Staying Ahead

 CHUBB SAFETY 01Here’s what companies need to know to mitigate commercial transportation risks.

 By David Brown

Crashes and fatalities on the road have been increasing with alarming frequency. In just under a decade, the number of fatal crashes involving large trucks or buses increased by 40 percent. To make matters worse, the degree of accident severity has risen at the same time. From 2016 to 2017, the number of large trucks involved in crashes resulting in injuries rose five percent, while the number resulting in fatalities increased 10 percent.

The increases in both the frequency and severity of crashes have had significant cost implications for the commercial transportation industry. One noteworthy contributing factor to the increased claims severity statistics involves the advancement of vehicle safety technologies. While important in reducing fatalities, the cost of these technologies has made repairs and replacement for vehicles more expensive. 

In addition, advances in medicine also contribute to the rapid increase of auto liability costs; the incredible benefits from improved medicine that reduce deaths among crash victims and allow survivors with severe injuries, including Traumatic Brain Injury (TBI) and other severe medical conditions, to live longer, are becoming increasingly costly. These developments, coupled with the current legal environment, have significantly increased the average cost of a vehicle accident. 

The use of the so-called Reptile Theory — a strategy used at trial to persuade the jury to react to evidence instinctively (focusing on safety and survival of family and friends) by showing the defendant’s conduct endangers the community at large, while placing less focus on the plaintiff’s actual injuries — is becoming a common and often successful strategy for plaintiffs in vehicle accident litigation today. As a result, the stakes for commercial trucking organizations are only getting higher.

Reducing Risks Now 

Many risk factors, like those outlined above, likely contribute to the increasing frequency and severity of crashes and their associated costs. Following are some steps companies should consider to help mitigate current and emerging commercial transportation-related risks and exposures:

+ Address the Smartphone Problem – It is not a coincidence that the spike in accident frequency occurred around the introduction of smartphones and with the explosive growth of smartphone use shortly thereafter. In 2017, handling a phone while driving contributed to more than 800 crash-induced deaths on U.S. roads (see January 2019 IIHS report). To reduce phone-related distractions, companies can enforce a zero-tolerance policy for phone usage in truck cabs. Some firms are already piloting technologies that can block cell signal in transportation vehicles to eliminate the driver’s temptation altogether. 

+ Don’t Ignore Exhaustion – Organizations can be more mindful of the mental and physical toll driving long distances can have on workers. This is especially important given the truck driver shortage the industry is experiencing. Factors such as demographics and age — most drivers are around 50, and all but a small percentage are men — contributed to a shortage of about 36,500 drivers in 2016. With fewer truck drivers on the road, it is easier to inadvertently overbook employees. Shifts must allow for sufficient rest between drives, and leaders should encourage and empower drivers to speak up if they are not feeling well enough to get behind the wheel. 

+ Integrate Driver Assistance Technology – More common in larger fleets, safety technology — including, but not limited to, rear cameras, collision avoidance systems, blind spot detection and lane departure warning systems — can help drivers avoid crashes. For example, automatic braking technology can reduce rear-end accidents significantly. There is a misconception that all driver assistance technology is extremely expensive. While that is the case for some devices, it is not true for all, and experience shows that it is well worth the investment. Companies should look into technologies that best suit their needs.

+ Training – With the shortage in available truck drivers, training becomes even more important. Small investments in time and resources can yield large benefits. Companies can install technology (sometimes as simple as in-vehicle cameras) to help evaluate how well drivers are doing on the road. Organizations may find that many of their claims comes from a small percentage of their drivers. Taking steps to better train and educate these drivers can help reduce risk for both personnel and companies alike.

Reducing Future Risk

The industry is moving towards the use of semi-autonomous and, eventually, fully-autonomous vehicles. In theory, by removing the human element, the industry will potentially see fewer crashes and therefore, fewer injuries and claims. This evolution will most likely take place along a continuum with five distinct stages that include:

+ Driver assistance

+ Partial automation

+ Conditional automation

+ High automation

+ Full automation

Right now, we are hovering around stage two — partial automation — where there are number of combined automated technologies built into vehicles that help drivers but still require them to be fully engaged. The move toward fully autonomous vehicles will likely happen slowly and rely on improvements in infrastructure, regulations and governance. While telematics could reduce certain risks, there could be a certain level of operational risk remaining, for a few reasons: 

1. New technologies bring new potential risks, like cyberattacks;

2. New technologies bring questions around liability and, in this case, the question might arise whether the vehicle owner, manufacturer or programmer could be deemed to be at fault in the event of a crash involving an autonomous vehicle; and 

3. Risk can never be fully eliminated.

With verdicts exceeding the $10 million range at an unprecedented rate, commercial transportation companies and those with large fleets need to ensure that they have the appropriate insurance coverages in place. Organizations should work with insurance carriers, brokers and risk engineers — who have deep expertise in the types of exposures their companies face in order to best mitigate current and emerging risks.

With the frequency and severity of auto liability on the rise, companies should proactively review and adapt their safety management plans. Safety is a commitment that must underscore every action that is taken at an organizational and individual level. Whether it is through the adoption of telematics or the installation of a no-cellphones rule, safety is a value we must work together to promote and strengthen, both on and off the road. 

This document is advisory in nature and is offered as a resource to be used together with your professional insurance advisors in maintaining a loss prevention program. It is an overview only, and is not intended as a substitute for consultation with your insurance broker, or for legal, engineering or other professional advice.

David Brown is an EVP and transportation practice leader for the Chubb Major Accounts Division. He is responsible for managing the underwriting services provided across the country to multiple lines of business, assisting clients in their efforts to enhance their safety culture and mitigate potential exposures. He has more than 28 years of experience underwriting primary casualty coverages in the U.S. for large corporate insureds.