Insurance has been a sore subject across the trucking industry over the past few years. Many companies have struggled with increasing rates – due in large part to the rise in nuclear verdicts – while simultaneously trudging through the ongoing freight recession.
As fleets continue to navigate this cash-strapped environment, it is important for them to take a proactive approach to insurance renewals. With the right approach, and a good insurance agent, it is often possible to save on rates without sacrificing quality.
Reliance Partners Executive Vice President of Sales Jackson Alexander believes that understanding the underwriters point of view can help carriers navigate the insurance renewal process.
During the insurance renewal process, a computer formulates manual rates for trucking companies according to the specific insurance provider’s algorithm. These rates, however, are not set in stone.
Underwriters have the ability to deviate up or down from manual rates by as much as 50%, depending on the state. For trucking companies, this is where taking proactive safety measures – and working with a high-quality insurance agent – can make all the difference. If an insurance agent can make a solid, evidence-backed case for a carrier, significant insurance rate savings are possible.
Each insurance provider assigns different weights to various trucking company characteristics. For example, some providers place an emphasis on driver retention when quoting rates, while others do not mind high turnover. Good insurance agents, like Alexander, understand how insurance providers differ, allowing them to recommend the best partner for each fleet.
While a number of factors contribute to a carrier’s insurance rates, there are a few variables that hold more weight than others across the board.
Individual loss history
The number of accidents and violations a fleet has acquired over the past several years plays a significant role in determining that carrier’s risk profile, and as a result, their insurance rate.
“We use the past to help predict the future. If you have 20 accidents each year for the past five years, you’re probably going to have another 20 next year,” Alexander said.
This means that trucking companies with a strong safety and compliance will receive more attractive rates than their less cautious peers. While most companies understand that loss history impacts rates, the sheer size of the financial impact that a less-than-stellar record can have on a fleet can come as a shock.
Years in business
Newer trucking companies tend to have higher insurance rates than their more seasoned counterparts due to their age.
“Companies that have only been in business for three years with 75 trucks are not going to get as good of a deal as an identical company with 75 trucks that has been in business for 30 years,” Alexander said.
This is simply because younger companies cannot yet provide the long-term data required to secure the same kind of competitive insurance deals as more established companies. This can be tough to stomach at first, but if newer fleets continue to operate safely, they will see their rates go down over time.
CSA scores
CSA scores are the most impactful factor when it comes to deciding a trucking company’s insurance rate. This makes sense since a CSA score is the most universal safety rating available for trucking companies.
In order to access these scores, insurance providers pull a Central Analysis Bureau (CAB) report on each fleet. These reports contain much more than just CSA scores, however.
“CAB contains a lot of information. Of course, it shows your CSA scores and what your DOT rating is, but it also shows your out of service percentage and how you compare to the rest of the trucking companies in the United States. . . It gives insurance carriers literally every single DOT violation you have had in the last two years.”
Underwriters rely heavily on CAB reports to determine final insurance rates. If areas of concern are highlighted in the report, underwriters often question trucking companies about what happened and how they plan to fix it. These conversations can have a serious impact on rates.
Understanding insurance rates does not have to feel intimidating. With a little perspective and a top-notch insurance agent, trucking companies can rest assured that they are getting the best rates possible for their unique businesses.
Click here to learn more about Reliance Partners.
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