{"id":10624,"date":"2021-04-09T13:50:56","date_gmt":"2021-04-09T11:50:56","guid":{"rendered":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/?p=10624"},"modified":"2021-04-09T13:50:56","modified_gmt":"2021-04-09T11:50:56","slug":"insurance-3","status":"publish","type":"post","link":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/2021\/04\/09\/insurance-3\/","title":{"rendered":"How to Rein in Rising Insurance Costs"},"content":{"rendered":"

Insurance is one of those things you may not really think about until your business needs it. That is, unless you\u2019re facing skyrocketing premiums or, worse, shrinking access to coverage itself, which is what\u2019s happening to truck fleets. Negative trends impacting the insurance market\u2019s view of trucking are forcing more fleet managers to think a lot more about insurance.<\/span><\/p>\n

Fleets are facing what commercial-insurance broker Hub International defines as a \u201chardened insurance market,\u201d in which premiums have not only gone up, but in many cases have doubled. \u201cWith increases between 10% and 15% for the third year in a row, policies are no longer just 3% to 4% of a fleet\u2019s annual revenue \u2014 they can approach north of 7.5%.\u201d<\/span><\/p>\n

Reining in insurance costs requires looking at your operation the way an underwriter does. Is your fleet, at bare minimum, a calculated but acceptable risk for an insurance carrier to take on? Or does everything about your operation scream disaster about to happen?<\/span><\/p>\n

To be sure, you are not alone in facing the insurance juggernaut. In its latest survey on the top issues confronting trucking, the American Transportation Research Institute, which is part of the ATA Federation, identified insurance cost and availability as an emerging issue.<\/span><\/p>\n

Since 2013, per ATRI data, fleets surveyed have been walloped by insurance premium costs that have jumped over 17%. ATRI states that rate hikes are being \u201cdriven by a number of factors, including increasing costs associated with: equipment repair, rising medical costs, higher jury awards and settlement costs, and greater safety and legal exposure.\u201d<\/span><\/p>\n

Underscoring how serious the threat is, ATRI has pegged as a top research priority the impact of so-called \u201cnuclear verdicts,\u201d massive punitive damages of over $10 million, on truck fleets. The researchers will document and quantify historical trends associated with growing jury awards and out-of-court settlements resulting from negligence cases and other tort suits brought against trucking companies.<\/span><\/p>\n

While the rise in nuclear verdicts can be, and are, blamed on personal-injury lawyers who are very good at their jobs, the fact that trucks can be involved in horrific accidents is arguably the biggest factor. Some crashes can\u2019t be avoided, and no driver or employer should be blamed for them. But in the current tort-happy legal climate, it behooves all truck operators to do all they reasonably can to prevent or mitigate accidents on the road, especially calamitous ones.<\/span><\/p>\n

Risky Environment<\/span><\/h3>\n

\u201cSignificantly minimizing the cost of insurance is unlikely in the current environment,\u201d contends Keith Dunlap, transportation practice leader and senior vice president for Gallagher Bassett, a global claims-services provider. \u201cThere are too many issues insurers are facing today, from the high cost of defense, to unreasonable plaintiffs\u2019 attorneys with unreasonable demands, to year-over-year escalating loss costs.\u00a0And until there is meaningful tort reform implemented by state legislators, I don\u2019t think it is possible to lower insurance pricing significantly.\u201d<\/span><\/p>\n

That being said, he also points out that, \u201cexceptionally well-run trucking companies with experience, owned equipment, low driver turnover, minimal loss activity, a commitment to a telematics investment, and impeccable CSA scores are in a better position to gain access to more insurers with better pricing than\u00a0those that don\u2019t stand out as best-in-class companies.\u201d<\/span><\/p>\n

Dunlap adds that commercial insurers have \u201ca much higher chance of achieving better outcomes on claims with focused third-party [claims] administrators managing expectations\u201d of liability claims.<\/span><\/p>\n

Third-party claims administrators for commercial liability\u00a0insurance providers act\u00a0much like claims adjusters. They may work with the insurance\u00a0company\u2019s internal claims adjuster as well as\u00a0outside claims investigators and\u00a0defense counsel in the event of lawsuits.<\/span><\/p>\n

Speaking of defending against the rise of nuclear verdicts, Dunlap warns that \u201chiring marginally acceptable employees\u201d has helped lead to \u201cexploitation\u00a0by skilled plaintiff\u2019s lawyers.<\/span><\/p>\n

\u201cThis leads to negligent hiring and retention claims against the motor carrier, all in a concentrated effort to support gross negligence and punitive damage claims, maximizing recovery,\u201d he says. \u201cThese efforts can result in higher jury awards, adversely affecting insurers who write [policies]in the trucking space.\u00a0Those insurers then increase their rates across their entire book of commercial auto business.\u201d<\/span><\/p>\n

