Fleet Safety

More Focus on the Road

More employers are taking formal steps toward addressing the workplace cost of distracted driving.
By: | March 23, 2017 • 7 min read

Distracted driving, particularly due to texting or other cell phone usage, is increasingly resulting in accidents, as well as workers’ compensation claims for employee drivers.

While data is scant on whether distracted driving specifically has resulted in higher workers’ comp claims, many insurers can infer the rise by reviewing their claims involving motor vehicle accidents and government statistics on distracted driving.

For example, the percentage of AF Group’s claims involving motor vehicle accidents rose from roughly 2 percent in 2009, to nearly 3.5 percent at year-end 2016, said Bob Lapinski, a spokesperson for the Lansing, Mich.-based holding company for Accident Fund Insurance Co. and three other workers’ comp insurers. During that same period, the National Highway Traffic Safety Administration documented a spike in distracted driving accidents, Lapinski said.

That trend alone should push employers to institute policies to minimize distracted driving among their workforce, said Dave Brandolino, loss control manager at Chicago-based Third Coast Underwriters, another division of AF Group. Brandolino is based in Nashville.

“It all starts with the hiring process,” he said.

Advertisement




Employers should check candidates’ motor vehicle driving records to see if there any incidents due to distracted driving, as well as CSA scores assembled by the Federal Motor Carrier Safety Administration, which measure compliance, safety and accountability, Brandolino said.

It’s also import to implement best practice hiring guidelines, such as establishing minimum age requirements and road experience.

Dave Brandolino, loss control manager, Third Coast Underwriters

Employers should also establish a strong accountability program for drivers using telematics — electronic devices installed in vehicles that transmit data about how the driver is operating the vehicle, such as whether the driver is speeding, hard breaking, rolling or swaying the vehicle, he said. Cab cameras can also be activated by such events.

“We encourage employers to establish a tracking and monitoring system of those data points to develop forward-looking metrics,” Brandolino said. “This is also an important tool to hold drivers accountable by coaching and training, rewarding and disciplining them based on defined standards and individual performance.”

There are also devices on the market that block cell phones from making phone calls and answering emails and texts if the driver is moving, he said.

“We encourage the use of technologies that combat distracted driving because you just can’t put a price on a life,” Brandolino said.

Formalize a Policy

Chris Hayes, second vice president of transportation risk control at Travelers in Hartford, Conn., cited several statistics by the National Safety Council: the average work-related motor vehicle injury claim costs $72,540, which is twice as much as other work-related injuries. Moreover, 54 percent of drivers said work would motivate them to do a distracting activity while driving — such as making a phone call, searching for a location using a GPS system, or reviewing and sending emails.

According to the Travelers’ 2016 Business Risk Index, 65 percent of the insurer’s business clients have employees that use their personal vehicles for business activities.

“So it’s important for organizations to include that in their vehicle safety plan, because they still face liability risk and employee safety risk even if employees are driving their personal vehicles on behalf of the company,” Hayes said.

Organizations should put together formal policies around not using cell phones while driving, having all drivers sign off on the policy, and keeping documentation of that, he said. These policies should be regularly communicated to help reinforce the message that distracted driving is a risk that should be avoided.

“Organizations should also promote that culture to other employees in the office, to let them know that if they contact employees in the field, [they should] make sure those employees are not driving when they take the call or answer a text or email,” Hayes said. “Employees who are driving should know that they don’t have to immediately respond to people in the office trying to contact them, but rather they can wait until they are stopped in a safe place to respond.”

One way to avoid the risk of distraction from the phone is to keep it in the glove compartment or on the passenger seat out of reach, so they can focus on driving instead, he said.

“If a person is driving 55 miles per hour and takes their eyes off the road for five seconds, they will have traveled the length of a football field without watching carefully or safely,” — Randy Thornton, president, risk control, York Risk Services Group, Lafayette, La.

Even before cell phones were prevalent, there was distracted driving due to fatigue, eating while driving, fiddling around with the radio, or reaching behind to grab something in the back seat, among other things, said Edward Canavan, vice president, workers’ compensation practice & compliance at Memphis-based Sedgwick. Canavan is based in Santa Ana, Calif.

“Now with cell phones, distracted driving is a huge problem – there’s around a half million people a year that are injured as a result of distracted driving, which also impacts workers’ comp claims,” Canavan said.

