By Janice Sutton
Just last week, Ken Latzko, an eleven year veteran of the company, was promoted to the position of Senior Director of Sales at The CEI Group, Inc. We were not surprised to hear this good news; Ken is clearly an expert in this field and a very articulate spokesman for the company.
While CEI is focused on driving down collision repair costs in a number of ways and increasing recovered costs through subrogation, Ken says that over the past 15 years, accident prevention has emerged as one of their core competencies, reducing fleet accident rates by up to 35 percent. That’s impressive.
CEI, like many fleet management companies, is looking to grow its business by targeting vocational fleets and in this interview, Ken gives us some insight into the company’s significant strengths serving this specialized market.
Why is CEI targeting the vocational fleet market right now?
CEI is targeting the vocational fleet market for a bunch of reasons really. The first is that there are a lot of vocational vehicles out there. Many of them do have a provider but there are plenty that also self-administer their services. There a lot of ways that CEI feels we can help these companies, such as centralizing their billing and improving their processes through a managed care program while still taking into account all of the challenges that the vocational fleets have within a decentralized fleet organization.
What is different about vocational fleets?
The difference between vocational fleets and standard sedan fleets is basically everything. The vehicle itself is different. The driver is different. The job the driver does is very different. And also you are likely to have a lot of upfitting on these vehicles. So, the vehicles themselves are more complex to repair, especially with that upfitting. A lot of times you have to go to a limited selection of shops that can do the work, whereas with a sedan fleet almost any repair shop can repair that vehicle.
Also, replacing the vehicle is a big challenge. Vocational vehicles are integral to the worker’s job, and without that specific vehicle they can’t do their job, whereas with a sedan fleet we can get the driver into a rental car and back doing their regular job within hours.
So, the timing and the ability to get the vehicle back faster is usually very, very critical for vocational fleets. That is part of process is that we have been constantly improving and continue to target for even more improvement.
What are some of the ways that CEI can help vocational fleets?
CEI can help vocational fleets through a variety of ways. One way we have always helped our customers has been through our quality control team. Our quality control team is made up of 20 licensed, physical damage appraisers so they are folks that have actually worked in body shops or in the field as appraisers. They review every single estimate for savings and make sure that everything is in line with the client’s parameters. For some of our vocational customers they even source parts from damaged vehicles that they can reclaim and use at basically minimal cost. They do a lot of great work for vocational fleets and they save our customers on an average of between 8 and 12 percent of their total accident spend through these estimate audits.
Another way that we can help vocational fleets is through our subrogation team, because at many fleets a lot of potentially recovered dollars are left on the table. On average, CEI’s subrogation team recovers about 96 percent of what our customers spend on their repair.
Finally, we are helpful by getting vocational fleet vehicles repaired and back on the road very quickly. One key to accomplishing that is that we are integrated with shop estimating software. That sounds a little technical, but the benefit of it is that we get documentation and information from and to the shop when they need it, quickly, and that, in turn, reduces cycle time, and we are the only fleet management company that is integrated with shops that way. Insurance companies have been doing it for years, and we’re happy that we are too, and we’ve already seen significant improvements in cycle time because of it.
Tell us more about how CEI manages subrogation, which we know is vital to driving down costs.
Whenever a customer has an accident and it was the other driver’s fault, we collect all of the documentation we need from our repair network and from the other party, including their insurance information so we know who to contact. After the repair is complete and we have the final invoices we then send electronic demands to these other carriers.
We also use the insurance industry’s E-Subro Hub application, which all of the major carriers participate in. It allows us to send electronic notification directly to that carrier rather than having maybe to fax it or send it in through the mail. E-Subro Hub dramatically streamlines the loss recovery process by getting our demand documentation to the right people very quickly, and it significantly improves recovery cycle time. The industry average cycle time for recovery – including both the insurance and fleet industry, is about 90 days on the good side. CEI recovers in about 50 days or less, which makes our fleet customers very happy.
We also ask for compensation for things beyond repair and rental costs. Whenever possible, we ask for damages for loss of use and potential diminished value of the vehicle. As a result, there are many instances where we recover more than our customers actually spend on the repair.
Asking for loss of use and diminished value is also useful for negotiating with insurance companies. For example, if for some reason the carrier is telling us that they don’t want to pay for the entire rental bill, we may say, “Okay, you give us the money for the rental and we will waive this diminished value fee.” That way, we succeed in getting back what they spent on the repair, which really is the goal of subrogation.
We signed a mixed vocational fleet in 2006 that had self-administered their loss recovery program. They had boxes of old claim files they hadn’t been able to work through and asked us to see what we could do. We handed them over to our loss recovery department and were able to recover $300,000 from just the first two of the old boxes of files that had just been sitting there for well over a year.
What about when there is shared responsibility for the accident?
Whenever a fleet driver is not 100 percent at fault, or there is haziness as to who is and isn’t at fault for the accident, our subro team will still attempt to collect. Often they will start by trying to work out a negotiation with the other carrier. Sometimes that doesn’t work, in which case the only other option at that point is to decide whether it’s worth sending the claim to a lawyer to litigate.
But before CEI ever gets to that step, we offer our customers the option to go to arbitration. We work with an insurance industry non-profit company called Arbitration Forums that submits disputed claims to a panel of professionals who review the claim, and whose determination as to who is at fault is legally binding.
After that decision, CEI either collects the money or we find that the customer really was the one who was at fault, not the other party. But of the claims we send to arbitration, we win about 75 percent of them. So, we usually don’t recommend that unless we are pretty confident that it is going to be ruled in our favor.
Let’s talk about CEI’s role in helping its clients reduce accidents.
CEI calls itself a fleet driver management company, because our focus is on the driver. Over the past 15 years, accident prevention has emerged as one of our core competencies; we reduce fleet accident rates by up to 35 percent. So what we mean by fleet driver management is that we take care of drivers when they have an accident and we take care of them by helping them to avoid having accidents.
Our safety focus is a natural fit with vocational fleets because those companies are very safety conscious. But what sometimes happens is that those fleets have concentrated more on the employee’s safety after they’ve arrived at the site than they have on their safety getting to the site. That’s how CEI can be particularly valuable to vocational fleets.
One person in charge of safety for a major electrical utility company once told me that almost 90 percent of the workers’ comp claims that came across his desk were vehicle-based. Their safety training was focused on how their employees worked high voltage power equipment, but the statistics showed that that wasn’t how most of them were getting injured. They got injured when they got down off the lift, got into the vehicle, started driving and got into an traffic accident.
So there is a strong safety culture at a lot of vocational fleets and CEI’s safety DriverCare application is a great fit to help these customers reduce accidents and improve workplace safety.