The Wall Street Journal recently published the article “Surging Truck Insurance Rates Hit Freight Operators” by Jennifer Smith.
For the past 10 years, W W Payment Systems has been providing cash flow support to trucking companies and owner-operators across the country. Some of our favorite customers have gone out of business, particularly in 2019, due to escalating insurance costs.
We asked our most successful trucking customers how they manage their insurance costs. Here is what we learned.
DRIVERS! It’s about good drivers! It seems obvious that good professional drivers result in fewer accidents and ticket violations… But this is tricky. Attracting and retaining the best drivers is expensive. Keeping per mile rates high, running newer trucks, booking only easy routes, is very hard to do. But the budget-breaking costs of insurance premiums these days demand that trucking companies hold very high standards for driver performance; Easy to say, but hiring good drivers and firing the ones that mess up is the single most important element in this puzzle.
Watch Your Ratings: The Federal Motor Carrier Safety Administration (FMCSA) compiles and posts the data from their Safety Measurement System: SMS Scores. Insurance companies track every digit of those scores and use them in their underwriting models. If you have moving violations, accident claims, or “out of service” occurrences at scales, your scores start to rise. Tracking this data is critical to managing your insurance costs.
Active Safety Management: The WSJ article quotes an insurance industry executive saying, “If you cannot demonstrate that you are obsessed with safety, you may not get renewed.” This is hard to do with all the other pressure truckers’ face. Most small trucking companies can’t afford a full-time professional safety manager. But someone paying attention to the safety profile is seemingly critical in managing insurance costs and sustaining your reputation. Brokers and shippers these days really shy away from carriers with “conditional” operating status, let alone the chance you can’t get insurance.
When we hear from our customers about their insurance and safety management concerns we immediately recommend they get help. A long term resource we always recommend is super effective safety consulting firm CDS Safety & Compliance. If you are worried about your insurance, already in a jam with your safety rating, or just need help building a safety plan, they are the answer. Call us for a referral and a discount at 360 314 2004. They are the best.
Don’t Wait: With all the things truckers have to think about it is natural and predictable that you might not worry too much about your insurance costs until it is time to renew. DON’T WAIT!!! Managing your safety profile is a critical activity to master BEFORE it is time to renew your insurance. If you wait until your annual renewal to work on this you will be surprised for sure and may find you can’t afford it at all.
Truckers have always known the importance of managing their insurance. But these days it can kill you. Work on it NOW, and stay on the road.
Good luck, and Roll on!!!