Safety at Butler Medical Transport drives savings and is a necessity to keep our financial house in order. With 80 vehicles operating in three states, we didn’t wake up one day and decide Butler wants to be a safer company; we decided we needed to save money because our insurance premiums had been creeping up year over year in the double digits. It got to the point where we were paying $10,000 per year just to insure each vehicle. We were a disaster on wheels, and there wasn’t an insurance company that would touch us. Even our current insurance provider sent us a cancellation notice.
How Turning a Blind Eye to the Cause of our Accidents Led to Increasing Insurance Premiums
The few accidents we had occurred on dry, sunny days; rear ending another vehicle or backing into another vehicle (or other objects). We would fix each ambulance and move on, turning a blind eye to the cause of the accident. This continued to happen for several years, and before we knew it, the average cost of $2,500 per ambulance for repairs skyrocketed to almost $7,500 per ambulance. Our market place at renewal shrank to almost non-existent. This led to our insurance provider hiking our premiums, and then ultimately severing ties with our agency.
How Road Safety Put an End to Those Insurance Hikes
Fortunately, we heard about Road Safety, and thought it could help lower our number of accidents. We were particularly interested in the real-time coaching that it provided crew members, so they always knew if they were getting close to going beyond our safety protocols. However, instead of jumping in fully, we started off with Road Safety in a portion of our fleet in order to spend proper time analyzing the numbers. One of the things we saw immediately was that the audible beeps from Road safety helped the crew start to adhere to our vehicle operator protocols, such as speeding, seatbelt use and backing without a spotter. We also quickly noticed a reduction in those annoying bumper and body repairs that were getting much more expensive for us. As we tracked our accidents over time with Road Safety, we saw consistent drops in our insurance claims. In hindsight, one of my big regrets is not bringing Road Safety to our entire fleet fast enough to curtail the big hikes in our premiums.
In hindsight, one of my big regrets is not bringing Road Safety to our entire fleet fast enough to curtail the big hikes in our premiums.
In order to bring those premiums back to manageable levels, we did two significant things when Road Safety was brought into our organization. First, we created a competition where the best vehicle operator earned a trip to Disney. That did wonders for shifting our worst operators to our best ones. Secondly, we implemented a vanishing deductible program where our vehicle operators with the best safety scores got paid a stipend to drive each month. These two programs helped reduce our insurance hikes from 12 to 14 percent to only 3 to 4 percent per year. Gamifying Road Safety so that our drivers viewed it as a benefit and not a punitive system was a big secret to our success.
Don’t Wait Until Your Premiums are Through the Roof
We were impressed to see our average cost per accident reduced by $5,000. However, it wasn’t enough to reverse the damage that multiple years of insurance hikes had done to our operational expense of insuring our fleet. Although our continued improvements leveled out our insurance premiums, we were well above industry norms. This meant Butler was still paying our insurance provider significant premiums, which were lining their pockets and draining us of cash.
Through all this, we found out that insurance companies will penalize you for your mistakes – or lack of safety – but are slow to reward you for your hard work. It was frustrating to have made such a big turnaround in safety and savings and not get rewarded by our insurance provider. So we researched additional options such as switching to another carrier or joining a self-insured captive. An insurance captive is a group of member organizations that pay premiums into a pooled account. Each member has access to this pool of money to cover unforeseen expenses such as accidents. The difference here is that the funds are sharable with other members of the organization. All have an incentive to be the safest because a portion of unused premiums get returned to the members rather than line the pockets of an insurance company.
We elected to leave our insurance company and join a captive. Our strong track record of limited accidents with Road Safety gave us a confidence that we were a good candidate for reaping the benefits of being in a captive. So far it has been one of the best decisions we have made. Being a captive member complements our investment in Road Safety so that if our crew drives safely, our organization benefits through lower insurance costs. Stay tuned for my next blog on the difference we have seen so far from being part of a captive.
About the Author
Will Rosenberg is the Chief Operating Officer at Butler Medical Transport, the largest privately held commercial ambulance service operating in Maryland and The District of Columbia. He has been in EMS for more than 17 years, starting as a field EMT at Syracuse University, and then as a paramedic in New York State. He is an active volunteer paramedic and serves as the Fire Chief for a volunteer fire department in Harford County, Maryland.