The North America transportation market has been hit hard over recent years by increases in premiums and reports suggest that there is no end in sight.
With insurance availability rated as the 5th greatest concern to the industry according to a 2020 survey it is little surprise that fleets can be hard to place. For the most difficult risks brokers turn to the subscription market – an area where we can help with our binder and open market expertise.
Based on our experience, we explore 3 areas that are making risks hard to place and what can be done to overcome them with planning and risk management.
1. More claims, higher pay-outs
It can seem that there has been a perfect storm for trucking, culminating in an increase in so called Nuclear Verdicts by juries. One recent case saw an award of $280M to the families of five victims of a road accident in Alabama.
There are many factors that have led to an increase in awards. Two of the risks can be mitigated within a broader risk management approach:
• Distracted drivers – It seems that none of us can live without smartphones, but we definitely need to when behind the wheel. Fortunately, other technological advances such as collision mitigation, lane departure camera mirrors and telematics can all be effective in identifying risks and preventing accidents. A good example is the development of Apps to help tired drivers find a truck stop at the end of a long day.
• Driver training – It is expected that there will be 200,000 fewer drivers heading into 2021 and companies have had to be innovative in attracting qualified and competent drivers. Walmart is paying a premium of $8000 to new hires, while a firm in Phoenix is investing in the latest high-end Peterbilt trucks. But aside from these innovative ways to attract drivers there is a fundamental need to run a tight ship. Ongoing training programmes providing feedback to drivers through things like telematics and cab cameras will improve safety. Also, advances in Artificial Intelligence (AI) should be embraced as they are transforming fleet safety through data and insights.
From 2010-2018, the average jury verdict in trucking trials increased from $2.3 million to $22.2 million — a jump of 967%
The American Transportation Research Institute
Having a companywide strategy to reduce accidents through a combination of the right technology and driver training and evidencing this will present truck fleets in the best light for insurers.
While there are minimum standards for Entry Level Drivers and a minimum of 3 years’ experience is expected – we also believe in the risk philosophy within a business. For example, where drivers are hard to find an owner manager in a well-managed family firm, with a good claims history might have a young family member as a driver. This need not count against them.
2. A hardening market – be prepared, be flexible
Many insurers are exiting the market and others are increasing rates with double digit rate rises expected well into 2021.
Facing these twin challenges means that preparing well in advance of renewal is essential. Leaving things to the last minute is a risky strategy.
With good planning firms can present a strong case to get the best cover and premiums:
• Make sure all safety and loss information is well documented and complete. Better still, include a risk management plan.
• Consider an approach that focuses on risk retention to help reduce rates. The additional benefit is that it shows that insurable risk and loss prevention are being taken seriously.
• Tell your story and target those who are willing to listen. For example, A 20-year-old truck might appear to be a difficult risk to place. However, complete service and maintenance records evidence that both the fleet and business are well-managed.
Tell your story
A 20-year-old truck might appear to be a difficult risko place. However, complete service and maintenance records evidence that both the fleet and business are well-managed.
3. Cargo theft is on the increase
Cargo theft has increased by 16% over the last year. Unattended cargo trucks and trailers are an easy target and are clearly not covered. Thieves will either hook up their own tractor units or simply steal the entire unit. Hot spots for theft include truck stops and large distribution facilities.
Top risk management tips
• Have robust due diligence procedures to ensure that you know the identity of all third parties. This is particularly important when dealing with new carriers and drivers.
• Implement strict identification procedures within a framework that is communicated across your supply chain.
• Where possible, remove stops that are unnecessary. Keep cargo moving, as the saying goes – cargo at rest is cargo at risk. During planned stops use secure locations when parking up.
Be vigilant and understand when the risks are highest. Public Holidays are a notorious time for thefts. Ensure that when cargo is left unattended, especially when this is for a number of days, security measures are at their highest. For example, use high security locks and tracking devices.
At Shepherd Compello we are a family-owned business, so the personal touch runs through the DNA of everything we do. We are willing to listen to you and have the expertise to place your transportation risks as well having the capability to write them through our binders. Please get in touch now to discuss how we can help.
Claire Titshall, Broker. Claire.Titshall@shepherdcompello.com
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