The no-fault system within workers’ comp adds another layer of complexity to a claim, he said. Most likely the claims will have to be paid, but in some jurisdictions, the benefits can be altered due to negligence on the part of the injured worker.

“But the negligence has to have met a certain threshold and this has not been tested because the criteria is so high,” Canavan said. “An example would be in California, where the act causing the injury would need to meet the threshold of being serious and willful misconduct. This could be a solo accident and not necessarily involve another person.”

Preventive Strategies

From a loss prevention and risk management standpoint, there is a lot of technology that can help to discourage texting while driving, he said. For example, there’s a mobile app that will give a driver the fastest route based on road conditions, traffic and construction, but it detects motion and asks people if they are the driver or the passenger.

Chris Hayes, second vice president of transportation risk control, Travelers

“However a person could just lie, so an even better type of technology would be actual devices installed in cars that prevent cell phone use while driving,” Canavan said. “Within several years, these types of devices might be required by the National Transportation Safety Board and standard in all cars.”

Debra Levy, senior vice president, quality management and WC practice leader at York Risk Services Group in Atlanta, speculated on why there is no hard data on workers’ comp claims for distracted driving: very few employees are willing to admit they were using their phone either talking or texting at the time of an accident, especially if there is a company policy against it.

“Unless an employer is going to investigate phone and text usage after every motor vehicle accident occurrence, this data will not be captured,” Levy said.

To lessen accidents due to distracted driving, employers must have a strong distracted driving policy that includes random checks on both company and personal phones during expected travel times, she said. Once an employer commits to a distracted driving policy, they must follow the policy diligently to get the desired effect on driver behavior. They must also follow through on disciplining employees who violate the policy.

“If employers don’t follow through on an implemented distracted driving program, they could find themselves in a difficult liability situation if the accident is caused due to an employee violating the distracted driving policy,” Levy said.

Advertisement




Anything that can distract a person can be distracted driving, including spilling coffee or dropping something — “anything that takes your eyes off the road,” said Randy Thornton, president, risk control at York Risk Services Group in Lafayette, La.

“There’s a really powerful factoid: If a person is driving 55 miles per hour and takes their eyes off the road for five seconds, they will have traveled the length of a football field without watching carefully or safely,” Thornton said.

Texting while driving is illegal in most states, and the federal Department of Transportation also has been successful in banning texting and the use of cell phones while driving among commercial drivers, he said. The government also has good public awareness campaigns, including an informative website, distraction.gov, in which employers can download forms to use in obtaining a pledge to not engage in distracting activities while driving.

York also recommends that employers regularly educate their drivers, and not underestimate the fact that new drivers and experienced drivers alike need to be educated and reminded of the dangers of distracted driving.

“You’ve got to monitor it, you’ve got to measure it, you’ve got to train around it. It’s a circular process by nature,” York said. “There is always employee turnover, and before you know it, you have 10 new drivers. It’s important that everyone is operating under the same set of dynamics.”

Katie Kuehner-Hebert is a freelance writer based in California. She has more than two decades of journalism experience and expertise in financial writing. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Risk Scenario

A Recall Nightmare: Food Product Contamination Kills Three Unborn Children

A failure to purchase product contamination insurance results in a crushing blow, not just in dollars but in lives.
By: | October 15, 2018 • 9 min read
Risk Scenarios are created by Risk & Insurance editors along with leading industry partners. The hypothetical, yet realistic stories, showcase emerging risks that can result in significant losses if not properly addressed.

Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.

PART ONE: THE HEAT IS ON

Reilly Sheehan, the Bethlehem, Pa., plant manager for Shamrock Foods, looks up in annoyance when he hears a tap on his office window.

Reilly has nothing against him, but seeing the face of his assistant plant operator Peter Soto right then is just a case of bad timing.

Sheehan, whose company manufactures ice cream treats for convenience stores and ice cream trucks, just got through digesting an email from his CFO, pushing for more cost cutting, when Soto knocked.

Sheehan gestures impatiently, and Soto steps in with a degree of caution.

“What?” Sheehan says.

“I’m not sure how much of an issue this will be, but I just got some safety reports back and we got a positive swipe for Listeria in one of the Market Streetside refrigeration units.”

Partner

Partner

Sheehan gestures again, and Soto shuts the office door.

