Insurance & Risk Management Roundtable
Mark Gaskamp, CSP, CRM, CIC, ARM, ALCM Managing Director, Wortham Insurance & Risk Management Sharon Blake Division Executive, The Hartford
Will Strasburg Risk Control Director, CNA Patrick Durbin, CHMM Assistant Director of Risk Control, The UT System
Dealing with MVRs & Driver Qualifications
Driver qualification – THE #1 Risk Management Tool
Who is responsible for checking MVRs?
Insurance & Risk Management
Roundtable
Dealing with MVRs & Driver Qualifications
When should MVRs be checked?
At hire
At Least Annually
What role does the insurance carrier play in the process?
Underwriting- New Drivers/ Renewal Drivers
“Excluded drivers”
What is the insurance agents role?
Privacy laws & Credit reporting agency issues
Facilitator & Advocate
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What do the numbers look like and what are
underwriters looking for in a good fleet risk?
Sharon Blake
Division Executive, The Hartford
Insurance & Risk Management
Roundtable
Automobile Insurance More Accidents, Larger Claims Drive Costs Higher October 2016
Insurance Information Institute 110 William Street New York, NY 10038 212.346.5500 [email protected] www.iii.org
Copyright © 2016 by The Hartford. Classification: Company Confidential. All rights reserved. No part of this document may be used, reproduced, published or posted without the permission of The Hartford.
6
The Big Problem: Insurance Costs Are Rising
Source: Fast Track Monitoring System.
From early 2014 to early 2016, the cost of accidents has risen dramatically. By contrast, consumer prices overall
rose 1.7 percent during 2014 and 2015.
Auto Insurance Increase in Loss Costs, 2014:Q1–2016:Q1
Bodily Injury
9.6%
Property
Damage
14.7%
Personal Injury
Protection
18.4%
Collision
11.1%
Comprehensive
11.0%
Copyright © 2016 by The Hartford. Classification: Company Confidential. All rights reserved. No part of this document may be used, reproduced, published or posted without the permission of The Hartford.
7
More Accidents
Source: Fast Track Monitoring System, Insurance Information Institute.
-1.8%
-3.6%
2.5%
-2.4%
-1.4%
-0.5%
0.9%
-1.8%
2.4%
4.4%
0.8%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
An
nu
al
Ch
an
ge
The accident rate – the number of claims per hundred vehicles – is rising.
Collision Claims: Frequency Trending Higher in 2015
Copyright © 2016 by The Hartford. Classification: Company Confidential. All rights reserved. No part of this document may be used, reproduced, published or posted without the permission of The Hartford.
8
Why More Accidents? More Driving
Source: Federal Highway Administration, Rolling Four-Qtr Avg. Frequency from Fast Track Monitoring System, Insurance Institute for Highway Safety, Insurance Information Institute.
People are driving more. The more miles people drive, the more likely they are to get in an accident.
More Miles Driven, More Collisions, 2006–2015
5.3
5.4
5.5
5.6
5.7
5.8
5.9
6.0
2,850
2,900
2,950
3,000
3,050
3,100
3,150
06:Q4 07:Q4 08:Q4 09:Q4 10:Q4 11:Q4 12:Q4 13:Q4 14:Q4 15:Q4
Miles Driven Collision Claim Frequency
Billions of Miles Driven in Prior Year
Overall Collision Claims per 100 Insured Vehicle Years
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9
Why More Accidents? More Jobs
Source: Seasonally adjusted employed from Bureau of Labor Statistics, rolling four-quarter average frequency from Fast Track Monitoring System, Insurance Information Institute.
People are driving more because the economy is improving.
More People Working and Driving => More Collisions, 2006–2016
5.3
5.4
5.5
5.6
5.7
5.8
5.9
6.0
120
125
130
135
140
145
06:Q1 07:Q1 08:Q1 09:Q1 10:Q1 11:Q1 12:Q1 13:Q1 14:Q1 15:Q1 16:Q1
Number Employed Collision Claim Frequency
Number Employed, Millions
Overall Collision Claims per 100 Insured Vehicle Years
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10
Accidents Are Getting More Expensive
Source: Fast Track Monitoring System, Insurance Information Institute.
