DRIVING AT WORK RISK MANAGEMENT

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DRIVING AT WORK RISK MANAGEMENT

25 FEBRUARY 2015

Dan Karmy and Chris Skilling Marsh Ltd

INSURANCE – DOCUMENTATION & CONTROLS

Dan Karmy Law LLB (Hons)

NEBOSH Health & Safety Risk Management NGC1.

Consultant: Workforce Strategies Team. Marsh Risk Consulting

Telephone: 0207 357 1000 Mobile: 07469402668 E-mail: [email protected] Website: www.marsh.co.uk Chris Skilling Client Executive Marsh Ltd Telephone: 0161 954 7424 Mobile: 07717 618600 E-mail: [email protected] Website: www.marsh.co.uk

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MARSH RISK CONSULTING

Risk Assessment, Controls and Documentation

• Previous session have covered what are the issues and consequences associated with motor fleet risk so I am here to focus on:

– How to manage driving at work using Risk assessing and Controls – What documentation is essential?

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1. What are the issues and consequences associated with motor fleet risk?

• Physical consequences: Minor, serious and fatal injuries

• Financial cost : Insured (Own vehicle and 3rd_{party) and Uninsured.} • Civil Compensation for injuries (employees & third party)

• Increasing insurance premiums- Large retailer can pay in region of £800 per car.

• Loss of reputation/business. Loss of goodwill.

• Criminal fines and imprisonment following prosecution by the police or the HSE. The action may be brought against either the company (as is the case with Corporate Manslaughter) or management or individuals. In relation to management, section 37 of the HSWA act makes it clear that directors or senior managers can be prosecuted for offences

committed by the corporate body if they consented or connived in the offence or were negligent in their duties.

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MARSH RISK CONSULTING 05 March 2015 4

Costs – the Iceberg principle

Vehicle Damage Repair of Vehicle Personal Injury Compensation Property Damage Recovery and Storage Legal Fees

Compensation

Inconvenience Damaged/Lost Stock Fines Management Time Re-delivery Administration Time Investigation Time Image/Reputation/PR

Increased Insurance Premiums Increased insurance excess

Insured costs

Uninsured costs

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Bite size legal overview

• Corporate Manslaughter & Corporate Homicide Act (from 2008): An organisation is guilty if its senior management organises or manages its affairs to cause to cause death and the activities amount to a gross breach of the duty of care. An individual may still be prosecuted for common law gross negligence

manslaughter. Police will seize phones and enquire about previous weeks work. • Road Traffic Act. (Provision by employer of roadworthy vehicle and insurance).

Police will take phones and interview about previous week’s work to investigate tiredness.

• HASAWA 1974 – work activities include driving. Duty to do what is ‘reasonably practicable’. Balance risk and cost/time. HSE issue. Fine or imprisonment (s37 liability for directors where there has been ‘neglect’.

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Bite size legal overview continued…..

• Management of H&S at Work Regs – duty to risk assess. HSE matter. Criminal liability: Fine or imprisonment.

• Road Death Investigation Manual – focus on driving for work and company responsibilities. Professional Practice Unit of the National Policing Improvement Agency.

• Working Time Directive means breaks must be given.

• HSE/DfT - ‘Driving At Work’ INDG 382 guidance. Excellent guidance. Highway Code.

• Civil proceedings. Duty to employee and the public. Duty to employee under employment contract.

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What does industry best practice look like? It will follow a health and safety

management model reflecting HSG 65 “Successful Health and Safety Management”.

6. Audit & management review 1.Leadership 2. Policy 3. Organising 4. Planning and Implementation 5. Measuring Performance

Evidence the implementation with documentation. Documents must be current and communicated consistently to the business.

The documents must also be accessible.

