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RISK MANAGEMENT

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Q: Why do some seemingly small losses become so large?

A: Let’s set the scene. A dealership salesperson is conducting monthly inventory across the lot when he twists his ankle on a crack in the asphalt, causing him to fall on his hip. The incident is reported to the sales manager, but the employee indicates he’s fine. Nothing further is said or done. Two weeks later, the general manager learns the employee has been diagnosed with pelvic and ankle fractures, which eventually leads to sedentary restrictions. The dealership does not accommodate the restrictions, eventually resulting in a legal settlement with the employee, with losses totaling $290,000.
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A small incident turned into something large because a formal reporting and investigative procedure was not in place. Also, dealership management didn’t view risk management as anything more than an administrative task for support staff. The result was a much costlier resolution to the dealership than it could have been.

Preventing losses is the ideal situation, but it’s not always possible. However, dealerships can help control losses by proactively defining the investigation, reporting, and implementing ongoing case management guidelines. This applies to all types of losses, including—but not limited to—employee accidents, equipment damage, theft, and vehicle accidents. The following is recommended:

▶ Evaluate claim reporting/investigation guidelines: Ensure written procedures include a comprehensive form to report incidents and requirements outlining timeliness, investigation, hazard reduction, and notice to claims for handling.

▶ Enforce a duty program: Documentation and enforcement of the program should go through the dealership’s management staff and be an annual performance goal for all management levels.

▶ Implement an action plan: This will help manage loss prevention initiatives requiring capital investment, broad participation, or extended timeframes to implement.

▶ Hold all accountable: All employees need to report accidents in a timely manner.

No dealership wants to experience a loss. With a plan and investigative guidelines in place, along with strong managerial support and supervision, losses can be controlled. Make sure your dealership is ahead of the curve when it comes to proactively managing claim cases.

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