The average claim size has risen steadily since 2010.
3.9%
3.1%
0.1% 0.5%
-2.3%
-0.1%
2.8%
1.3%
4.1%
1.3%
5.7%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
An
nu
al
Ch
an
ge
Collision Claims: Severity Trending Higher in 2009–2015
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11
Why Are Accidents More Expensive? Repair Costs
Indexed so 2004 = 100.
Source: Insurance Information Institute, Bureau of Labor Statistics.
The cost of repairing autos is rising faster than overall inflation.
100
105
110
115
120
125
130
135
140
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Body work Overall inflation
Cost of Body Work Is Rising Faster Than Costs Overall
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12
Severity: Driving Fatalities Are Rising
Annual Change in Motor Vehicle Deaths
Source: National Safety Council, Insurance Information Institute.
-7.0%
-5.9%
2.2% 1.5%
2.0%
0.7%
-0.4%
0.1%
-2.5%
2.2%
1.0%
3.6%
-1.4%
0.4% 0.9%
-0.1%
-3.0%
-9.5% -9.0%
-2.4%
-0.1%
3.1%
-2.9%
0.1%
8.0% 9.0%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
Driving has been getting safer for decades, but recent trend is discouraging—38,300 deaths in 2015.
Seatbelt Use Rose to 62% of Drivers, From 49% in ‘90
Big Drop-off Due to the Great Recession
On Track for 18% Increase in Two
Years
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13
How do Underwriters Think about Auto Risks
• Management – Safety Program, Understanding of Risk, Attitude• Drivers – hiring practices, MVR guidelines/procedures, training• Number, Age, Type and Condition of Vehicles (any specialization
that increases cost of unit/cost to repair)• Loss History – Examine Frequency & Severity. Any learnings or
changes made post loss?• Size and radius of insured’s operations. Time bound deliveries?
Consistent Routes? Vehicles at jobsite or in motion for majority of day? Rural or Urban environment?
• Preventative Maintenance Program for owned vehicles. • Concentration Hazard ? Stored in one facility? Covered? Flood?• Salespersons or Executives provided company cars – 24 hour
exposure? Family member policy? Unusual amount of rental cars –details?
• Employees using their own vehicles for business – limits required, COI verification procedures
Insurance & Risk Management
Roundtable
What are the key fleet exposures insurance
company loss control staff expect to be
addressed?
Will Strasburg
Risk Control Director, CNA
Insurance & Risk Management
Roundtable
15
Common Causes of Rear-end Crashes
• Driver being distracted
• Following too close
• Going too fast for conditions
• Another vehicle cutting in front of your vehicle
16
Auto Rear-end Crash / Distracted Driver
Speed
35 m.p.h.
45 m.p.h.
55 m.p.h.
65 m.p.h.
Each Second
52 feet
66 feet
81 feet
96 feet
3 Seconds
166 feet
198 feet
243 feet
288 feet
6 Seconds
312 feet
396 feet
486 feet
576 feet
17
What is Distracted Driving?
Any activity that could divert a person’s attention away from the primary task of driving.
ALL distractions endanger driver, passenger, and bystander safety.
18
Rear-end Crashes / Following Too Close
A driver must allow enough distance between their vehicle and the one ahead so they have time to react and stop without hitting the vehicle ahead.
A standard rule is to be 3-4 seconds.
In a loaded vehicle or in poor weather conditions you need to increase this to 4-6 seconds.
What can you do to improve your fleet safety
program from a “risk management“ perspective?
Patrick Durbin, CHMM
Assistant Director of Risk Control, The UT System
Insurance & Risk Management
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Fleet Risk Management
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– Know your operations
– What are you using vehicles for?
– Who is driving?
– Do what you say!
– Training
– MVR checks
– Inspections
– Maintenance
– Expect the best, but plan for the worst
Insurance & Risk Management Roundtable
QUESTIONS?