Dunlap advises that the \u201conly way any motor carrier can truly protect themselves against allegations of negligent hiring today is to maintain a driver qualification file that can withstand scrutiny. Truckers need to comply with each of the seven hiring processes outlined in the Federal Motor Carrier Safety Regulations [49 CFR 391],\u00a0which outlines the minimum requirements for hiring commercial motor vehicle drivers.\u201d<\/span><\/p>\n

Eyes and Minds<\/span><\/h3>\n

Whenever a driver is involved in an accident, both driver and employer can be targeted by a break-the-bank personal injury suit. One way to combat that is to do all you can to prevent distracted driving, advises law firm Franklin & Prokopik in its transportation-practice blog.<\/span><\/p>\n

The firm states that \u201cin trials that result in massive civil judgments, awards for punitive damages, if sought, far exceed awards for compensatory damages\u2026.the reason for this trend may be rather simple: With an increase in commercial vehicle accidents involving a distracted driving component, the transportation industry has seen an increase in nuclear verdicts.\u201d<\/span><\/p>\n

As Franklin & Prokopik sees it, there\u2019s a common thread to nuclear verdicts. \u201cThere exists some act leading to distracted driving, whether visual, physical, or cognitive, and an element of preventability and accountability on behalf of the carriers and trucking companies.\u00a0There is no dispute that distracted driving significantly increases the likelihood of catastrophic accidents. The recent nuclear verdicts in cases involving commercial vehicle accidents with a distracted driving component make clear that juries will hold not just the driver accountable, but the motor carrier accountable as well for the safety of the public on the roadways.\u201d<\/span><\/p>\n

Although distracted driving can be the root of many horrific crashes, it is of course not the only cause of poor safety performance that can drive up insurance premiums and even lead to a denial of coverage for a truck fleet.<\/span><\/p>\n

Here\u2019s where managers roll up their sleeves and dig into their safety stats to identify what needs fixing first and foremost to make their fleet attractive to insurers. The tools used may be soft-touch, such as improving driver recruitment and retention to hire the best possible drivers, or hard-edged, like leveraging telematics and spec\u2019ing advanced safety equipment.<\/span><\/p>\n

The results of these efforts need to be measured and the goals set for them continually updated to present the fleet to insurance underwriters with the most flattering loss-ratio profile possible.<\/span><\/p>\n

Tell a Positive Story<\/span><\/h3>\n

\u201cInsurers want to work with fleets. Particularly insurance brokers. They want to make sure their customer [risk profile] is attractive to underwriters,\u201d says Mark Murrell, co-founder of CarriersEdge, which works with a number of insurance providers that resell the company\u2019s online driver training modules. CarriersEdge also co-produces the annual Best Fleets to Drive For program.<\/span><\/p>\n

Murrell says there are \u201cstarting points\u201d to building a positive profile, including showing proof of documented safety policies for drivers and managers and proof they are followed, such as by documenting training.<\/span><\/p>\n

\u201cMore training equals a better safety profile,\u201d Murrell contends. \u201cAnd insurers want to see how much is done in terms of follow-up to any training. Some may want to see it in print or electronic form. But my guess is they will take what they can get to work with.\u201d They\u2019ll also want the training regimen organized with drivers methodically tracked. \u201cThey don\u2019t want to see a room full of boxes\u201d of training material.<\/span><\/p>\n

\u201cKeeping the materials online will make it easier to pull up reports,\u201d he adds. \u201cSince it can be billable work for a broker to work up profiles, being organized will save the trucking company money \u2014 as will the broker being able to tell a better story about the fleet to an underwriter.\u201d<\/span><\/p>\n

\u201cImproving a fleet\u2019s safety profile is seldom a one-time fix,\u201d says Chad Hoppenjan, assistant vice president of Safety Management Services Company, a safety and risk-management consultancy. \u201cWe see the most success with clients who continuously work on it.\u201d<\/span><\/p>\n

He says when SMSC presents its safety assessment, customers \u201cmore often than not are very receptive. We work with them, but we can\u2019t tell them what to do.\u201d Improving a risk profile is a process, \u201cnot something you can change overnight. What you do is work in this policy year to improve for the next year.\u201d<\/span><\/p>\n

For Hoppenjan, key elements of a safety review should include top-down management commitment; hiring quality drivers and then retaining them; making sure operational, sales, and driver-manager teams are all accountable for safety; and focusing on reducing \u201closs leaders\u201d in the fleet and zeroing in on \u201creal safety issues, not perceived ones.\u201d<\/span><\/p>\n

Don\u2019t Hire Problems<\/span><\/h3>\n

Drivers are at the heart of the safety equation, or as Hoppenjan puts it, \u201cYou don\u2019t want to hire problems and then continue to have problems throughout their employment. What I stress is to not take your current qualified drivers for granted. If you can retain them, you will not have to hire so many later on.<\/span><\/p>\n

\u201cAnd you don\u2019t want to set up drivers to fail,\u201d he continues. \u201cBasically, that means not putting them into a bad position, such as loads scheduled too tightly, that can push them to be unsafe by driving too fast and hard.\u201d<\/span><\/p>\n

