See also: <\/b>How insurance companies, attorneys are using fleet data\u00a0<\/a><\/i><\/p>\n These factors are much more tangible to insurance companies: The age and experience of your drivers. Accident history, both for your drivers and collectively your fleet. Out-of-service violations. The age and maintenance of your fleet. Do your trucks and drivers operate through congested places such as the Northeast U.S., the Mid-Atlantic, or many areas of the West Coast?<\/p>\n Especially important, though, is drivers. “Lots of things anchor back to the driver,\u201d said\u00a0Gary Flaherty, who is senior VP of E&S Wholesale, Commercial Auto, the division of Nationwide Insurance Co.<\/a> that underwrites all the company\u2019s for-hire trucking business.<\/p>\n Insurance underwriters often examine how well\u2014or poorly, for that matter\u2014a fleet\u2019s drivers are trained and how experienced they are. It\u2019s no secret that driver training often is inadequate, flawed, or rushed<\/a>\u2014and not all CDL schools have done the job well at all, stakeholders said. Coincidentally, compliance began Feb. 7 on new federal commercial driver\u2019s license (CDL) training and testing requirements. The jury is out on whether these new rules go far enough to help correct the disparities in the quality of trucker training, both before drivers reach fleets with their newly minted CDLs and after they’re on the job.<\/p>\n \u201cInsurance people are always telling fleets to please train your drivers better,\u201d said Mark Murrell, president of CarriersEdge<\/a>, which many U.S. fleets rely on to provide online safety and regulatory training to their truck drivers. Many CarriersEdge resellers also are insurance brokers, he noted.<\/p>\n Nick Saeger, assistant VP of pricing and product for the transportation division of Sentry Insurance Co.<\/a>, a provider of insurance to commercial fleets, was blunt about the topic of driver training. All too often, where the rubber meets the road for insurance companies is in court.<\/p>\n See also: <\/b>How fleets can tackle driver challenges head-on<\/a><\/i><\/p>\n \u201cDo we expect [fleets] to be perfect? No. It\u2019s great to have driver training guidelines, but you have to follow them,\u201d noted Saeger, who by trade is an actuary, a person who statistically calculates risk. \u201cIf you have these guidelines that you don\u2019t follow, you\u2019re unsafe, and you have to be punished in cases after an accident. Plaintiffs’ attorneys are good at finding that.<\/p>\n \u201cThere are a lot of different things in accessing the risk,\u201d he added. \u201cWe do look at equipment and the driver and their experience with losses. We look at distance from terminal; geography matters in rates. There are vehicle factors, driver factors. It\u2019s hard to say whether it\u2019s one factor over another.\u201d<\/p>\n Murrell added to the driver discussion: \u201cFor liability and risk, often it does end up with the drivers and the focus around drivers. [Underwriters] will consider the safety equipment, but in most cases, driver behavior makes the biggest difference. Accident history, driver violations, [fleet] programs in place to prevent problems. What are you doing to avoid issues? How are you dispatching? Do [drivers] have sufficient time to haul their loads?\u201d<\/p>\n Driver training<\/a> also is Topic A for Flaherty.\u00a0When asked what trucking companies can do best and the most to keep premiums under control, he said \u201clargely, it\u2019s [about] the drivers.”<\/p>\n Flaherty reiterated the importance of training, adding that insurance underwriters take a deep dive into whether fleets have a defined set of policies and procedures when it comes to their people behind the wheel. Underwriters also ask whether these fleets enforce their own rules. \u201cThat carrier wants to be safe, they want to be reliable, and they want to be consistent,\u201d Flaherty urged.<\/p>\n But where there are drivers, there are missteps, including violations and accidents. Do fleets need a perfect safety record. The answer is \u201cno,\u201d Murrell added. But they do need to show underwriters that they coach their drivers. \u201cWhat are they doing to rehab a person?\u201d he asked.<\/p>\n \u201cInsurance companies really want to hear what you\u2019re doing to improve things,\u201d Murrell added. \u201cIf they hear you\u2019ve got this program that identifies risks before things happen \u2026 that\u2019s a much more compelling story. The absence of this kind of story will be filled with premium from the insurance company. Insurance companies like the [carrier] to have a vigorous driver training program.