Break down trucking insurance using
Insurance costs are scored differently for trucking industry safety. Learn how.
Everything you need to know
Face it, you probably do not have the time to spend hours researching the details of how trucking safety affects your insurance costs. Lucky for you, we focus on those exact things day in and day out – and we have broken them down for you here.
- “Shopping” your insurance rates will often have little to no impact if you have issues with the factors listed above. If insurance companies perceive that you are unsafe, they will either decline to cover you or offer a price that is unmanageable.
- Insurance companies that insure truckers have been losing money over the last several years. This has led to insurance companies exiting the market, and the insurers who have remained have increased their prices.
- Preferred insurance companies have tightened their underwriting, and they are only looking for well-run, best-in-class trucking operations. They look at the three factors listed above the most, and determine if you are a best-in-class trucking operation prior to deciding to quote insurance.
- If you want to be insured by a preferred insurance company and get away from high prices and bad terms, you have to focus on the right actions needed to impact the factors listed above.
START FIGHTING BACK:
See the staggering difference in insurance rates between a company that is insured by Preferred vs. Distressed Insurance companies:
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.
GET YOUR CAB SCORE:
Total Insurance Premiums ÷ Total Insurance Claims = Loss Ratio
Example – ABC Trucking Company Inc has paid $100,000/year for insurance over the past 5 years for total of $500,000 in premiums paid over that time. During the same 5 years, they have had $200,000 in total insurance claims. Therefore, they have a 40% loss ratio (200,000/500,000 = 40%).
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.
IMPROVE YOUR LOSS RATIO:
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.
START BUILDING YOUR SAFETY PROFILE:
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:
- Do all of this yourself
- Hire a full-time safety person in house
- 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!
TAKE ACTION – REDUCE YOUR INSURANCE COSTS
How can partnering with Claim Shield save me money on insurance?
Insurance companies largely underwrite based on your safety scores, insurance losses, and safety profile. Claim Shield will work with you month in and month out to improve these three “scoreboards,” which leads to reduced insurance costs.
Am I guaranteed to save money on insurance if I partner with Claim Shield?
No. There are no guarantees. The best way to think about it is to compare it to dental hygiene. If you brush your teeth and floss regularly, you will most likely have fewer cavities. Claim Shield will build a safety plan for your business, track the plan, and then work with you side by side to execute. Insurance companies will generally set premiums based on their perceived exposure, and businesses with a strong safety culture usually get better insurance rates.
Does Claim Shield work with insurance companies?
Claim Shield has a sister company that does insurance – Robley Insurance Services. Clients of Claim Shield are not required to be insured by Robley Insurance. You can keep your insurance agent if you want to. If you want Robley Insurance to provide you with an insurance proposal, you can give permission to Claim Shield to share your safety information with Robley Insurance.
How much does Claim Shield cost?
Pricing for Claim Shield services varies based on the number of employees/drivers and the specific needs of the customer. Generally, after a brief conversation, Claim Shield can provide a proposal for services.
How does Claim Shield bill? Is there a contract for a specific length of time?
Claim Shield typically bills on a monthly basis via an Electronic Funds Transfer (EFT). If you join Claim Shield, you will sign a Service Agreement, but you will not be “roped in” for a specific length of time. The goal is to provide a partnership that helps you realize sustainably lower insurance costs and a strong safety culture.
How does the service model work at Claim Shield?
You will typically work with one person – your “personal trainer.” Your trainer will quickly come to learn and understand your business, and you will often develop a good business and personal relationship over a short period of time. If your trainer is unavailable on a given day, you can speak with another trainer if you would like.
What are examples of services that Claim Shield provides?
- Fleet Safety Programs
- Monthly Driver Training
- MVR Monitoring
- Safety Score Monitoring
- DATAQ Assistance
- Assistance with DOT Audits
- Assistance with Driver Files
- Assistance with Driver Logs