It is no great secret: Insuring big rigs gets more expensive by the year. This is even worse during our current COVID-19 crisis. Fleets are experiencing what some refer to as a “hard” insurance market. This refers to an insurance industry cycle where insurance companies impose far more onerous underwriting standards and decrease the levels of coverage they will support.
As a result, these moves have a knock-on effect and cause insurance supplies to contract even as premiums rise. Depending on the frequency or severity of claims being submitted, some trucking companies are hit harder than others. Still, no matter how a trucking companies operates, one thing is for sure, insurance rates have doubled for long-haul trucks in the past 10 years.
Insurance Costs See no Limit
Many trucking companies are witnessing premium increases for the third year in a row or more. As bodily injury lawsuits skyrocket and insurance companies take notice, small trucking companies are feeling the squeeze. Why? Because commercial auto insurance has been one of the most unprofitable segments in the insurance industry.
As a result, many insurance companies are leaving the space altogether, which puts trucking companies in a bind. With less policies to choose from and those that are left being quite expensive, there is little a company can do. Insurance companies are incurring losses on truck policies and have become quite selective in who they will do new business with moving forward.
Fortunately, fleets are not without recourse. Trucking companies have their own destiny in the palm of their hands. Improving safety programs, taking care of truck drivers, and partnering with the right insurance agent will go a long way towards reducing insurance costs and keeping a green bottom line.
In the end, it doesn’t really matter what kind of insurance a trucking company has. They keep costs low by properly managing risk. And managing risk is all about focusing on safety. Trucking companies that focus on fleet safety programs have fewer crashes. It is a simple, irrefutable fact. As a result, successful trucking companies make sure they focus on safety.
Insurance companies will look at your CSA scores, claims history, and other safety-related information, such as truck driver turnover, to evaluate you. Once their evaluation is complete, they will create a risk profile. This is where your behavior as a company comes into play. If your risk profile is worse than other trucking companies of your same size and operational type, you will likely face higher insurance premiums.
Create a Safety Program
Insurance companies want to see that those they ensure are taking a proactive approach o managing risk and increasing fleet safety. This goes beyond merely collecting data and ensuring you are in dull DOT compliance. Trucking companies with low insurance premiums get creative with how they run their operation. They work hard to keep safety concepts at the forefront of their truck drivers’ minds and actions by instituting training on vehicle inspections, hours of service regulations and defensive driving.
A first step in comprehensive safety program should be ensuring everyone is aware of their CSA scores. Everyone in your trucking company needs to understand how important it is to maintain and improve CSA scores. Everyone in the organization needs to know what CSA is and how they can contribute to lower scores. Truck drivers who incur the most violations need to be coached and educated on why improvement is necessary. Always remember that it is usually only a small percentage of your truck drivers that have issues with roadside inspections.
Reducing CSA scores involves eliminating common violations. Remember that some violations should be easy to prevent. A couple quick examples are simple maintenance violations for tires and lights. If your truck drivers are not completing adequate pre-trip inspections, you may wind up with violations that could have been easily avoided.
Unsafe driving violations, including speeding, not wearing a seatbelt, and using a cell phone while behind the wheel will cause a CSA score to skyrocket. How do fleet managers avoid this? By creating and running truck driver training and accountability programs. Most hours of service violations that happen in the post-ELD landscape are minor and can be corrected by providing additional education to drivers and supervisors.
Focus on the People
Trucking companies that focus on the people that make the company run are the most successful. They are proud of what they do right, and they spend time actively talking about it. They have reputations their peers are envious of. Your first step in operating a fleet that takes safety seriously and keeps insurance costs low is to hire the right people.
Do you know your insurance company’s preferred hiring guidelines? If so, have you communicated it to new hires. When you have the chance, do you review the candidate’s MVR and PSP closely as well as conduct a pre-hire road test? Make sure you utilize an MVR monitoring service to monitor your truck drivers’ license status on an ongoing basis, so you’ll be aware of suspensions and downgrades. These are must-dos if you want to operate a trucking company that isn’t drowning in insurance costs.
Make sure you also focus on empowering your truck drivers and motivating them to follow all safety protocols. Do you have incentive programs to reward those who have strong safety records? Do you call out truck drivers who reach positive milestones? You could offer company-branded gear or other monetary incentives.
In the end, focusing on your people is all about accountability; accountability on your part and on the part of those who are carrying out your wishes. Both truck drivers and fleet managers both must live and breathe industry best practices and company rules. They also need to know what will happen when violations occur.
A company culture that promotes following the rules and paying attention to preventing minor mistakes succeeds above all others. And these tenets need to be followed at all levels of the organization. Consequences for breaking rules or missing guidelines needs to be appropriate and consistently implemented, so that everyone understands what to expect. There should be no favorites.
A lot of fleets struggle to implement effective safety programs. But not all. Trucking companies that pay attention to their safety programs wouldn’t do business any other way. Even more, they are not shy to let their insurance carrier know what they have done to improve their levels of overall safety. They provide examples of best practices, such as monthly safety meetings, telematics usage, and having a strong claims communication protocol. They also require a specific level of experience for all positions and operate a non-punitive disciplinary program. Ongoing education is a must.
Find the Right Broker
Trucking companies who deftly manage the insurance landscape partner with an insurance broker who knows their business best. Fleet managers do not have the time or training to become insurance experts. That is why it is best to partner with someone who can be trusted; someone who knows the particulars of that operation.
Like anything else in life, your partnership with your insurance carrier is built on trust. The last thing you want to do is change insurance companies every year, which would likely result in higher pricing. Instead, built a long-term relationship with an agent who is less likely t overreact to negative news. You also want to meet with them regularly and plan each renewal at least six months in advance.
Also come prepared with your story. Insurance underwriters will learn about your losses and safety performance regardless. That is why it is best to take a proactive approach and let your insurance broker know all the details of your operation. Are you doing anything specific to prevent future losses? If so, they should know!
You must also make sure you are familiar with specific types of losses. Also speak to loss trends within your business. If rear-end crashes are common in your fleet, make sure you are ready to talk about what you are doing to ensure they are prevented in the future.
Beyond utilizing the right partner, you need to operate in a responsible way. Make sur all claims are reported in a timely manner and that documentation is thorough. Work closely with your broker to find best case outcomes when cases arise. The goal should always be to get your claim resolved with minimal fuss. Consistent communication throughout the year will help you meet these goals.
Through an effective safety program and due diligence when working with an insurance partner, your fleet can set itself up for future success. Mitigate your insurance risk by keeping the above-mentioned best practices in mind and streamline your operation in a post-COVID world.