\u201d<\/p>\n Commercial trucking is covered by certain federally mandated minimum insurance requirements<\/a>. There has been much debate whether, in the current environment, these minimums should be raised.<\/p>\n Fleets that transport non-hazardous cargo in vehicles weighing under 10,001 lb. are subject to a $300,000 federal minimum, which goes up to $750,000 for non-hazardous freight hauled in vehicles over 10,001 lb. Oil transported by for-hire or private carriers comes with a $1 million in minimum liability coverage as standard. If your fleet hauls hazardous material or explosives, the minimum is five times that amount: $5 million.<\/p>\n Many underwriters recommend coverages with higher dollar amounts that exceed the federal minimums because the costs from accidents\u2014underwriters sometimes call them “occurrences”\u2014that result in property damage or injuries\/loss of life go much higher, especially in this age of nuclear verdicts. Nuclear verdicts are judgments against carriers in excess of $10 million.<\/p>\n See also: <\/b>Added insurance protection will come with a bigger price tag<\/a><\/i><\/p>\n What does even minimal insurance cost? Average premium costs can vary quite a bit. According to East Insurance Group (EIG), the cost of liability insurance can range from $5,000 to $7,000 per truck per year for a fleet. But insurance in the Los Angeles area, for example, can cost upwards of $14,000 per year, according to EIG. Costs for new authorities can range between $12,000 and $18,000. For owner-operators with a permanent lease with a motor carrier, the average cost can be $3,000 to $5,000 per year. For owner-operators with their own authorities, the costs can be much higher\u2014about $9,000 to $12,000 per truck per year, according to EIG.<\/p>\n Many insurers calculate rates by using somewhat complicated algorithms, which are based on a series of aforementioned variables from each fleet, according to Flaherty and Saeger. These algorithms generate annualized premiums. Some motor carriers pay premiums annually, all at once, while many are offered payment plans, either monthly or even weekly. Owner-operators often find weekly premiums most useful, Flaherty said, as they may not have dedicated shippers.<\/p>\n Whether it\u2019s a driver or fleet equipment, your safety record and what you and your people behind the wheel do on the road might matter the most to companies that cover the trucking industry. The \u201cvariables\u201d matter, according to insurance stakeholders.<\/p>\n Data collected by the Federal Motor Carrier Safety Administration (FMCSA) matters greatly, said Nationwide\u2019s Flaherty. A carrier’s safety and fitness ratings can be viewed at FMCSA\u2019s<\/a>\u00a0SAFER<\/a> website, searched by carrier name, or by U.S. Department of Transportation (DOT) number. Licensing and insurance status information also is available there. The data available on SAFER is updated monthly, and carriers themselves report to FMCSA annually.<\/p>\n \u201cThere\u2019s some good kernels in\u00a0that [FMCSA] data,\u201d Flaherty said. \u201cBy the way, that\u2019s always looked at by the plaintiff\u2019s bar. It’s extraordinarily important.\u201d<\/p>\n See also:<\/b> Trucking insurance rate trends continue in the wrong direction<\/a><\/i><\/p>\n He said Nationwide\u2019s underwriters have tools that rigorously monitor the FMCSA data. \u201cAnd we look at that [data] in a place of support,\u201d to coach fleet customers on what the federal information is doing to their premiums and insurability.<\/p>\n Another \u201cvariable\u201d that matters to insurers: dedicated safety and compliance officers.<\/p>\n Often this is a crossover duty of the human resources department back at the base terminal, but Flaherty said underwriters are impressed if a fleet relies on an employee dedicated solely to that one task, which often involves training drivers in federal Drug & Alcohol Clearinghouse compliance, obeying hours-of-service requirements, and providing driver coaching.<\/p>\n One such person is Dana Achartz, safety and compliance director at Belleville, Illinois-based carrier\u00a0Commercial Transport<\/a>, which runs 155 tank trucks that haul food-grade material such as flour but also hazardous material.