Accidents waiting to happen

According to figures from the Health and Safety Executive, up to five times as many employees die on the road each year than in a factory or an office. Yet, despite the high incident rate and the fact that the Department for Transport has officially classed driving as one of the most dangerous activities within the workplace environment, UK businesses still do not take the risk seriously enough.

Research by the British Vehicle Rental and Leasing Association, in association with the International Car Distribution Programme, estimates that the number of employee cars used on business has grown from 1.6 million to more than 2.1 million over the past five years as the benefits in kind tax regime pushes more companies to offer cash or personal lease vehicles rather than traditional company cars. Worryingly, recent research reveals that at least 51% of UK businesses admit that they do not look after the specific safety needs of staff who drive private cars for work purposes.

This lack of fundamental risk assessment of own-car drivers by companies means that the companies are not able to identify and manage the risks these drivers face.

Figures from the HSE underline the problem: about one-third of all road-traffic collisions involve somebody at work at the time and may account for over 20 deaths and 250 serious injuries per week. That equates to a staggering 1000 employee deaths and 13,000 serious injuries annually.

This, in addition to the fact that many of these drivers are not adequately insured for business use, is costing UK business about £2.7bn a year, with society paying a further £1bn, says the Department for Transport.

Alarmingly, the obvious costs of dealing with a major collision are just the tip of the iceberg. It is the hidden costs that are the biggest issues for businesses. The International Loss Control Institute has gauged that, for every £1 a company receives from insurance, there can be from £8 to £32 in uninsured losses depending on the severity of a collision.

A major contributor to these underlying costs is absenteeism and the resulting business interruption. Not being able to work has a knock-on effect; colleagues are required to take on a greater workload and often they are not performing the job as well, which can result in the loss of key business or clients. The smaller the company the more important each individual is. Then there are the added risks of financial liability and possible damage to brand and reputation if, for example, a liveried vehicle is perceived as the cause of a major accident.

It is not uncommon to find that 5% to 7% of a company's turnover can go towards funding the cost of collisions. However, many UK businesses are unaware of these underlying costs, which are absorbed in everyday operating costs and are rarely reflected on a balance sheet. This only serves to perpetuate the problem with little being done to improve the safety situation or to ensure that employees are taking out adequate insurance to cover the business use of their vehicle.

Managing work-related road safety

Businesses are leaving themselves open to the threat of substantial fines and, in extreme cases, prosecution in the event of a collision involving one of their employees because they are not prioritising work-related driver safety. Furthermore, companies could be financially liable for an employee who is deemed to be at fault in a major collision. Complying with certain road-traffic law requirements, for example, having valid MOT certificates and drivers' licences, is not enough to ensure the safety of employees and others when they are on the road, states the HSE.

According to the Driving at Work guidance on work-related road safety issued by the HSE and the Department for Transport in September 2003: "Health and safety law applies to on-the-road work activities as to all work activities, and the risks should be effectively managed within a health and safety management system. This guidance applies to any employer, manager or supervisor with staff who drive or ride a motorcycle or bicycle at work, and particularly those with responsibility for fleet management. It also applies to self-employed people."

Unfortunately, many of the businesses surveyed by Zurich are unaware of this guidance and nearly two-thirds of businesses said they have no specific budget allocated to implement and maintain a fleet risk-management programme. This means that employees driving on business may not be getting the management support they need to drive safely.

The benefits of adopting a safe driving-at-work culture can be considerable.

According to the HSE, it allows you to exercise better control over costs, insurance premiums and legal fees and claims from employees and third parties. It also allows you to make informed decisions about matters such as driver training and vehicle purchase and helps you to identify where health and safety improvements can be made.

Companies will also benefit from the following: fewer days lost due to work injury; reduced risk of work-related ill health; reduced stress and improved morale; less need for investigation and paperwork; less lost time due to work rescheduling; fewer vehicles off the road for repair; reduced running costs through better driving standards; fewer missed orders and business opportunities so reduced risk of losing the goodwill of customers; and less chance of key employees being banned from driving.

Work-related road safety can be effectively managed if it is integrated into a company's health and safety requirements and risk management programme.

While this can be a huge undertaking, it is something that companies do routinely for, say, factory or office tasks because they are required to do so under current health and safety legislation.

