized training program that best positions them for success on the road.
Looking back at previous claims can be a difficult process; it’s no different from dwelling on a painful memory. But it’s a necessary one as a thorough analysis can help identify patterns that prevent future claims.
Once these patterns are identified, adjust your claim reduction strategy accordingly. If a high percentage of your accidents occur at roundabouts, then you know to focus your training on this area.
Or maybe most accidents occur while navigating country roads late at night. If so, then look to change your routes and the times your drivers are out on the road.
Analyzing previous claims will help make informed decisions across a plethora of business areas.
Setting aside a budget for minor accidents allows you to address them in-house without having to file an insurance claim and risking an increase in future premiums.
This may not be an option for some smaller businesses, but it can actually save money for those who are afforded the option, as paying out-of-pocket for smaller incidents will keep a clean claims history and lower the chance of premiums going up.
However, if these smaller accidents become a common occurrence then we recommend using the same approach as claims analysis. Identify problem areas and adjust accordingly.
To maximize the effectiveness of your other strategies, it's crucial to have a well-trained workforce. Consider this: identifying problem areas is useless if your drivers aren’t equipped to address them. Hiring top talent is an excellent start, but without training tailored to your business, it's ineffective. And the budget allocated for minor losses can quickly disappear if an untrained team is put into action.
It’s simple: equip your workforce with the skills and knowledge to succeed, and they will.
What’s not so simple is finding a way to train a dispersed workforce that spends their time on the road. Not exactly an environment conducive to training.
Or so you think. But there are ways to optimize your training without disrupting your operation:
If you’re used to rolling out traditional, long-format classroom-style training, then making training accessible to a fleet of drivers may seem like a hurdle. Or maybe even a wall.
That’s why we recommend a digital solution that integrates into existing technology, such as employees’ mobile devices. Picture this: one of your employees is driving at night when one of their headlights goes out. They pull over to the side of the road and, unable to remember the process, take out their mobile phone and watch a short video on how to identify and solve the problem. Before you know it they’ve changed the bulb and are back on the road, potentially avoiding an accident.
What are the alternatives? Perhaps your driver disregards the issue and tries to finish the trip, potentially leading to an incident. Or maybe they waste valuable time searching online for solutions, without finding anything. With mobile training, you don’t risk any of these problems.
Flagger Force introduced mobile training to supplement their in-person sessions, resulting in 15% reduction in insurance claims that translated to a $250k cost saving for the company.
How do you consume information in your leisure time? If you’re addicted to your phone like the rest of us then chances are you spend your time scrolling through short, engaging videos on Instagram or TikTok.
Our attention spans have shortened and our brains are now wired to consume bite-sized content, usually in video format. This doesn’t change when we’re on the clock. The pen is mightier than the sword, but a good video trumps all.
That’s why we recommend utilizing social-media style content that mimics how we spend our leisure time. Imagine a TikTik-style video tutorial on how to change a tyre, or a guide in the style of an Instagram story that informs employees on how to navigate adverse weather conditions.
Temco Logistics, a premier home goods delivery and installation solutions provider, reduced auto accident rates by a third after rolling out TikTok-style training.
eduMe is TikTok-style training in the hands of your workforce that may not have a computer, email, or desk. Most training you’ll ever receive at a job has not come in this format before. We decided to pursue this quickly because we see the future payoff in being early.
- Dan Drenk, Director of Learning and Development, Temco Logistics
We believe continuous training is vital for all businesses, but it’s especially crucial for fleet vehicle drivers who encounter unique challenges daily. Vehicle conditions, road situations, and regulations are constantly evolving, creating an unpredictable environment.
Even the most thorough onboarding can't cover every scenario or keep up with changes. Ongoing training enables you to proactively develop your team's skills, ensuring they meet and exceed safety standards, which helps minimize accidents and reduce insurance premiums.
Regular training not only reduces operational errors but also offers many benefits, such as increased employee engagement and retention.
Don't wait any longer – optimize your employee training today.
eduMe is the preferred digital solution for your frontline workforce. With accessible, customizable, and engaging training, we equip workers with the relevant materials they need and give them the power to manage their own learning.
Contact us today to learn how we can help. Not ready? Then watch this 5-minute demo instead.