Best Practice Tips for Lowering Your Commercial Auto Rates

Author, Jeremy Hoolihan, Partner, Rancho Mesa Insurance Services, Inc.

For the last several years, the insurance industry has seen a significant increase in auto rates. In 2023, the top ten auto carriers in the US all saw double digit rate increases. This, in addition to the rate increases we’ve seen since 2018, equates to rates anywhere from 20-50% higher than we had just a few years ago. According to US auto insurers, these rate increases are still not keeping up with the skyrocketing claim frequency and severity. Therefore, we are likely to continue to see auto rates increase before things level off. 

With that being said, positioning your company now with a best practice fleet safety program is more important than ever. It is also critical that business owners work closely with their insurance brokers to develop a program that will not only improve safety on the roads, but will also highlight the efforts a company is focusing on from an underwriting perspective. Minimizing rate increases only comes with the collective efforts of the business owner and their insurance broker. In order to even consider receiving any credits on auto rates, a business needs to stand out from other submissions an underwriter is reviewing. Rancho Mesa understands how important this is which is why we have developed our detailed Fleet Supplemental Application and SafetyOne™ Driver’s Training Program.

As an insurance broker, a vital role we play is representing a business to the insurance marketplace. Providing underwriting details of the business to insurance carriers in an effort to make them interested in quoting the insurance is only the first step. Providing in depth details relating to fleet safety and efforts that go beyond what an underwriter is used to seeing is what Rancho Mesa strives to submit. The more details an underwriter has regarding an auto submission, the more comfortable they will be with the company’s program, which generally leads to more subjective credits. Rancho Mesa developed a Fleet Safety supplemental that dives deep into a business’s fleet program. It collects general information such as fleet size, driving radius, and description of vehicle usage. It also explores details surrounding safety management. Examples of the information collected include:

• Safety controls

• GPS or telematics details relating to maintenance, speed, location, routing, etc.

• Accident reporting

• Fleet safety courses provided

The Fleet Supplemental also provides vehicle and driver information such as:

• Information relating to any permanently attached equipment

• Vehicle inspection and maintenance program

• Where vehicles are parked overnight

• Personal usage policy with employees

• Safeguards in place relating to storing of vehicles

• Process for reviewing and selecting drivers

• Review of Motor Vehicle Reports

• Pre-employment physicals, drug testing, and alcohol testing

Another useful tool relating to fleet safety is Rancho Mesa’s proprietary application called SafetyOne. Rancho Mesa has developed a driver training program that is accessed through the SafetyOne website. The administrator can assign the online driver training courses to the appropriate employees where they can easily be completed from a computer or mobile device.

Since each employee has their own login and password to access their trainings, the records are always easy to locate in the platform.

Driver training courses include both a video and quiz. And, they are offered in both English and Spanish. Employee watch the video and then take the quiz. This can be done as many times as needed in order to pass the course. We want people to really understand the content, not just get a minimum passing score. 

Courses include:

• Distracted Driving – The course covers the cost of distracted driving, “multi-tasking”, technology and distraction, eliminating distractions before you drive, cell phones, and fighting distraction on the road.

• Driver Safety – The course covers preparing to drive safely, driving fundamentals, driving with other vehicles, driving a night and bad weather, distracted driving and road rage, and handling an emergency.

• Driving Defensively – This course covers the fundamentals of driving defensively, dealing with distracted drivers, coping with aggressive drivers, using your headlights, driving safely in bad weather, handling a blowout, and sharing the road with trucks and buses.

• Driving Safety – This course is a refresher course that covers preparing to drive safely, the fundamentals of safe driving, driving safely when sharing the road with different types of vehicles, staying safe when driving at night and in inclement weather, road rage and distracted driving, and what to do if there’s an emergency.

While the auto marketplace continues to see rates increase, now is not the time for businesses to sit back idly and be complacent with their fleet safety program. Working with your insurance broker to improve your fleet safety program and sharing this information with insurance companies can have a significant effect on your auto premiums. 

If you would like to discuss how Rancho Mesa can assist in improving your auto risk profile, please feel free to reach out to me at (619) 937-0174 or jhoolihan@ranchomesa.com.

Back to the Books: Fall Months Call for Driver Preparedness

Author, Megan Lockhart, Media Communications and Client Services Coordinator, Rancho Mesa Insurance Services, Inc.