Risk assessment

Understanding all the risk areas is a crucial first step and companies need to assess organisational, individual and proven risks.

Understanding organisational risks involves looking at a company's safety operation and management procedures and the effect they are having on their employees' ability to drive safely. Quite often, safety measures have to be implemented at an organisational rather than an individual level to solve the problem on a long-term basis.

To understand individual risks requires a process of understanding the theoretical risk that exists - the possibility that something may happen in the future - by conducting thorough risk assessments of the driver, the journeys they make and the vehicle(s) they use. Areas looked at include driver habits and history, their minor and major collisions, their fitness to drive, mileage, roads travelled on and countries travelled in, the vehicle's fitness of purpose for that type of job, the vehicle's age, mileage, engine capacity and service history.

Proven risks require a collision analysis process of employees' past road-traffic collisions. Often a wealth of data already exists on the types and severity of crashes and who is having them, but it is not being used for risk management purposes. The deeper a company delves, the more apparent the cause of such accidents will become.

Once a full understanding of all the risks is achieved, appropriate control measures can be put in place to address the exposures. The third stage is to maintain the programme and to monitor and measure progress and whether the interventions have been successful. Finally, a review of the process will ensure that all elements are working in tandem and will also allow a business to refocus and realign a fleet risk management programme as changes occur in its operating procedure that could have a knock-on effect on safety issues.

Besides addressing the risks, a fleet risk management programme needs to have adequate insurance in place to cover claims in the event of a collision. However, despite more privately owned or leased cars than ever before being used for business purposes, Zurich calculates that only 30% of its customers are buying cover for business use of own cars on their employees' behalf. That leaves 70% of employers who are relying on their staff to source their own insurance. This in itself is not a problem if employees are aware of the level of cover they need to secure. Most, however, are not.

Quite often there is a great deal of confusion surrounding what constitutes business use of a private vehicle. This is compounded by the lack of a standard insurance definition and the fact that each insurer interprets and defines the exposures differently. Personal insurance typically includes cover for the use of a vehicle for social, domestic and pleasure purposes and for commuting to and from their usual place of work. It may not cover the owner for driving to, for example, meetings, training courses or alternative work premises.

Employee education

It is the employer's responsibility to educate employees on the safety issues involved, to identify exposure and to ensure that staff understand what level of insurance they need to cover that exposure. Insurers and brokers can help in this respect by ensuring that customers understand the exposures, the options available to them and the policy's level of protection.

Extending an employer's fleet insurance to cover business use of own cars is a viable option. The benefit here is that an employer can be certain that they are getting the right cover, the correct level of indemnity and that claims will be met in the event of a collision involving a vehicle being used for business purposes.

Yet, unless employers wake up soon, the lack of fundamental safety programmes is putting more employees and other people at risk daily and the inadequacy of insurance is unnecessarily exposing employers to unknown liabilities.

While underinsurance is a difficult issue to overcome with legislation, enforcement action by the HSE will be taken where the police identify that serious management failures have been a significant contributory factor in the incident.

- Mark Bacon, Motor manager, Zurich London and Andy Price, Senior risk consultant, Zurich Risk Services.

TIPS FOR SAFER DRIVING

Major causes of road-traffic collisions and tips for safer driving

Bad journey planning:

- Maximise the time spent on motorways.

- Minimise time in built-up areas.

- The safest route will not necessarily be the shortest.

Tiredness:

- Make sure your travel time is factored into your working day.

- Avoid driving between midnight and 6am.

Mobile phone use:

- Follow the law and stay hands-free.

- Even users of hands-free phones have slower reaction times compared to a concentrating driver with a 25.8% increase in 'thinking distance'.

Adverse weather conditions:

- Always follow the advice of the police and breakdown services.

- Stopping distance will double in the wet and can be up to ten-times further in icy conditions.

Drink driving 'the morning after':

- Businessmen out with clients beware.

- If consumed between 9pm and midnight, one pint of beer (4% ABV), three 250ml glasses of wine (standard large measure) (12% ABV) and a double pub-measure brandy at 40% ABV, would mean you would not be alcohol-free and therefore not OK to drive until 11am the following morning.

Source: Zurich Risk Services.