“How much of a positive?” Sheehan says more quietly.

Soto shrugs.

“I mean it’s not a big hit and that’s the only place we saw it, so, hard to know what to make of it.”

Sheehan looks out to the production floor, more as a way to focus his thoughts than for any other reason.

Sheehan is jammed. It’s April, the time of year when Shamrock begins to ramp up production for the summer season. Shamrock, which operates three plants in the Middle Atlantic, is holding its own at around $240 million in annual sales.

But the pressure is building on Sheehan. In previous cost-cutting measures, Shamrock cut risk management and safety staff.

Now there is this email from the CFO and a possible safety issue. Not much time to think; too much going on.

Sheehan takes just another moment to deliberate: It’s not a heavy hit, and Shamrock hasn’t had a product recall in more than 15 years.

“Okay, thanks for letting me know,” Sheehan says to Soto.

“Do another swipe next week and tell me what you pick up. I bet you twenty bucks there’s nothing in the product. That swipe was nowhere near the production line.”

Soto departs, closing the office door gingerly.

Then Sheehan lingers over his keyboard. He waits. So much pressure; what to do?

“Very well then,” he says to himself, and gets to work crafting an email.

His subject line to the chief risk officer and the company vice president: “Possible safety issue: Positive test for Listeria in one of the refrigeration units.”

That night, Sheehan can’t sleep. Part of Shamrock’s cost-cutting meant that Sheehan has responsibility for environmental, health and safety in addition to his operations responsibilities.

Every possible thing that could bring harmful bacteria into the plant runs through his mind.

Trucks carrying raw eggs, milk and sugar into the plant. The hoses used to shoot the main ingredients into Shamrock’s metal storage vats. On and on it goes…

In his mind’s eye, Sheehan can picture the inside of a refrigeration unit. Ice cream is chilled, never really frozen. He can almost feel the dank chill. Salmonella and Listeria love that kind of environment.

Sheehan tosses and turns. Then another thought occurs to him. He recalls a conversation, just one question at a meeting really, when one of the departed risk management staff brought up the issue of contaminated product insurance.

Sheehan’s memory is hazy, stress shortened, but he can’t remember it being mentioned again. He pushes his memory again, but nothing.

“I don’t need this,” he says to himself through clenched teeth. He punches up his pillow in an effort to find a path to sleep.

PART TWO: STRICKEN FAMILIES

“Toot toot, tuuuuurrrrreeeeeeeeettt!”

The whistles of the three lifeguards at the Bradford Community Pool in Allentown, Pa., go off in unison, two staccato notes, then a dip in pitch, then ratcheting back up together.

For Cheryl Brick, 34, the mother of two and six-months pregnant with a third, that signal for the kids to clear the pool for the adult swim is just part of a typical summer day. Right on cue, her son Henry, 8, and his sister Siobhan, 5, come running back to where she’s set up the family pool camp.

Henry, wet and shivering and reaching for a towel, eyes that big bag.

“Mom, can I?”

And Cheryl knows exactly where he’s going.

“Yes. But this time, can you please bring your mother a mint-chip ice cream bar along with whatever you get for you and Siobhan?”

Henry grabs the money, drops his towel and tears off; Siobhan drops hers just as quickly, not wanting to be left behind.

Advertisement




“Wait for me!” Siobhan yells as Henry sprints for the ice cream truck parked just outside of the pool entrance.

It’s the dead of night, 3 am, two weeks later when Cheryl, slumbering deeply beside her husband Danny, is pulled from her rest by the sound of Siobhan crying in their bedroom doorway.

“Mom, dad!” says Henry, who is standing, pale and stricken, in the hallway behind Siobhan.

“What?” says Danny, sitting up in bed, but Cheryl’s pregnancy sharpened sense of smell knows the answer.

Siobhan, wailing and shivering, has soiled her pajamas, the victim of a severe case of diarrhea.

“I just barfed is what,” says Henry, who has to turn and run right back to the bathroom.

Cheryl steps out of bed to help Siobhan, but the room spins as she does so.

“Oh God,” she says, feeling the impact of her own attack of nausea.

A quick, grim cleanup and the entire family is off to a walk-up urgent care center.

A bolt of fear runs through Cheryl as the nurse gives her the horrible news.

