Safety Alert - Cost Benefit Analysis

Executive Cost/Benefit Analysis Instructions
Cost/Benefit Worksheet
View completed Cost/Benefit Worksheet sample

The following work sheets and examples have been developed for loss control specialists and underwriters to estimate the cost/benefit of Safety Alert Network’s services for their clients and insureds. Safety Alert Network clients report a variety of benefits from using its services. Vehicular accident frequency rate reductions in excess of 40% have been reported. Further, our reporting has led to other non-accident savings such as the recovery of stolen vehicles.

An estimate of savings can be developed by filling in all the blanks if all direct and indirect costs of your clients’ or insureds’ accidents are known. However, if actual numbers are not known, then some estimates can be used. For this Cost/Benefit Analysis a very conservative vehicular accident frequency rate reduction (10%) and average accident cost estimates have been used ($9,000).

Do your clients/insureds have some unusual costs that are specific to their operations that should be added above the base cost of accidents?

Monetary Expenses contributing to accident costs.

Experience rated insurance premiums
Replacement vehicle rental cost
Workers’ compensation claim cost
Damage to company vehicles
Overtime/temporary employees
Damage to cargo

Insurance deductibles
Administrative cost for processing claim
Lost workdays
Delayed delivery/reorder costs
Rush order replacements
Legal fees
Punitive damages
Other liability costs

Subtle monetary and non-monetary expenses resulting from accidents.

Angry Customers
Negative Public Image
DOT Audits/Fines/Unsatisfactory Rating
Lost Business (renewals, reorders, and government contracts)

To receive sample reports with your client/insureds name, information about customized decaling, or to have questions answered about Safety Alert Network, call 800-737-6789. See Cost/Benefit Worksheet below.

Services Cost/Benefit Worksheet
View completed Cost/Benefit Worksheet sample

Cost of Safety Alert Network Services

of vehicles	X		annual per vehicle charge	=
of trailersⁱ	X		one-time decaling charge	=
		Total Cost of Service		=

Estimated Benefits

Number of 'frequency rate' accidents
	ANSI standard frequency rateⁱⁱ	X		million miles drivenⁱⁱⁱ	=
Estimated cost of fleet accidents
	of frequency rate accidents	X	^iv		=
Anticipated savings from 10% accident rate and cost reduction (avoided accident cost)
	Cost of accidents	X			=
First-year minimum net savings
	Avoided accident cost	-			=

ⁱA one-time decaling fee of $3.95 is assessed for the number of trailers above the number of covered power units.

ⁱⁱThe average local delivery ANSI Standard vehicular accident frequency rate ( VAFR) is approximately 7.0. The average VAFR rate for over-the-road operations is approximately 2.0, but the severity rate (the resulting costs of accidents) is higher. If you do not have freq. rate for your company, assume 7 accidents annually for every million miles driven in local driving, (a vehicular accident frequency rate of 7.0) and 2 accidents for every 1 million miles in over-the-road driving.

ⁱⁱⁱEstimate of accidents based on million miles driven. Vehicle accident frequency rates (VAFR’s) based on less than 1 million miles driven are of questionable statistical significance. Results could be effected by random fluctuations in variation. Smaller fleets driving less than 1 million miles should use multiple years for calculations. For example, a company with 500,000 miles driven each year should use VAFR for two years of mileage and accidents.

^ivPHH Fleet America estimated the average total direct and indirect costs of a commercial fleet accident to be $8,986. Source: CFO magazine, "Damage Control," November, 1993.

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Safety Alert Network
8146 One Calais, Suite 103
Baton Rouge, Louisiana 70809
Voice: (225) 819-5991
Voice: (888) 209-7233
Fax: (225) 819-5626

To report an incident:
1-800-REPORT-9

Email us: service@safetyalert.com