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SPECIALTY LINES MARKETS
ADDRESSING
COVERAGES,
SAFETY KEY
TO TRUCKING
INSURANCE SUCCESS
Industry growth and change create opportunities for retailers
By Dave Willis, CPIA
F
s for trucking firms.
uel costs are down. That’s good new
ple, “Increased
exam
For
ain.
rem
es
But other challeng
pliant drivers is
com
regulation and screening out of nonU, AIS, underCPC
er,
Altiz
John
ains
a major issue,” expl
writer at Risk Placement Services.
From a regulatory and legislative
standpoint, the past few months were
extremely impactful to the industry,
with the Federal Motor Carrier Safety
Administration (FMCSA) adopting
a final rule mandating electronic
logging devices (ELD) and launching a phased rollout of a Unified
Registration System, and the president
signing the Fixing America's Surface
Transportation (FAST) Act.
Tim Horgan, chief marketing officer
of Canal Insurance Company, explains
that the new ELD rule, while giving
motor carriers two years to comply, “will
cost them time and money to implement. ELDs are designed to help drivers
be compliant with hours
of service regulations
and maintain accurate
logs.”
According to Teri
Greenwood, chief
underwriting officer at Northland
Transportation,
“Regulatory requirements, such as hours of
service rule changes, may
create more operational
challenges that could
contribute to an erosion
of margins, which are
already thin.”
She points out
that while some costs,
including fuel, are
down, others are on
the rise. “Trucking
firms face rising costs
of equipment, an
increasingly stringent
regulatory environment,
and increasing driver
pay as they compete for
qualified drivers amidst
a general shortage,” Greenwood notes.
She warns that companies that deviate
from their core business to compensate
for lost revenue or clients increase the
risk inherent in their operation.
Altizer says changes are taking
place in the makeup of trucking firms.
“We’re seeing a trend away from the
single-unit trucker, and we’re seeing
significant growth in the stronger,
well-managed fleets,” he observes.
Horgan says he expects to see more
consolidation and mergers among
trucking companies.
Some segments of the business
are growing. Robin Pisecki, CPCU,
ARM, president of Willis Programs of
Connecticut, who manages a program
for petroleum distributors, says, “The
domestic crude oil discovery boom—in
Ohio, Pennsylvania and all over the
country—has led to increased business
for petroleum distributors. The use of
biofuels, like soybean oil and waste oil,
has also helped fuel growth.”
She explains that, because crude is
pulled from the ground and needs to
be transported to refineries and then
to customers, “It’s a double transport.”
She adds that, as fuel prices have
dropped, there’s been some pullback,
particularly on discovery.
Distracted driving is having a
major impact on trucking firms and
their insurers. “It’s partly a driver
issue,” Pisecki says, “but the bigger problem is distracted driving on
the part of the general public. That’s
affecting both the number of accidents
and the severity. Everyone is just too
comfortable behind the wheel.”
Placement Services, is seeing some
price stabilization and increasing
competition. “This comes after four or
five years of moderate rate increases,”
she comments. “Insurance carriers are
relying more on data mining and predictive analytic pricing models. We’re
also seeing increased use of telematics
and cameras in the trucks.”
Serving clients
Agents and brokers can help trucking insureds in a number of ways.
One is addressing potential coverage
gaps. “Many trucking firms don’t carry
excess limits, and often they have
insufficient towing limits,” Beaumont remarks.
“I’m seeing more
carriers being unwilling
to offer full uninsured
motorists coverage,”
Pisecki notes. “They’ll
only offer the statutory
limits. With workers
comp being primary,
that may not be that big
a deal. However, many
owner-operators may
not have workers comp,
particularly in tougher
economic times.”
According to Altizer,
“Cargo forms vary
among markets, and
there are sometimes
coverage gaps based on
operations or commodi—Robin Pisecki, CPCU, ARM
ties hauled.”
President
Horgan warns:
Willis Programs of Connecticut
“Because some insurance
companies sell primarily monoline commercial
auto liability, agents
may place physical damLosses are having an impact on a
age or cargo with another insurer.” He
large part of the market. “Significant
says there’s value in having the auto
losses are materializing in the reinliability, physical damage, cargo and
surance market,” says Tim Turner,
truckers liability coverages with one
president and CEO of RT Specialty.
insurer. “If there’s a loss, it’s best for the
“Standard companies are seeing loss
insured to have one deductible and one
ratio deterioration, which is causing
insurer vs. multiple deductibles and
business to be dumped into the speinsurers on one accident,” he asserts.
cialty or E&S market.”