Road traffic safety (RTS) management system BS ISO 39001:2012. International

Organisation for Standardization (ISO)- prints over 19,000 standards. This standard is then published in UK by British standards institute

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Leadership: High Level Strategy and Action Plan Leadership

Corporate strategy for improving driving at work management • Clear set of objectives and targets with KPI’s

• Prioritised action plan, with timescales for implementation and persons responsible for such

• Regular periodic reviews. Lead from the top, by example Organisation

• Right people in the right role. Develop a positive driving at work safety culture

• Communicate and consult:

 Driver forums & DAW safety committee with TOR, agenda & minutes

 Communicate via intranet, email/briefings, bulletins, guidance, etc.  Check competence of drivers and line managers

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Policy 1: Travel Policy. Eliminate the risk ? • Clear & concise - provided to all employees • Adopt a hierarchical approach to travel

• Is travel necessary at all? • Are alternatives available?

– Telephone/email – Video conferencing

• Select most appropriate and safest method of travel – Air

– Rail

– Bus/coach

– Company owned/leased or hire car – Private car

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Policy 2: Driving at Work Policy

• Clear statement of intent – signed by most senior responsible person • Expectations upon Company and Employees

• Adequate resources to achieve • Organisation - leadership

• Roles & responsibilities at all levels

• Arrangements for implementation – topic A-Z • Provided to all employees who drive for work

• Documentation: POLICY MUST BE ACCESIBLE (COMMUNICATED), IN WRITING AND CURRENT

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Planning and Implementation: Risk Assessment

Undertaking a risk assessment • Identify

– A. risk.

– B. who is at risk. How many drivers. Hours driven. – C. how they are at risk.

• Evaluate Risk (consider matrix)

• Decide on precautions (Controls [see next slide] or eliminate). • Record findings and Review.

• Must be undertaken by a competent person. Ideally from the business but consider external help where appropriate.

• Documentation: Clear, communicated consistently. Accessible.

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Planning & Implementation : Controls • Driver Management

– Driver selection arrangements . Driver questionnaire pre employment (Health, incidents).

– License validation (initial and periodic)

– Guidance: Handbook covering all relevant processes

- Journey management [Distance, Time, Route]. Fatigue avoidance.

- Safe driving. Driver distraction and Speed - Driving in adverse weather

- Use of technology (Mobile phone policy- see guidance on convictions even if on hands free)

- Following & stopping distances Highway Code • Rewards and ‘charge backs’

– Incentive schemes for no fault periods

– Consider charge back to employee for costs over a threshold.

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Planning and Implementation: Controls

Guidance continued….

– Training and training manuals. Training post accident. Refreshers. – Update bulletins/ reminder bulletins

– Leadership: Line manager role (set an example, monitor,

communicate). 3 C’s – communicate consistently and clearly.

– Risk assessment (corporate & individual). Specific risk assessment if disability or health condition.

• Duty of care, Training and Education Programs. (Driver Management)

– Links in to ‘Duty of Care’ products. (See following slides) • Technology (Driver and Vehicle Management)

– Telematics and ‘In vehicle. cameras

– External front and rear cameras- (lorries interacting with bikes) – ADAS (Advance driver assistance systems) including sensors (for

parking and for monitoring distance in front).

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Planning and Implementation: Controls

• Vehicle Management Processes (see later slides)

– Servicing, Inspections (by drivers and management), Checks and repairs

• ‘Specific Event’ Process Management

– Accident management by the driver (eg how to put out a fire and deal with a breakdown on a motorway)

– Unloading procedures.

– Adverse weather procedures and guidance Documentation.

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Education and Duty of Care Products • Supplier of a Duty of Care Product may :

– Send out online assessment to all drivers. Will assess driving experience taking in to account

- Driver risk - Journey risk

- Driver administration - Vehicle maintenance. - Behaviour questionnaire.

- Licence check and possibly check of - Accident history

- Fines

• Low, medium or high risk will then trigger – Low risk: No further action

– Medium: E- learning (eg safe driving techniques and checks) – High: E learning and Driver awareness

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Duty of care programme will help “Measuring Performance” Monitoring includes accident reporting and inspecting.