As schools begin filtering back into session, more vehicles flood the roads in the mornings and afternoons. The “rush hour” traffic is back in full swing. From construction workers on their way to the jobsite to parents rushing their kids to school, more vehicles on the road means more risk for accidents, and an uptick in insurance claims.

According to the National Highway Traffic Safety Administration data, in 2021 the rate of fatal crashes for large trucks was highest in the months August through October, with its peak in September. Construction-industry vehicles typically fall into the category of large trucks, defined by a total weight of 10,000 pounds or more.

To avoid becoming a statistic, it’s a good time for employees to freshen up on driver training. The SafetyOne™ platform offers a library of online driver training topics to ensure your drivers are safe on the road.

• Driver Safety: The Basics

• Driving Safety

• Driving Defensively

• Distracted Driving

• Commercial Driver’s License (CDL) Defensive Driver Training

To learn more about risk management resources or the training offered in SafetyOne, contact your client technology coordinator.

Don’t Overlook the Importance of Fleet Safety

Author, Greg Garcia, Account Executive, Rancho Mesa Insurance Services, Inc.

From an insurance premium standpoint, one of the largest cost for any landscape company would be the auto policy, and for good reason. According to the National Highway Traffic Safety Administration, a motor vehicle crash happens every 12 minutes. Of course, not all those accidents are from landscapers, but it’s still a staggering statistic none the less. 

For all auto insurers, their combined ratios (claims dollars/premium) for this line of insurance is typically above 130%. Thus, for every dollar collected in premium they are on average paying out $1.30 in claim costs. These high claim costs are due in part to larger settlements being paid out for bodily injury, higher replacement costs (parts/labor) for the vehicles, etc. As a result, auto insurance premiums are rising overall and in some cases those increases are significant.

While an individual company can have little impact on the industry as a whole, there are a few areas landscape or other businesses can be aware of that will help defer or reduce premium increases for them.

The following are a few common mistakes landscape drivers are making to create an unsafe driving environment:

• Distracted Driving – This is by far the most common mistake any driver can make. It is imperative that your employees remain focused while operating a vehicle. The number one cause of distracted driving comes from cell phone use while driving a vehicle.

• Traveling at unsafe speeds

• Following too closely behind another vehicle

Best in class landscape companies understand the importance of fleet safety and really hone in on their fleet safety procedures. 

Some of the things the top landscape companies are doing to help keep auto accidents to a minimum include:

• Maintain your vehicles - Always take care of your vehicles, making sure everything is running properly. Complete regular inspections (daily, weekly, and monthly). Keep accurate maintenance logs and check for tire and brake wear. Vehicle maintenance and care is an important safety component, and helps reduce the chance of an auto accident.

• Fleet Safety Program -  Create a written company Fleet Safety Program and provide driver safety trainings to all employees. The Fleet Safety Program must detail leadership’s expectation of what is required to be a driver for the company and what the consequences will be if the procedures are not met. Driver trainings should not be a “check list” item, meaning you do it once and then you forget about it. 

For the Fleet Safety Program and the driver trainings to be effective and successful, they need to be a recurring training topic. 

Watch our Fleet Safety: Above and Beyond Compliance webinar to help you get started with your Fleet Safety Program. Your Client Services Coordinator will be happy to provide tools to help assist you in building your program.

By taking a serious look at your current fleet safety procedures and making necessary changes, you will not only lower your annual premiums on your auto policy, but you will also create a safer environment for your employees.

If you have any questions or want to discuss your risk management needs further, please reach out to me at ggarcia@ranchomesa.com and I will be happy to help you.

Work-Related Automobile Accidents and Their Correlation With Workers’ Compensation Claims

Author, Kevin Howard, Account Executive, Rancho Mesa Insurance Services, Inc.

In California, motor vehicle accidents are among the leading cause of severe injuries on a daily basis. From a risk management perspective, a company’s fleet safety program has a primary goal of keeping employees safe while driving which lowers the amount of annual auto premiums paid.

What is not typically discussed when talking about fleet safety is the impact a work-related auto incident has on a workers’ compensation policy and experience modification.  This article will discuss some of those impacts.

EXPERIENCE MODIFICATION IMPACT

When broken down, workers’ compensation premiums are driven by many factors. A main factor for pricing is the experience modification. Experience modifications are a measure of safety for a company when compared to others in the same field. Workers’ compensation claims adversely affect experience modifications.