Beaumont encourages retail
He says a combination of factors is
producers to help their clients by
driving this trend. “Most significant is
understanding and explaining the
an inaccuracy in reserves,” he notes.
various coverage forms. “Be sure to sell
“It’s pretty much across the board, but
coverage in addition to price,” she says.
there are a few areas where it’s more
Altizer encourages agents and brokers
acute, such as long-haul trucking and
to quote excess limits and GL on all
anything in the livery classes.”
accounts and provide higher towing
Pisecki says fewer carriers are writlimits when available. Pisecki says
ing gasoline hauling firms. “Unless you’re agents should look for programs that
really good at the business and have a
offer uninsured motorists coverage at
good handle on your safety program and
the policy limit.
loss activity, you may end up with very
Turner says that continuing detefew choices of carrier,” she notes.
rioration of primary and lead excess
In her markets, Lori Beaumont,
auto experience and a tightening marCIC, CPIW, senior underwriter at Risk
ket provide an incentive for
“Driver
training, including
defensive driver training, should not be
overlooked. Trucking firms need to have
a strong program for rewarding good
drivers; if they don’t have good drivers,
they don’t have a good business.”
Reprinted from the January 2016 issue of Rough Notes Magazine
agents and brokers to get out in front
of renewals. “Be prepared to market
risks extensively,” he says, “and involve
a wholesale specialist that can bring
deeper knowledge and understanding
of the risk, along with access to the
alternative marketplace, including
E&S providers, MGAs and MGUs.”
According to Greenwood, agents and
brokers should make sure their clients
don’t experience technology gaps. “Some
trucking firms aren’t making the most
of available automation, including electronic onboard recorders or telematics
devices that can help them minimize
their operating costs,” she points out.
Technology can help truckers
increase efficiency and accuracy in
tracking hours of service, Greenwood
adds. “This can free up resources they
can redirect to other aspects of the
operation.” She says better hours of
service tracking can mean fewer out
of service issues, which translates into
increased productivity. Also, using
telematics data to coach drivers on
behaviors can help reduce accident frequency and resulting costs.”
Greenwood encourages agents to
connect their clients with carriers
that have a risk control staff that
can help them recognize the benefits
of telematics and, through effective
coaching, obtain both driver buy-in
and management support. Beaumont
concurs. “Agents and brokers can benefit by partnering with companies that
specialize in transportation and can
offer clients in-house loss control services and specialized claim handling,”
she notes.
Pisecki also stresses the value of
solid safety programs. “Driver training,
including defensive driver training,
should not be overlooked,” she says.
“Trucking firms need to have a strong
program for rewarding good drivers; if
they don't have good drivers, they don’t
have a good business.”
She points to the need for frequent
and ongoing training and follow-up.
“Drivers need reinforcement, and
not just on procedures,” she asserts.
“They need to be constantly reminded
that, because they’re out there driving
among all kinds of people who aren’t
always paying attention, they need
to focus on avoiding accidents at all
costs.”
Cellphone policies are important,
she adds, “and we can help customers
enforce them.” Her company is working with a firm that uses technology
to help trucking firms eliminate the
risk of employee misuse of mobile technologies behind the wheel of a moving
vehicle. “It’s being used by a lot of
large auto fleets,” she notes. “I’ve used
the technology myself, and it works.”
Horgan encourages agents and brokers to help motor carrier clients stay
up to date on all regulations and issues
facing their industry. “If they don’t
have internal resources to handle this,”
he adds, “they need to find an outside
resource such as the risk management
services division of their insurance
company.”
He adds, “The best way for agents
and brokers to help their trucking
customers is to become experts in
their industry. They should know and
understand the business of a trucking firm and the many safety and
operational challenges it faces daily.
They need to help keep insureds
up to date on the latest regulatory
changes and, most important, know
which insurance carriers will best
meet their needs.
“Ultimately,” he concludes, “it’s the
motor carrier’s responsibility to make
sure it is always compliant. But agents
and brokers can help clients formulate or improve on existing safety and
operational controls and procedures
that minimize accidents, keep insured
trucks on the road and make sure drivers arrive home safely.” n