The views expressed here are solely those of the author and do not necessarily represent the views of FreightWaves or its affiliates. This is the first of two articles focused on the current trucking insurance crisis. The second article will be published Monday.
Like the British monarchy and parts of the Middle East, the U.S. trucking industry rolled into the third decade of the century in relative chaos. The primary factor in the trucking situation is financial pressure related to escalating insurance costs.
Two related developments have exerted the most pressure. The first is the shrinking number of commercial liability insurers. The second is the growing number of “nuclear verdicts” in liability cases — i.e., those with jury-awarded penalties exceeding $10 million. In the first of two articles, I intend to outline the problem and the role operators can play in reducing risk and attendant cost.
My premise is straightforward: When confronting a challenge, it’s essential to focus on what we can control — solutions, not complaints.
Insurance companies are not the problem
Insurance is not the problem. Insurance rates reflect the condition of the applicable market. Blaming insurance companies is like blaming the mirror for the image it reflects.
You may not be the problem either. Even if a company operates safely, insurance premiums, in part, are based on industry performance. Most trucking companies care about safety, but we are all paying price for those who do not.
The number of insurers writing trucking liability has always been limited. But the problem is worsening, with more providers leaving the marketplace in favor of more profitable industries. This leaves trucking companies with fewer options and higher rates. Double-digit increases are routine, even for companies with solid safety records.
These pressures fueled many trucking company closures in 2019. A Fox Business report pointed to 795 carrier failures in 2019 impacting 24,000 trucks.
Become insured of choice
Trucking companies have a choice. They can remain stuck in their old ways and disappear or they can commit to thrive by approaching the insurance crisis as a significant opportunity. Smart operators who develop new approaches to safety and prevention stand to become insureds of choice and gain competitive advantage. The days of bare-minimum compliance-based programs and obligatory banners are behind us. The path forward is a genuine culture of prevention.
As safety experts and regulators have long advised, compliance does not ensure a safe operation. Operators need to create a culture that takes no prisoners and leaves no doubt about the role of every individual in creating a safe, profitable future. In a culture-driven organization, safety is neither a priority, a policy nor a program. It’s a nonnegotiable core value supported by incident-prevention strategies like these. Safety is not a department – it’s a way of life.
Review your hiring practices. Are you hiring for the right characteristics — like a personal commitment to safety and a belief that individuals are accountable for their safety and the safety of their co-workers? If not, your employee roster may be filled with risk-takers who see themselves as above the law — and above your company rules.
Make a strategic investment in technology. Outfit every truck in your fleet with inward- and outward-facing cameras, which I believe should be required by insurers as a condition of favorable coverage terms. Avoiding one significant claim will pay for the equipment many times over. What’s more, cameras allow trucking companies to identify and root out bad behaviors.
Put safety above productivity. Safety is not an “either/or” proposition. Successful organizations must be safe and productive. Without the right culture, management and training, however, undue production pressure can lead to shortcuts, deferred maintenance and ignoring glaring risk. Adopt a policy — one with teeth — that states that productivity never trumps safety.
Listen closely. Early warning signs about unsafe conditions are everywhere; it’s a matter of heeding them. It could be the cry of a fatality or serious injury. Or it may be the whisper of a minor defect in a piece of equipment, a gap in employee training or supervisors who discourage reporting. Listen to the whispers and you’ll avoid the cries.
Prioritize purpose. Make sure your employees understand why they need to avoid shortcuts, use best practices and look out for co-workers. Employees must know the reasons for working safely and be aware of the impact of incidents on profitability, reputation and competitive advantage. Don’t be afraid to share statistics that highlight the costs of unsafe conditions and behaviors. Ultimately, safety is about people and families. It’s about coming home alive.
Choose wisely. Perform due diligence to ensure your insurance provider has the right coverage, financial strength, programs and expertise. Shippers can be unwittingly dragged into accident litigation and having the right carrier behind you can make all the difference in the outcome. The quality of your insurance coverage is critical to you and your clients. The safest carriers will continue to have plenty of traditional and captive insurance options. These carriers will have lower insurance costs, thus securing a sustainable competitive advantage.
Do the right thing
Best-in-class companies that invest in safety and believe in culture will see strong returns on their investment. They know it is impossible to control every outcome. So they focus on what they can control – people, process and behavior.
These companies know that good safety is good business. And they view prevention as a moral imperative, a matter of doing the right thing in the eyes of employees, customers and competitors. They understand that the current insurance crisis spells abundant opportunity for those who are willing to invest in a culture of prevention. Because they are proactive and are insureds of choice, they will communicate transparently with their clients, educate them and ultimately adjust rates to reflect double-digit insurance increases.
The losers will disappear. The winners will thrive.
With truckers closing their doors and financial pressures mounting, walking our industry back from the brink will take more than a strong safety culture. It also will require efforts to curb lawsuit abuse. I address this topic in the second part of this article.
Brian Fielkow is CEO of Houston-based Jetco Delivery and executive vice president of Montreal-based The GTI Group. He is co-author of “Leading People Safely; How to Win on the Business Battlefield.” Fielkow received the National Safety Council’s Distinguished Service to Safety Award, the council’s highest-level individual recognition.