Typically, business owners invest time, energy and resources into their safety program in the form of personal protective equipment (PPE), stretching before labor, tailgate meetings and job hazard analysis. But, the “big claim” businesses are doing so much to avoid could come from an auto incident. A heavy dose of fleet safety training should be mixed into the safety topic agenda, tailgate meetings and discussions regarding minimal driving record requirements for employees to drive on behalf of a company.

Businesses in California are required to offer no-fault workers’ compensation insurance which means it doesn’t matter who is at fault, the injury will be covered by a worker’s compensation carrier.

When a work-related auto accident occurs and there is an injury involved with an employee, the experience modification will be affected adversely based on the incurred cost of the claim as well as the loss ratios.

SUBROGATION

If another party is at fault regarding a workers’ compensation claim, the insurance carrier who is tending to the claim can subrogate and try to recoup the paid amount from the responsible party.

The issue workers’ compensation carriers deal with regarding subrogating auto claims is that the California minimum required auto liability limit is only $5,000. This amount would not cover most injuries suffered by an employee in an auto accident. Also, there is a high percentage of drivers who are uninsured which makes subrogation impossible in a claim scenario.

Overall, subrogation is pretty difficult in this specific area of workers’ compensation. The best defense is to avoid auto incidents as much as possible.

MULTIPLE EMPLOYEE IN ONE VEHICLE

Especially with gas prices soaring, carpooling to jobsites can be a popular method of getting employees from one location to the next. Regardless of fault, this could create multiple workers’ compensation injuries at once. Multiple workers’ compensation claims will adversely affect experience modifications, loss ratios and DART rates.

These factors should be considered when creating a car pool scenario for employees travel from jobsite to jobsite.

Important factors to consider if you do utilize carpooling to jobsites could be:

• Does the driver meet out company standards with his or her driving record?

• Is the vehicle’s maintenance up to date? (e.g., tires, windshield wipers, etc.)

• Are there multiple high wage earners traveling in the same vehicle?

TEMPORARY DISIBILITY COST ON THE RISE

With a major labor shortage occurring in California, wages have risen in order to attract and retain labor and highly qualified employees. A severe motor vehicle accident which creates a worker’s compensation claim could adversely affect an employer’s experience modification because two-thirds of the amount of the injured workers’ pay is a larger dollar amount on average than it has been in the past.

This could create a larger claim because of the amount of temporary disability being paid while an employee is hospitalized or unable to come back to work with or without restrictions.

FLEET SAFTEY CONTROLS

When budgeting for an overall safety program, business owners should factor in the multitude of impacts that an auto claim can have on a business. Controls like GPS/telematics, drug testing kits, MVR pull programs, and vehicle maintenance programs are examples of investing in fleet safety.

Fleet safety programs can save lives, save money and can create a stronger culture of safety throughout a business.

Rancho Mesa’s Risk Management Center has a searchable safety library with fleet safety materials that can be used to train employees. Register online for Rancho Mesa’s Fleet Safety webinar on May 26, 2022 from 9:00 am PDT – 10:00 am PDT. Or, contact me at khoward@ranchomesa.com or (619) 438-6874 if you have questions about your auto policy.

Benefits of using GPS Tracking Devices for Automobile Fleets

Global Positioning System (GPS) tracking devices have become a popular topic with employers who maintain vehicle fleets. The companies want to know what the advantages are of having these devices installed on their fleet vehicles and will it reduce their insurance costs.

The short answer is yes. Some insurance carriers provide a credit for having GPS systems installed on vehicles. Others may include a discount in their overall assessment of the company’s risk profile. Taking a proactive stance will be noticed by a carrier and taken into account.

The most important element of having GPS tracking is what the company does with the information received. It’s not enough to just install the device. The information generated should be used to promote corrective and preventative action within the organization. Rancho Mesa suggests organizations provide trainings, periodic ride-a-longs by a supervisor, and implement some kind of corrective behavior should the GPS show unfavorable driving behavior such as speeding or taking a less favorable route.

Other Benefits

Rancho Mesa clients have experienced indirect, sometimes unexpected, benefits from implementing a GPS System. These benefits include decreased fuel and labor costs, and ultimately more efficiency. Knowing the routes are being tracked can lead to a greater sense of accountability from employees as to what routes they are taking and how long they are spending on each trip. It can also allow decision makers to properly direct service calls to the right technician knowing who is in the vicinity.

For more information about the benefits of using a GPS system to lower insurance costs, contact Rancho Mesa Insurance Services at (619) 937-0164.