Insurance costs are scored differently for trucking industry safety. Learn how.

The CAB Report shows many things about you. There are too many to mention here, but here is a brief list of the important items:

• ISS Score – Rates You Against Your Peers
• Unsafe Driving Score and Driving Violations
• Vehicle Maintenance Score and Violations
• DOT Safety Rating
• Your Insurance History
• Number of Power Units and Commodities Hauled
• Radius of Operations Based on Your Inspections

In short, all the information on trucking and transportation companies is out there and accessible to insurance underwriters. This information, whether fair or not, plays a large role in your insurance rates.

• Your safety scores may not accurately reflect the safety of your operation. Therefore, it is important to build a Safety Profile – to defend yourself against any misperception derived from the CAB report.
• It is vital to have someone help you analyze and understand your CAB report and how it works in further detail.

Insurance companies want to insure companies with low loss ratios – the lower the better.

• One of the most important rules in insurance underwriting is History Repeats Itself. Based on this logic, if a company has a poor 5-year loss ratio, that trend will most likely repeat in the next 5 years.
• The rate at which insurance companies are profitable varies. A good rule of thumb is 55% or better for “break even” and 40% or better for “preferred.” The insurance companies have expenses and overhead of course, so they want their loss ratio to be as low as possible to make a profit. If your loss ratio is well over 55%, it is often tougher to be insured by a preferred insurance company.
• There are other factors involved in loss ratio – too many to mention here. Although loss ratio plays a large role in determining your insurance rates, there are exceptions as well. It is vital that you have strong Safety Scores and a documented Safety Profile, especially if you have a poor loss ratio. Even if you have a strong loss ratio, a large loss can change things around quickly.

Most trucking and transportation companies do not have a Safety Profile.

Sometimes your Safety Score and/or your Loss Ratio take a negative turn. If you don’t have a Safety Profile when this happens, you are in trouble. The Safety Profile shows insurance companies that you have a strong safety culture, and it offsets potential negative perceptions generated from poor Safety Scores and/or Loss Ratio.

Here are just a few components of a Strong Safety Profile

• Strong Hiring Guidelines
• MVR Monitoring
• Disciplinary Action Program
• Incentive Program
• Driver Review Program
• Vehicle Maintenance Program
• Driver Training

Many companies have good safety practices, but maybe they don’t happen consistently. Or perhaps they are not properly documented. If you have a strong safety culture, insurance companies need to be made aware, and all of that information should be leveraged for more preferred insurance rates.

Here comes the hard part. Now you need to assess your current situation with this new-found knowledge of the system. Then, you need to know exactly what steps to take and in what order to take them. Of course, you will need to build a plan and execute each item, not to mention document everything along the way. It is all a lot of work, which is why most companies don’t do it.

You have three options in this position:

1. Do all of this yourself
2. Hire a full-time safety person in house
3. Hire a consulting firm

If you have a safety person already, what are they doing? Many times, they are wearing many hats. It might make sense to outsource the safety and let them focus on other aspects of the business.

Regardless of what you decide – knowledge is only helpful when you take action!