Hoppenjan stresses holding accountable everyone who may impact driver safety. \u201cFor example, evaluate driver-managers on crashes\/injuries per driver and moving violations per driver. See who stands out and why. And address those [managers] who may be a part of causing safety issues.\u201d Similarly, don\u2019t let sales \u201coverpromise shippers.\u201d<\/span><\/p>\n

Determine your loss leaders (vehicles and injuries) in terms of both losses and compliance. \u201cBase this on your real data, not data distorted by the one severe incident that may have happened recently,\u201d he recommends. \u201cFor example, if you\u2019re using event recorders, are you seeing an upswing in following too close? If you can control these kinds of losses, it can only help with insurance rates.\u201d<\/span><\/p>\n

Keep in mind that the latest technology developments, everything from event recorders to collision-mitigation systems, \u201care all huge\u201d in helping drive up safety performance, Hopperjan notes.<\/span><\/p>\n

Technology Teaches<\/span><\/h3>\n

The various active safety systems now available on trucks, as well as event recorders and cab-mounted video systems fleets install, are constantly delivering a rich flow of actionable data to inform a fleet\u2019s safety assessment and training efforts.<\/span><\/p>\n

\u201cOf the top fleets in the United States, the majority have implemented some type of telematics,\u201d points out Gallagher Bassett\u2019s Dunlap.\u00a0\u201cThese motor carriers understand how collision-avoidance technology, auto braking systems, and video captures help reduce both the frequency and severity of loss.\u00a0They also understand how implementing telematics helps protect against meritless claims by third-party attorneys. In my view, this is a key risk-management investment.\u201d<\/span><\/p>\n

The electronic logging device mandate has almost every fleet now using some type of telematics, points out a Hub International trend report. \u201cThere is an incredible amount of information that can be harvested to improve both operations and safety if used correctly,\u201d the brokerage states.<\/span><\/p>\n

Telematics can include video systems to improve safe driving practices and to exonerate drivers in crashes that could not be prevented, as well as information about the speed, location, and mechanical condition of trucks. \u201cHow this information is shared with drivers, management, and customers can have a direct impact on the performance of the organization,\u201d Hub says.<\/span><\/p>\n

Attitude Adjustment<\/span><\/h3>\n

\u201cI met with several underwriters recently, and they are hot about telematics,\u201d says Terry Lutz, vice president of risk management for Transervice Logistics, which operates trucks on dedicated routes and contract carriage, along with providing full-service leasing and freight brokering. \u201cCrash avoidance, forward and rear-facing cameras, all play a part.<\/span><\/p>\n

\u201cSomething else that\u2019s important to bringing down premiums is the culture of your organization,\u201d she continues. \u201cIs management connected with safety? It should not be an issue to get top management to weigh in\u201d on policies and investments.<\/span><\/p>\n

Lutz agrees it\u2019s a tough market for insurance. \u201cMost carriers that score poorly on safety will go out of business because they won\u2019t be able to pay for expensive umbrella premiums.\u201d<\/span><\/p>\n

She notes that some insurance firms have exited the trucking market altogether. \u201cOthers will only now play at the higher level \u2014 fleets with the best safety records \u2014 or they may set lower coverage limits, maybe $3 million to $7 million instead of $10 million, or they will put in a 20% to 30% rate hike.\u201d<\/span><\/p>\n

Fleets need to work with their insurance brokers, Lutz advises. \u201cYou can\u2019t have the attitude, \u2018That\u2019s what insurance is for\u2019 when something goes wrong… [do that and] you will eventually be loss-rated and you will pay.\u201d<\/span><\/p>\n

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by David Cullen<\/a><\/p>\n

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Source: https:\/\/www.truckinginfo.com<\/a><\/span><\/p>\n<\/div>\n<\/div>\n

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CUT COTS OF THE FLEET WITH OUR AUDIT PROGRAM<\/strong><\/a><\/h3>\n

\"\"<\/a><\/p>\n

The audit is a key tool to know the overall status and provide the analysis, the assessment, the advice, the suggestions and the actions to take in order to cut costs and increase the efficiency and efficacy of the fleet. We propose the following fleet management audit.<\/p>\n

FLEET MANAGEMENT AUDIT<\/strong><\/a><\/h3>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n
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<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Insurance is one of those things you may not really think about until your business needs it. That is, unless you\u2019re facing skyrocketing premiums or, worse, shrinking access to coverage itself, which is what\u2019s happening to truck fleets. Negative trends impacting the insurance market\u2019s view of trucking are forcing more fleet managers to think a…<\/p>\n","protected":false},"author":3,"featured_media":10625,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[18],"tags":[103],"_links":{"self":[{"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/posts\/10624"}],"collection":[{"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/comments?post=10624"}],"version-history":[{"count":1,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/posts\/10624\/revisions"}],"predecessor-version":[{"id":10626,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/posts\/10624\/revisions\/10626"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/media\/10625"}],"wp:attachment":[{"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/media?parent=10624"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/categories?post=10624"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/tags?post=10624"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}