Is your business contributing to the overall
dramatic decrease in auto physical damage claims?
“Over the past 10 years, most insurance companies have seen a significant drop in
auto damage claims — some as much as a 20
percent decrease in volume,” says Jim
Hoendorf, director of claims vendor relations
and auto physical damage at Westfield
Insurance. “Although we have seen a significant drop in claims volume, this has been offset by a significant increase in severity.”
Smart Business learned from Hoendorf
about safety developments in the auto vehicle industry and how to minimize your commercial vehicle expense.
What is the total business cost associated
with vehicle accidents?
While collision repair is a multibillion-dollar
industry, the actual physical damage costs
associated with vehicle accidents are just the
tip of the iceberg. Reducing claims can have
a dramatic positive impact on a company’s
bottom line because of the many other
expenses that businesses incur as a result of
vehicle accidents, including:
- Medical treatments for injured parties
- Rehabilitation and physical therapy costs
for injured parties
- Loss of use expenses for business equipment damaged in vehicle accidents
- Replacement (rental car) expenses
- Loss of productivity of employees
involved in accidents (time off for court
appearances, doctor appointments, meetings
with insurance adjusters, etc.)
- Long-term absences due to extensive
and/or permanent injuries
- Increased insurance costs
- Increased workers’ compensation costs
What has contributed to the overall decline in
There are three primary factors that have
contributed to the reduction in auto physical
damage claims in the recent past.
- Crash preventive technology advances,
such as anti-lock brakes, traction control,
gyroscopic stabilizing sensors, event data
recorders and rollover protection systems,
have resulted in lower frequency of rear-end and single-car accidents. This helps account
for the fact that the vehicle claims that are
processed have a higher level of severity.
Highway improvements, such as rumble
strips, have reduced head-on collisions.
- A stricter underwriting discipline within
the insurance industry has resulted in lowered claims frequency among premium and
standard auto insurance companies.
- In the post-Sept. 11 environment, many
insureds have elected higher deductible auto
policies to help control personal and business expenses. Higher deductibles result in a
greater percentage of claims falling under the
deductible threshold, which also contributes
to only major vehicle claims being reported
to insurance companies.
How can businesses determine the safety of
The two most predominant organizations
dedicated to safety and prevention of auto
collisions are the Insurance Institute for
Highway Safety (IIHS) at www.IIHS.org and
the National Highway Traffic Safety Administration (NHTSA) at www.NHTSA.gov. The
IIHS is the nonprofit insurance funded organization most well known for its stringent
crash-test ratings of passenger vehicles. The
NHTSA is a governmental organization dedicated to passenger vehicle safety. Both
organizations publish the results of their
crash-test ratings. The IIHS also publishes a
‘Top Safety Pick’ list of the safest vehicles in
each vehicle category every year.
How can companies evaluate potential investments in crash prevention technologies?
While most of the new technologies for
vehicles are included in the base price, some
optional technology includes traction control, braking systems, hands-free cellular
technology, roadside assistance, ‘OnStar’
emergency response systems and global
positioning systems (GPS). Companies
should weigh the safety versus convenience
factors to determine what options are right
for their fleet vehicles. For example, traction
control and engine block heaters may be
good investments for vehicles that are used
in northern areas where winter weather conditions can be extreme.
What cost savings can result from purchasing
Companies can minimize their corporate
vehicle expenses by having fleet managers
research a vehicle manufacturer’s warranty
and the particular vehicle’s maintenance history. Often, vehicles that cost as much as
$5,000 more than a comparable vehicle can
actually be less costly to operate over their
lifetime due to lower maintenance costs,
improved fuel economy and higher safety ratings, which lead to lower insurance costs.
While a specific ROI for particular crash
prevention technologies may be difficult to
measure, increased productivity, decreased
down time, improved employee job satisfaction, as well as improved customer service,
are all benefits that can be realized through
additional fleet technology.
JIM HOENDORF is the director of claims vendor relations and auto physical damage at Westfield Insurance. Reach him at firstname.lastname@example.org or (800) 243-0210 x2470. Westfield Insurance provides commercial and personal insurance services to customers in 17 states. Represented by leading independent insurance agencies, the product we offer is peace of mind and our promise of
protection is supported by a commitment to service excellence. For more information, visit www.westfieldinsurance.com.