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Risk management helps new carriers lower insurance costs (with video)

The importance of a good safety program in trucking

Insurance has been a major headwind facing the trucking industry, keeping fleets from growing and in some cases from staying in business. The ability of owner-operators to access the insurance markets affordably has been a struggle.

Robert Haley, VP of Transportation for USI Insurance Services, and Pierre Laguerre, founder and CEO of Fleeting, a marketplace providing shippers and carriers with vetted CDL drivers to operate their trucks, sat down to discuss the hardening insurance market and other headwinds to growing a new fleet at FreightWaves LIVE @HOME.

Some insurance providers have left the industry as a result of a rise in accident-related jury awards. Those providers that remain have seen a significant tightening in underwriting guidelines. The result has been a tough trucking insurance market, with premiums skyrocketing in recent years. 

Asked for tips on how to find the right coverage and keep insurance costs in check, Haley suggested that fleets partner with a provider that will help them establish safety standards and a risk management program. A carrier with a strong risk mitigation plan and a handle on the extent of annual claims will have the ability to take on more risk, avoiding costly coverage that pays out claims starting at the first dollar of loss.

Haley said having a strong safety program in place and coaching drivers on things like how to respond in the event of an accident can go a long way toward lowering overall insurance expenses.

New motor carriers struggle to find palatable insurance rates as they don’t have a baseline for losses or a track record of safety scores. However, premiums can be reduced after a year or two if a good mitigation plan is in place. Many insurance providers have started to focus on safety inspection records versus the traditional way of underwriting, which focused heavily on prior losses.

Haley said telematics data is key when building a new fleet. The more data, the better the insurance provider can rate the risk. He said new owner-operators can also run under an established fleet’s authority to lower insurance expenses. Under an established authority, the operator only needs non-trucking liability and physical damage coverage on the tractor.

Operating under your own authority requires comprehensive coverage with primary auto liability, general liability and cargo and physical damage policies, all of which can be cost-prohibitive for a new operator.

Laguerre sees the biggest headwind in trucking as driver retention because the job doesn’t provide drivers with flexibility in their hours, causing turnover. “No one wants to become a truck driver anymore,” Laguerre said. Fleeting’s marketplace helps carriers and shippers find qualified drivers, who benefit from using the site as they can work when they want to.

Asked what motor carriers should do about hiring new drivers, Haley said that newer drivers actually tend to be more careful even though most insurers don’t rate them that way. Haley said a good training program is necessary and suggested starting drivers out on Class B trucks, graduating to full trailers after a year or two. He said the the initial cost of bringing on a new driver can be reduced with a good mentorship in place.

Click for more FreightWaves articles by Todd Maiden.

The FREIGHTWAVES TOP 500 For-Hire Carriers list includes Heartland Express (No. 35).

Todd Maiden

Based in Richmond, VA, Todd is the finance editor at FreightWaves. Prior to joining FreightWaves, he covered the TLs, LTLs, railroads and brokers for RBC Capital Markets and BB&T Capital Markets. Todd began his career in banking and finance before moving over to transportation equity research where he provided stock recommendations for publicly traded transportation companies.