Claims and damage management: the new source of savings for fleets.

When it comes to fleet management, every euro counts! In many companies, the total cost of ownership (TCO) often represents the second largest expense after salaries. Among the various components of TCO, claims and damage have a negative impact. Beyond repair costs, there are many hidden costs that are often underestimated. In this article, we analyze the different impacts of claims and damage, and the various ways in which they can be optimized.

The hidden costs of automobile claims and damage:

Unfortunately, this is the case: company vehicles suffer damage of varying degrees of severity throughout their service life. Whether accidents or simple scratches, these events can ultimately have a major impact on the total cost of the fleet.

Behind the costs of repair and overhaul, there are often other, often unrecognized, costs that accumulate.

First of all, let's assume that the claims and damage are known to the fleet manager...i.e. declared by the driver. With full knowledge of the causes, the fleet manager can decide to take action to remedy the situation. This may involve filing a claim with the insurance company, carrying out repairs or providing a replacement vehicle. Depending on the action taken, various costs may be incurred.

Downtime :
A vehicle out of service for repairs represents, above all, a potential loss of income. A home breakdown service would be unable to fulfil its mission, and therefore unable to invoice its customers. Of course, some rental or insurance contracts include the provision of replacement vehicles for this type of event. This service generally inflates the rental price.
Another solution is the temporary rental of a replacement vehicle. But this too has a cost.

Insurance premium increases :
Claims usually result in higher insurance premiums. These rate increases are not limited to vehicles involved in accidents, but are generally applied to all vehicles in the fleet over the coming months and years.

Loss of productivity :
Accidents often lead to late deliveries. But also missed appointments and other problems that can compromise the productivity of the company as a whole.

Vehicle depreciation :

Even after repairs, a damaged vehicle can depreciate faster than other vehicles in the fleet, reducing its resale value.

Now let's look at another hypothesis, which is unfortunately not uncommon: the minor loss or damage unknown to the fleet manager. We illustrate this with a harmless yet recurrent example with far-reaching consequences. The driver leaves a customer's parking lot and inadvertently bumps into the gate. He gets out of his vehicle, notices a slight dent in the front-right fender and scratches in the paintwork. He considers the damage to be minor and not serious (or is afraid of being reprimanded by his management). After all, it in no way impedes the smooth running of the vehicle, and it's not his personal vehicle! So he decides to overlook this event (which will undoubtedly be followed by similar ones in the future). As the saying goes, "neither seen nor known"! Yes... until the day the vehicle reaches the end of its contract and has to be returned to the lessor.

One fine day, the fleet manager informs the driver that the vehicle must be returned within 15 days. Ouch! Too late for the driver to back out and inform the fleet manager of the damage caused over the past 36 or 48 months. It's also too late to say "mea-culpa" and hope to have the vehicle repaired on time.

What happens then?
The inventory of fixtures carried out by the rental company highlights all the damage to the vehicle and, in accordance with the initial rental contract, generates an unexpected bill for the fleet manager. If the cost of repair is less than €1,000, don't panic, you're doing fine.
But, as you'll have guessed, the bill for restitution costs often exceeds 2,000 Euros, or even 3,000 Euros, or even much more. In such cases, the manager is presented with a fait accompli, and is left with a heavy, unplanned expense.

Areas for optimization

The best way to avoid this type of situation is, above all, prevention. In fact, risk prevention (of which road risk is one) is a legal obligation for company managers.

Identifying risk behaviors:
On-board telematics enable constant analysis of each driver's driving behavior. In the case of Optimum Automotive's fleet management platform, various criteria are scrutinized: bends, braking and acceleration. Algorithms process these driving events to establish a rating, known as the "eco-index score", for each driver. Good drivers can thus be rewarded, and less good drivers can be identified and subject to specific measures.

Training and stimulation
Unfortunately, it's impossible to change driving habits overnight. For some drivers, a training process will have to be initiated: e-learning courses, on-track training with a professional trainer. Various formulas can be envisaged. Beyond training, results will need to be observed (improvement in eco-index rating) and stimulated over the medium and long term. The fleet management solution can be used to create different challenges to stimulate and sustain the results obtained.

Vehicle maintenance
The evidence is clear: a rigorously maintained vehicle is "safer" than one that is not. Regular vehicle maintenance can detect and repair problems before they become major incidents. This is why Optimum Automotive's fleet management solution automatically retrieves odometer readings. It is also connected to vehicle manufacturers' maintenance plans. This gives the fleet manager perfect visibility and alerts on maintenance deadlines and contents recommended by the manufacturer.

Driver involvement:
As we saw in the previous example, a fleet manager can't anticipate what he doesn't know. It is therefore essential to place the driver at the heart of the process, in order to optimize the impact of claims and vehicle damage. To this end, Optimum Automotive, in partnership with R Solution Expertises, has designed a "claims and damage management module". The module is integrated into the Optimum Connect mobile application (made available to drivers), enabling immediate declaration (date, time, location, type of event, photos of the incident, etc.) of any claim or damage. The information is automatically transmitted to the fleet manager, who can then initiate the appropriate action.

Via this service, the driver is also invited on a regular basis to carry out a complete inventory of his vehicle, with supporting photos. Scratches, dents... the manager thus regularly benefits from a perfect overview of the vehicle's general condition, and can take the necessary decisions to calmly anticipate the return of the vehicle.

To sum up:
The most unpleasant surprises are usually those we discover by chance or too late.

Thanks to advances in fleet management tools, it is now possible to anticipate: vehicle maintenance, training of at-risk drivers, possible repair operations prior to return...

This enables the fleet manager to significantly and sustainably reduce the total cost of his vehicle fleet.