Insurance Premium As An Incentive to Reduce Accidents With Delivery Vans



Insurance Premium As An Incentive to Reduce Accidents With Delivery Vans

Authors

R A M Jorna, T Steenhorst, Diepens & Okkema; M Ederveen, Ministry of Transport and Public Works, NL

Description

Abstract

The results of a study of Diepens & Okkema traffic and transport consultants shows that a reduction of the insurance premium can be an incentive for companies with delivery vans to establish a safety culture and thus to reduce the number of accidents. The magic word is incentives!

The basic thought of the study is that companies owning/leasing delivery vans (max. 3.500 kg), will be more stimulated to take strong safety measurements if they are directly rewarded by means of incentives, e.g. lower insurance premium, reduced reduction of no-claim benefit, etc.

On behalf of the Dutch Ministry of Transport, Diepens & Okkema carried out a study from September 2003 to January 2004. The reason for the study is the fast growth of traffic accidents with delivery vans in the past few years and the related the high costs for companies and for society.

The target of the study is a pilot with fleet owners and insurances companies to study whether the so-called Incentive System really works. The project has been divided in two stages:
* The first stage has been used to examine the financial costs of an accident for the company and to create an instrument that can be used by the fleet owners and insurances companies in the process to implement a safety culture in the company. Financial costs of an accident are defined to include material costs, time of stagnation, administrative costs, the costs for another car, the loss of time, the relapse in no-claim, an increase of the insurance premium, etc.
* The second stage will be used for the pilot itself, i.e. agreements between companies with a fleet of delivery vans and the insurance companies on preventive measures and insurance premium reduction. When writing this paper, the first stage has been completed, and the second stage has just started. The results of the second stage will be available in August 2004.

First stage, the results
As expected, there is a lot of difference in financial costs of accidents between the companies (construction, courier services, wholesale, furniture, etc.). A distinction can be made between professional drivers (e.g. couriers) and persons with driving as an additional task (e.g. a construction worker). It can be concluded that companies are only willing to take safety measures when the damage costs are a substantial part of the total business costs. Another conclusion of the study is that the direct relation between the damage and the costs are ?hidden? because of the package deal of the lease-contracts, which often include also insurances. Because of this combination a good insight in the real costs of accidents is lacking and with that simultaneously the incentive for the company to take proper action for damage prevention.

A next conclusion concerns the insurance costs as percentage of the total business costs, varying from less than 1% (e.g. in the construction sector) to more than 2% (e.g. in the courier sector). A survey of 25 accidents with delivery vans in The Netherlands has shown that the average financial costs of an accident is 691 euro, consisting of 273 euro ?own risk?, 249 euro time loss (delay, stagnation, etc) and 169 euro other costs (e.g. renting another car).

Besides examining the financial costs of an accident for a company, the first phase was also used to create a tool that can be used by the fleet owners and insurances companies to implement a safety culture in the company. Therefore traffic safety risk factors and prevention measures have been identified for the target group, i.e. companies with delivery vans:
* The risk factors can be divided into risk factors concerning the vehicle, the driving behaviour of the driver, the condition of the driver, the management and the regulation. Examples of risk factors are sight problems, weight problems, not giving way to other road users, management paying the fines, not enough driving experiences, etc.
* Within the prevention measures a distinction can be made between measures for the management and measures for the driver. Examples are monitoring the damages, extra driving training, extra theory courses, adjusting the driving behaviour to the freight, knowing the impact of the weight on the driving characteristics, etc.
For both the management and the drivers there are many options to improve the safety.
However, only with the right commitment of the management a safety culture can be realised at companies. There, above all, the management should have a vision on the safety culture in their company!

Of course prevention measures do not come for free. The study identifies two types of measures and related costs:
* the cost for training and awareness
* the costs for technical systems.
In the first case the costs consist of management time, the costs of courses, and the time of the employees. In the second case the costs are ?out-of-pocket-costs?, varying from 100 euro for the Dobli-mirror to 3.000 euro for distance keeping systems. The investment costs will vary per company, depending on the size, the requirements and the safety risks.

The insurance companies in the pilot strongly believe in the basic concept of the Incentives System for the delivery sector. However, they are reluctant to guarantee standard discounts on insurance rates and conditions. First of all the insurance companies want to check the safety history of the company concerned, the safety culture in the company, the willingness to invest in prevention measurements and the measures itself. Only when all this is known, the insurance companies are prepared to estimate, together with the transport or service company, the potential discount on the insurance rate.

Second stage, the process
The second phase, a pilot with fleet owners and insurance companies, has just started. At this moment, there are not yet results, but in September 2004 the results of the evaluation of the process (what have the partners learned? Does the concept work?) and the evaluation of the traffic safety (what is the quality of the safety measures and the impact on the safety?) will be available and shown at the conference.

Publisher

Association for European Transport