Braking Vehicle Transport Costs

Claim executives are looking in new places to gain better control of their costs. Advanced technologies and innovative industry offerings now enable them to hone in on previously difficult-to-manage costs with almost pinpoint accuracy. The vehicle transport management process is one often-overlooked area that may be worth review when considering costs and options.

Managing Transport and Towing Costs

One reason for the difficulty in managing such costs is the sheer scale of the vendor network required. Unlike companies in other industries, which might have ten to 15 primary providers (think Apple), even the smallest claim organization has to wrestle with a taxonomy of providers on an enormous scale. With hundreds of vendors in each category, it becomes overwhelming to create a network, credential the providers, manage the day-to-day logistics, and realize the attendant benefits. Some new approaches to network management in vehicle transport may solve this issue.

"He wants how much to tow our insured's vehicle?" Often considered a "necessary evil" of our business, it is surprising how many carriers are simply unaware of the costs involved with their non-drivable vehicles. The selection of the towing provider may be made by a frontline desk adjuster (who has a thousand other things to do), or even worse, delegated to the repair facility itself. Towing costs are driven up as a result. Towing costs can average several hundred dollars for the initial tow, and hundreds more for secondary towing.

Non-Drivable Vehicle Storage Costs

The primary cost of a non-drivable vehicle may not be the towing cost, the storage costs and fees, which can be excessive. There may be some significant low-hanging fruit to be picked after looking at this issue. One goal here is to identify those vehicles in storage quickly and to take immediate secondary towing action to mitigate these costs. So how might that goal be achieved?

• Evaluate your FNOL process. Carriers that are using a call center to handle FNOL may not be engaging vehicle transport at that point in the process, even when they have confirmed that the insured's vehicle is non-drivable. Considering the cycle-time for claim office assignment, adjuster file assignment, initial review of the claim, and appraisal assignment, a carrier can typically spend several days of additional storage/rental cost in the process. Connecting FNOL directly to vehicle transport services can significantly shorten that time-frame.

• Quantify your actual vehicle movement cycle-time. Industry case studies have shown that the average Tier 1 carrier can have a vehicle movement cycle time of 3 to 4 days from loss report to vehicle transport to repair shop. If you combine an average daily storage rate of $35 with an average vehicle rental rate of $35, then more than $70 per day is being incurred for any delay in your process. If that typical process could be reduced by 3 days, then approximately $200 a day in costs could be eliminated for each vehicle. It is important to note that these figures don't include the typical lien and administrative fees that are typical in many markets if vehicles are not picked up within 24 hours of an initial tow.

• Consider administrative burdens in your current process. How involved in the routine tasks of arranging vehicle transport and negotiating with tow vendors are your adjusters? Does their involvement take away from more value-oriented work, such as determining liability, mitigating injuries, or extending service to your insureds? Probably.

That point brings us back to how to go about addressing these challenges. Many carriers have long recognized the benefits of a having a managed repair network in place. Commonly referred to as direct repair programs (DRPs), these networks promote consistency of process, economic leverage, and high quality standards.

The emergence of new, sophisticated, national towing and logistics vendors (that specialize in towing network management as a core competency) presents claim executives with the opportunity to achieve the same benefits in this arena as well. In short, these vendors can:

? Tie your FNOL process directly to their intake process.

? Leverage their towing networks to achieve faster transport cycles, eliminating several days of inaction (and storage fees).

? Free up valuable adjuster time, through one-call or one-click access to the entire transport management process.

? Provide real-time transport status to all involved parties, eliminating duplicate requests, unnecessary phone calls, and more.

? Generate detailed metrics about your entire vehicle transport program, providing added insight about cycle-time, volume, and other indicators.

While each organization's experiences and benefits will vary, assessing the costs incurred by the vehicle transport process is one way to take better control of spending. Has your organization looked at your costs in this area? Do you use a national towing network manager? With so many options to consider, tailoring the process to your organization may be time well spent.