insurance & risk management roundtable · insurance costs are rising source: fast track...

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


Roundtable

What do the numbers look like and what are

underwriters looking for in a good fleet risk?

Sharon Blake

Division Executive, The Hartford


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%


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


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


http://www.fhwa.dot.gov/policyinformation/travel_monitoring/tvt.cfm

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


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


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


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


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


Roundtable

What are the key fleet exposures insurance

company loss control staff expect to be

addressed?

Will Strasburg

Risk Control Director, CNA


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


Roundtable

Fleet Risk Management


Roundtable

– 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?

insurance & risk management roundtable · insurance costs are rising source: fast track...

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