Creating and Managing a Best-In-Class Fleet Safety Policy

1. Creating and Managing a Best-In-Class Fleet Safety Policy Pete Mitchell Senior Manager, Account Development The CEI Group, Inc. November 17, 2010

2. What Is a Fleet Safety Policy? It’s a document Must be tied to an action program Primary purpose of both: To reduce/prevent fleet accidents 83 percent of fleets have one, 17 percent don’t* *(Fleet Management Newsletter, July 10, 2010)

3. The Fleet Safety Challenge Fleet accident frequency: 6X the general driving public’s NHTSA*: 620,000 fleet vehicle accidents per year Fleet accident rates: 10 to 40+ percent per year Why? Fleet drivers log more miles (20-25,000 per year vs. 12-15,000) Motor vehicle accidents: leading cause of workplace fatalities 2002-2007: 1,371 workers per year (U.S. Bureau of Labor Statistics) NAFA: 50 percent of all fleet accidents are preventable *National Highway Traffic Safety Administration

4. Accidents Are Expensive NETS* (2003): They cost business $60 billion per year Physical damage Medical expenses Worker’s compensation claims Lost productivity and revenue Insurance premium increases Administrative overhead Liability: third-party claims *Network of Employers for Traffic Safety

5. NETS Employer Accident Cost Worksheet Indirect costs Supervisor’s time (rescheduling, making special arrangements) Fleet manager’s time to coordinate vehicle repair, replacement Reassignment of personnel to cover for missing employees Overtime pay (to cover work of missing employees) Employee replacement Re-entry and retraining of injured employees Adminstrative costs (documentation of injuries, treatment, absences, crash investigation) Inspection costs Failure to meet customer requirements resulting in loss of business Bad publicity, loss of future business

6. Accidents Are Expensive Average total cost of accidents (NETS, 2001/ NHTSA, 2002) All: Fatal: Breakout of average accident cost (NHTSA) Physical damage Lost productivity: Medical costs: Administration Legal: Other (e.g., premiums, taxes) • $ 16,500/ $11,229 • $ 504,408 • $ 3,720 • $ 3,646 • $ 1,988 • $ 925 • $ 678 • $ 272

7. Fleet’s Biggest Hits: Negligent Entrustment Definition: Trusting a dangerous driver on company business DUIs Suspended licenses History of frequent violations and accidents Court punitive awards in the millions* 2007: Florida trucking company, $11 million settlement 2002: Tennessee transport company,$6.8 million jury award 1994: New Mexico company, $2.6 million, even though driver found NOT at fault! *Source: Risk Management Magazine, June 10, 2010

8. Having Fleet Accidents Is Like Losing Sales or Tax Revenue Operating Sales Needed to Profit Margin Replace Profits Average Accident*Fatal Accident 20% $ 56,495 $ 2,500,000 10% $ 112,990 $ 5,000,000 5% $ 225,980 $10,000,000 2% $ 564,950 $25,000,000 *At average total cost of $11,229

9. Hallmarks of a Best-In-Class Fleet Safety Policy It communicates to drivers Clearly written Use active voice Uncomplicated sentences, short paragraphs Avoid “legalese” Attractively presented Avoid small type face Professional layout and design Easily understood Easily and readily available

10. Hallmarks of a Best-In-Class Fleet Safety Policy It’s comprehensive Addresses all major safety issues and causes of motor vehicle collisions It’s communicated to all drivers (regular fleet, grey fleet, authorized secondary drivers)

11. Hallmarks of a Best-In-Class Fleet Safety Policy It’s actually communicated/marketed Distributed to all drivers Drivers sign off Revisions distributed Regular communications with drivers

12. Hallmarks of a Best-In-Class Fleet Safety Policy It’s driven from the top Senior management commitment Tied to company/organization strategy Senior management communications

13. Hallmarks of a Best-In-Class Fleet Safety Policy It’s enforced Uniformly Without exception On a timely basis

14. Components of a Best-In-Class Safety Policy Statement of Purpose/Mission Statement Definitions Terms Roles Responsibilities Authority Identifies standards of acceptable driving behavior Establishes accident reporting procedures Training requirements Penalties for policy violations Good driver reward program

15. The Mission Statement Ideally, from the CEO The purposes, goals of the policy The importance of safe driving to all

16. Sample Safety Policy Statement To our employees: Vehicle accidents can cause serious injury and undue hardship on you and your families, and have a negative impact on our company, both as a community of co-workers and as a business. It is the policy of (name of company) to achieve the greatest practical freedom from accidents and to ensure that every employee is provided safe and healthful working conditions. We have begun a fleet safety program to reduce and prevent accidents. We will, as always, comply with all applicable regulations and expect all drivers to drive safely and obey traffic laws. Safety is a priority. Your cooperation and help are needed to make our program a success. Signed, President

17. Roles, Privileges, Responsibilities and Authority Approved drivers Who they are: regular fleet, “grey” fleet, secondary drivers Drivers license requirements Vehicle and use Nature of vehicle (equipment, assigned or driver-acquired) Permitted uses: (i.e., business, personal) Reimbursing fleet for tickets, camera violations, etc Fleet and safety management Supervisor/management responsibilities

18. Standards of Driving Behavior Obeying all traffic laws Key safety issues: Seat belts Impaired driving Aggressive driving & Speeding Distracted driving Cell phones Texting

19. Accident Procedures At the accident scene Calling emergency personnel Data gathering Answering police questions Reporting to fleet Required time frame Who and how to notify

20. Enforcement Enforcement thresholds Events Points How events/points are cleared from the record Nature of penalties Required remedial training Loss of driving privileges Termination

21. Securing Driver Compliance: Enforcement and Recordkeeping Communicate changes in driver status/score as they occur Enforce the policy Uniformly As soon as possible Without exception Uniform enforcement is vital to defense against fleet liability Document every intervention with drivers Retain all records Your audit trail for legal defense

22. Good Driver Reward Program The importance of recognition Types of rewards (not necessarily costly) Examples: point or monetary awards, vehicle upgrades

23. Creating Your Safety Policy Fleet management has primary responsibility Involve all relevant departments to secure buy-in Risk management Human Resources Sales & Service (managers and drivers) Legal Procurement

24. Creating Your Safety Policy Use examples to get you started Make it uniform across all divisions and locations Level the playing field by jurisdiction

25. Managing Your Policy Document: Annual Reviews State laws and Federal regulations change New technologies New trends in your fleet can emerge These may require new policies, like: MVR reporting requirements Policies on secondary drivers Use of electronic devices New reimbursement procedures for accidents and fines New policy provisions should be communicated immediately