Active Monitoring

 Driver profiling/assessment – online  Driver in-vehicle assessment

 Vehicle inspections  Vehicle maintenance

 Spot checks on vehicles and drivers • Reactive Monitoring

 Incident reporting & recording  Trend analysis

 Robust Investigation including driver interviews  Use of root cause analysis tools

 Determine and implement additional control measures

Documentation Audits

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Other risk considerations

• Insurance: Ongoing duty to disclose. (eg Ghost fleet hire car issues) • Grey Fleet: Fleet policy often will not cover Business use when

employee using own car. Therefore insert clause that employee should obtain Business Use insurance in their contract of employment. Some policies may add “OBU” (Occasional business use- eg less than 1000 miles), or cover 3rd_{party incidents unbeknown to employee as}

protective back up)

• Agency drivers: Some agencies will agree to indemnify. Must have a recovery system for making claims

• Future risk issues:

– Drug driving (March 2015). Employee should spot check. – Licence changes (2015) (no paper licence): Loss of way for

employers to check for free.

– MOJ portal and fixed costs has reduced claims spend.

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Using Robust Risk Management to drive competitive advantage Current Fleet Insurance Market

• Reduced number of markets restricts choice • Narrow appetite from remaining markets

• Historically poor trading results driven by:

- increasing claims costs: vehicle repairs, legal fees, medical advances - fraud eg staged incidents, phantom passengers, “flash for cash” etc - credit hire

- low investment income returns

• Pressure on insurers to increase rates

• Insurers do however have growth targets to meet – how do you differentiate your risk?

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Fleet Underwriting - Hard Scoring

• Fleet Profile – HGV’s, Vans, Cars, Special Types, Bus/Minibus

• Fleet Strength – Measured in vehicle years (1 vehicle for 12 months) • Trade – Haulage, Hazardous goods, blue light, carriage of passengers • Driver Profile – Proportion of young/inexperienced drivers

• Scope of Cover – Comprehensive, TPFT/TPO • Historical Claims Experience

- Payments and Reserves

- Own Damage ie repairs to own vehicles (bent metal)

- Third Party Damage ie repairs to vehicles, other third party property - Third Party Bodily Injury, including passengers

• Assessment of frequency, average claims cost

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Fleet Underwriting - Premium

• Insurers ideally looking to write to circa 75% loss ratio and below ie: - 75% of premium will cover claims costs

- 25% of premium to cover costs and expenses, profit and large loss funding

• A calculation based upon clients historical data, procedures, practices and insurers experiences

• How do you provide comfort to an underwriter to look forward, not back and price a risk based upon what will happen?

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Fleet Underwriting – Soft Scoring

• Is a robust Fleet Risk Management Strategy in place?

- Policies, Procedures, Board Sponsorship, Management Intervention • Review Claims Experience to identify what is driving premiums

- Repeat Offenders/Problem areas (no longer employed, issue resolved) - Fraudulent/Exaggerated Claims

- Insurer failures (MOJ timelines, over reserving, not closing redundant files)

• Review Programme Design

- Consider “Total Cost of Risk” including within excess claims - Uninsured Loss Recovery Arrangements

- Conventional Fleet programme vs Non-Conventional

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Fleet Underwriting – Soft Scoring

• Are Robust Accident Reporting Procedures in place? - Non reporting of accidents/Lack of detail

- Late Reporting of Incidents “First Notification of Loss” (FNOL) - No Third Party Intervention

• How do you Compare to your Peers?

- Benchmarking key metrics can identify development areas and quantify upside

• Technology

- Telematics systems can provide fleet operators with a host of benefits – fuel saving, location of vehicles, better routing etc

- Certain insurers will allow identifiable savings provided they can

oversee the implementation of telematics system and management of the data

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Gaining Competitive Advantage

• Development of a robust strategy around fleet risk management is key to taking control of insurance costs

• Communication of strategy and changing risk profile to insurers is vital to achieve insurer “buy in”

• Insurers have a vested interest – funding for risk management projects is available where commitment to change can be demonstrated

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Final thought:

• Good controls and documentation will save injury and death. • But, good controls and documentation will also impact premiums

provided they are all incorporated within an efficiently managed and, importantly, documented Health and Safety Management model and Fleet Risk Management strategy.

• Otherwise insurers will revert back to the hard scoring system of: – Industry type

– Vehicle size (eg HGV have to be reinsured as damage to it and 3rd

party will be greater) – Fleet numbers

– CLAIMS EXPERIENCE