“Listeriosis,” says the nurse. Sickening for children and adults but potentially fatal for the weak, especially the unborn.

And very sadly, Cheryl loses her third child. Two other mothers in the Middle Atlantic suffer the same fate and dozens more are sickened.

Product recall notices from state regulators and the FDA go out immediately.

Ice cream bars and sandwiches disappear from store coolers and vending machines on corporate campuses. The tinkly sound of “Pop Goes the Weasel” emanating from mobile ice cream vendor trucks falls silent.

Notices of intent to sue hit every link in the supply chain, from dairy cooperatives in New York State to the corporate offices of grocery store chains in Atlanta, Philadelphia and Baltimore.

The three major contract manufacturers that make ice cream bars distributed in the eight states where residents were sickened are shut down, pending a further investigation.

FDA inspectors eventually tie the outbreak to Shamrock.

Evidence exists that a good faith effort was underway internally to determine if any of Shamrock’s products were contaminated. Shamrock had still not produced a positive hit on any of its products when the summer tragedy struck. They just weren’t looking in the right place.

PART THREE: AN INSURANCE TANGLE

Banking on rock-solid relationships with its carrier and brokers, Shamrock, through its attorneys, is able to salvage indemnification on its general liability policy that affords it $20 million to defray the business losses of its retail customers.

Advertisement




But that one comment from a risk manager that went unheeded many months ago comes back to haunt the company.

All three of Shamrock’s plants were shuttered from August 2017 until March 2018, until the source of the contamination could be run down and the federal and state inspectors were assured the company put into place the necessary protocols to avoid a repeat of the disaster that killed 3 unborn children and sickened dozens more.

Shamrock carried no contaminated product coverage, which is known as product recall coverage outside of the food business. The production shutdown of all three of its plants cost Shamrock $120 million. As a result of the shutdown, Shamrock also lost customers.

The $20 million payout from Shamrock’s general liability policy is welcome and was well-earned by a good history with its carrier and brokers. Without the backstop of contaminated products insurance, though, Shamrock blew a hole in its bottom line that forces the company to change, perhaps forever, the way it does business.

Management has a gun to its head. Two of Shamrock’s plants, including Bethlehem, are permanently shuttered, as the company shrinks in an effort to stave off bankruptcy.

Reilly Sheehan is among those terminated. In the end, he was the wrong person in the wrong place at the wrong time.

Burdened by the guilt, rational or not, over the fatalities and the horrendous damage to Shamrock’s business. Reilly Sheehan is a broken man. Leaning on the compassion of a cousin, he takes a job as a maintenance worker at the Bethlehem sewage treatment plant.

“Maybe I can keep this place clean,” he mutters to himself one night, as he swabs a sewage overflow with a mop in the early morning hours of a dark, cold February.

Bar-Lessons-Learned---Partner's-Content-V1b

Risk & Insurance® partnered with Swiss Re Corporate Solutions to produce this scenario. Below are their recommendations on how to prevent the losses presented in the scenario. This perspective is not an editorial opinion of Risk & Insurance.®.

Shamrock Food’s story is not an isolated incident. Contaminations happen, and when they do they can cause a domino effect of loss and disruption for vendors and suppliers. Without Product Recall Insurance, Shamrock sustained large monetary losses, lost customers and ultimately two of their facilities. While the company’s liability coverage helped with the business losses of their retail customers, the lack of Product Recall and Contamination Insurance left them exposed to a litany of risks.

Risk Managers in the Food & Beverage industry should consider Product Recall Insurance because it can protect your company from:

  • Accidental contamination
  • Malicious product tampering
  • Government recall
  • Product extortion
  • Adverse publicity
  • Intentionally impaired ingredients
  • Product refusal
  • First and third party recall costs

Ultimately, choosing the right partner is key. Finding an insurer who offers comprehensive coverage and claims support will be of the utmost importance should disaster strike. Not only is cover needed to provide balance sheet protection for lost revenues, extra expense, cleaning, disposal, storage and replacing the contaminated products, but coverage should go even further in providing the following additional services:

  • Pre-incident risk mitigation advocacy
  • Incident investigation
  • Brand rehabilitation
  • Third party advisory services

A strong contamination insurance program can fill gaps between other P&C lines, but more importantly it can provide needed risk management resources when companies need them most: during a crisis.



Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]