2lazy2p
There is a driver shortage. Not enough drivers willing to work for the offered pay. Trucking companies going bankrupt because they can not get drivers and low, low rates (Income). Insurers charging higher rates and driving their customers out of business and fear of the 10 million dollar verdict. Shippers in a constant search for the lowest price to haul their stuff.
After 15 years in the industry, now retired, I can say that I believe The Trucking Industry Is Broken And Can Not Be Fixed…………
We are in for years of the same shi+$^*……………….
DJ
The number one problem that supersedes all issues in the trucking industry is it’s image. How many times do we hear
drivers state that they don’t make enough money in this business? What incentives are there for anyone wanting to get into the industry because they’re not? These are the major problem that needs to be solved first. Until this happens, insurance costs are always going to be an issue and more trucking companies and drivers will leave the market.
Tony Brock
The problem with this kind of thinking is that it promotes the idea that workers can be controlled like animals, or worse, robots. From my point of view, the more we have de-humanized the truck driver, the more wrecks and injuries we have experienced. De-humanizing the truck driver makes the job of trucking even worse than it is now which drives the problem of finding drivers willing to do this at all. The overall quality of drivers has decreased over the years, mostly as a result of the de-humanizing efforts of corporations and folks like this author.
harold hart
I have been using ELD’s off and on since March 1998. I rarely ever have issues. I plan my day and my trips according to parking availability. When you consider the exhorbetant and ass nine lawsuits and the cost of cleanup and medical, I cant blame insurance companies. My company has no problem firing cowboy truckers and other bad drivers. When I go down the highway the dangerous driving habits of the majority of truck drivers is very real: tailgatting, lane hopping, speeding, texting, not using hands free phones, etc, etc.
Dale Hermans
Definitely spoken like somebody that’s never had anything to do with the industry. Eliminate the fmcsa and the number of highway fatalities will decrease. The trucking industry always had a safe culture. Rules rules rules and more rules caused those high quality people to quit the industry. Upon retirement, they should have been out training in the new drivers. Now they are gone, and the new drivers have only a couple years of car driving experience, and about 16 minutes of truck driving experience. Comparison……force the NBA to lower the basketball hoop by 2 feet, and make the hoop 2 feet wider, also limit the number of hours a player can train…..boom, I’m Lebron James. Player skill and pay will decrease. Just like autoshifts and hours of service.
Dear author, what insurance company paid you to write the article? People like you are cultivating a deadly false narrative about this industry. The old school culture of trucker used to go MILLIONS of miles without an accident.
ROBERT
Over the road drivers are not going to allow inward facing cameras, looking in to where they live. And don’t bulshit yourself those cameras can be turned on at any time for any reason. Not happening!
James W Salyards
This article was clearly written by someone that has no knowledge of the industry. As I was told by one of the most influential gentleman, “Young man you may be a good driver, but you need to be just as good in your 10th hour as you were in your first.” Everytime I get behind the wheel that resonates with me. This industry is strictly regulated, and was listed as one of the most dangerous careers. I can proudly say I’m a 3rd generation runner. My family has a combined 3 million+ miles, with no incidents. So you can shove that insurance essay up your ass. I know what I’m doing behind the wheel of the equipment I’m operating, the trucking industry has to be weary of all the 4 wheelers on the road. Not vice versa.
Dan Gambill
Your political correctness is nauseating. Calling workers unsafe is like calling workers racist. Its usually a game played by someone in an attempt to game the system against the worker. Your attempts to focus on “re-education” are predictable and pathetic.
Mike
The author apparently has never been out here, much less owned a truck or trucking company. I had my authority up until last year, just me, but I have owned and operated 5 trucks, so I know a little. I shut it down for a number of reasons, insurance was at the top of the list. 31 years of safe driving, no tickets in many years, 2002 was my last one, they got me for 63 on the Ohio TP around 2300 on a beautiful clear Summer night. Speed limit was 55 for trucks, 65 for cars. Yes, a real cowboy.
My truck is paid for, paid cash, so that had no bearing on my decision. I turned off the authority when my insurance agent called to inform me that I was looking at a 30% to 100% increase in insurance. I looked at those numbers, shopped around a bit, found the same, and it was very easy to turn off the authority. The terrible rates, the insurance, fuel, mechanical and general maintenance had me at the end of my rope. I then found a small carrier, American owned, and signed on… Good outfit, but suffering like everyone else out here.
The ELD, that was weighing on me too, and was quite frankly, my last straw. I was no longer in control, speeding and doing stupid things that I never did as I attempted to stay ahead of the clock. I had enough when I found myself speeding, trying to get to the truck stop before I ran out of time, I parked with 16 minutes on the clock. That was it, I worked my way back to the office, and peeled off the door signage and turned in the ELD and permit book. I parked the truck this past Thursday, I have secured employment elsewhere, that does not require me to play beat the clock. The truck will go up for sale in the Spring. I’m done. No longer worth it out here.