In a small company, the impact fleet costs can have on profitability can be enormous, putting huge pressure on the business.

Fixed costs of vehicle funding, fuel, maintenance and repair are an accepted part of doing business, although savings can be made.

But the most dramatic savings for a small company can come through tackling the costly issue of vehicle damage costs and insurance.

Electrical installation and maintenance company Chelmsford Electrical learnt this lesson the hard way after a growing accident claims record wiped hundreds of thousands of pounds from its bottom line in just a few years.

Its accident record jumped from four insurance claims in 1998 to 33 during 2001, an 800% rise and a worrying sign on a fleet of just 30 light commercial vehicles and 12 company cars.

When the £11 million turnover business was presented with an insurance renewal premium of £78,540, swift action was needed.

Based on a typical business profit margin of 5%, a premium this big would mean a company would need sales of £1.5 million just to cover its vehicle insurance costs.

Chelmsford Electrical’s company secretary, Peter Locke, who is in charge of the fleet, knew action was needed to protect the core business.

Until 2001, it had conducted all management of drivers in-house, but decided to bringing an external risk management company to combat its rocketing accident rate.

A rolling driver training programme was introduced by Drive & Survive focused on the 30-vehicle van fleet, although company cars were also included.

There was an immediate impact in the first year of the driver training programme, with the number of claims dropping to eight, leading to a claims reduction of 89%.

As a result, the business benefited from a dramatic fall in related costs, including repair, administration and downtime.

Locke said: “The advantages of taking this action are so extensive that I can’t see a negative side to it.

"There is some disruption from taking drivers away from the business for training, but we save time from not having to process accident forms.

"There is also always the risk that a driver will be injured in a crash.

“The savings go straight to the bottom line, which is important in the current financial climate.

"Every penny we can save makes us more profitable.”

Keeping accidents under control has needed constant investment and a focus on one-to-one training, as the company found that field-based drivers struggled to get on with online assessments when a package was trialled.

But Locke says the company is very pleased with the result and is confident that the improvement in the figures seems to indicate that direct delivery of training best suits its fleet and its drivers.

He said: “We did find that because of staff turnover and new people coming into the company, there was a dilution in the training of the drivers.

"Accidents and costs started to increase again. When we looked at the cause, it was quite obvious really.

"The people who were having the accidents were the ones who had not been trained.”

As a result, Chelmsford Electrical is continuing its driver training as an on-going programme, with new drivers receiving one-to-one training within the first six months of joining.

To give a wider overview, the company has also introduced a single annual online risk assessment for all drivers.

This gives Chelmsford Electrical an up- to-date assessment of the risks posed by individual driving habits which may not be identified otherwise.

A critical factor in the success of the scheme is Chelmsford Electrical’s commitment to include the risk performance of each driver as part of their annual appraisal review.

If drivers have been subject to a claim during the previous insurance year, Chelmsford Electrical automatically considers them for one-to-one refresher training.

Although accident levels have varied since driver training was introduced, the company has seen accident costs which are consistently lower than the peak figures reached before driver training started.

Furthermore, total crash costs and the cost of each incident has also been consistently lower.

The most recent full year figures for 2007/2008 show a 91% reduction in claims costs over the baseline figure.

In 2008/2009, the claims reduction reached 100%, with just three non-fault incidents as the firm’s financial year-end approached.

As a result, the insurance premium per vehicle it pays has dropped from £1,350 in 2001/2002 to £550 per vehicle.

A figure for 2009/2010 is currently being negotiated.

Chelmsford Electrical also benefits from a retrospective rebate scheme where part of its premium, normally 10%, is returned if accidents remain below a certain level.

It is also now a Business Champion for the Government-funded Driving for Better Business Programme, which raises awareness of the importance of work-related road safety in the business community and public sector by using companies and organisations to promote the business benefits of managing it effectively.

Locke added: “The decision to opt for a driver training package in 2001 was an easy one.

"The insurance company offered to reduce the premium by an amount equivalent to the cost of the training.

"As there was no cost to Chelmsford Electrical, the training was effectively self-funding. I cannot see any reason why any business would not make the same investment.”

About Chelmsford Electrical

Chelmsford Electrical Limited, an electrical design and installation company, was established in 1970.

It works on domestic, commercial and industrial projects and also provides services for local authorities, including 24-hour emergency call out contract services and a full range of ancillary services in line with its status as an Electrical Contractors’ Association (ECA) member and a National Inspection Council for Electrical Installation Contracting (NICEIC) Approved Contractor.

It has a turnover approaching £10 million, nearly 100 employees, with projects in the City of London, the Home Counties, the Thames Gateway and East Anglia.

Chelmsford Electrical offers a full 24/7 emergency maintenance and repair service in addition to its installation activity.

The company’s drivers often work to tight timescales and invariably at all hours of the day and night.

Chelmsford Electrical’s drivers encounter a wide variety of journey profiles, covering urban and rural environments, as well as making extensive use of motorways.

They frequently encounter a partly completed road infrastructure on new industrial estates, housing developments and urban re-development projects.

The vehicles in question also frequently carry high value cargoes, so personal security, theft and anti vehicle hi-jacking are other considerations.

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