\u00a0Much of her new job as well as her former position is to serve as a lookout for clean driver compliance,\u00a0especially during new driver onboarding.<\/p>\n Both Commercial Transport and\u00a0Newman Carriers<\/a>, the fleet where she also directed safety and compliance, have “zero-tolerance” policies for any driver who tests positive for drugs or alcohol or even if a driver has returned to good standing after satisfying the federal return-to-duty regimen after testing positive. There is an insurance component to the zero-tolerance policy, Achartz said during a recent interview with FleetOwner<\/i>, but that policy falls back on the fact of the type of cargo that Newman and Commercial Transport’s drivers haul: hazmat, which has the highest federal insurance minimum requirement.<\/p>\n \u201cIt\u2019s just kind of a no-brainer to us, with what we do,\u201d Achartz said.<\/p>\n See also: <\/b>How insurance companies, attorneys are using fleet data<\/a><\/i><\/p>\n Nationwide’s Flaherty also weighed in on zero-tolerance policies from an underwriter’s perspective.<\/p>\n \u201cWe would view a zero-tolerance policy favorably. Zero-tolerance policies are important,\u201d said Flaherty, who added that underwriters look positively when their fleet customers employ officers such as Achartz who are dedicated to safety and compliance. But, he said, \u201cmake it a dedicated position within [the] company. They also must have authority. You can\u2019t have [their decisions] being overridden.\u201d<\/p>\n Regarding such compliance and safety directors, Murrell of CarriersEdge noted: \u201cYes, insurance people will tell you it absolutely does make a difference \u2026 whether someone is in that role, or they outsource it. One of the things we noticed in the industry is that [a safety director] takes on tasks done in other departments. Safety people can handle performance reviews, for example. I would be surprised if you don\u2019t find any company over 40 trucks that doesn\u2019t have somebody in a full-time role.\u201d<\/p>\n \u201cYes, it does matter if they have somebody, but to what end?\u201d asked Dan Clements, senior director of sales and underwriting at the transportation division of Sentry. \u201cWhat results are they seeing from the efforts of the safety director? Are you seeing fewer claims, fewer out-of-service violations? Are driver behaviors improving?\u201d<\/p>\n Driver turnover and a fleet’s growth are two other trends that underwriters try to spot, Flaherty and Murrell both said.<\/p>\n The for-hire large truckload carrier driver turnover rate hovers at around 95%<\/a>, according to trucking trade federation American Trucking Associations<\/a>, so it stands to reason that even the safest and thus most insurable fleets lose and gain drivers with frequency.\u00a0Private fleet turnover<\/a>, in contrast, was 16% last year and was as low as 14% as recently as 2018, according to the\u00a0National Private Truck Council<\/a>\u00a0(NPTC).\u00a0Private-fleet turnover has not been over 19% in the last 17 years, according to NPTC’s most recent Benchmarking Report.<\/p>\n There also was a lot of growth and consolidation among FleetOwner<\/a>\u00a0<\/i>500 top for-hire companies in 2022<\/a>, so stability of safety is important to underwriters, Flaherty added.<\/p>\n \u201cThere needs to be a level of stability,\u201d he said. \u201cWe appreciate transparency with fleets. If you\u2019re planning to grow, let\u2019s talk about that. Nationwide has a risk-management team, and we can help you work through that. Underwriters love stability, but that\u2019s not the reality. The economic situation and this driver situation causes a lot of folks that do what we do to get concerned.\u201d<\/p>\n Murrell added: \u201cInsurance companies will look at turnover. It\u2019s easier to manage stability when people aren\u2019t exiting all the time.\u201d<\/p>\n A lot of technologies interest insurance companies, but their future potential in most respects must still yet play out. The technology that is showing the greatest current utility is in-cab, driver-facing video\u2014or dashcams.<\/p>\n \u201cI\u2019ve been in the dashcam camp for a decade, speaking of technologies,\u201d Nationwide\u2019s Flaherty said. \u201cWe have exonerated more drivers with the use of video recording systems. These are going to become standard fare really soon.\u201d<\/p>\nDriver quality and training<\/h3>\n
Minimum requirements and cost<\/h3>\n
Emerging trends<\/h3>\n
In-cab video<\/h3>\n
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