Insurance experts offer insights on how to lower carriers' rates

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Updated Sep 27, 2022

Nuclear verdicts are on the rise, and insurance rates are right there along with them.

Insurance is one of the top five most costly line items on a trucking company’s budget behind driver compensation, fuel and equipment, according to an analysis of the operational costs of trucking by the American Transportation Research Institute. With fuel prices up and demand for freight capacity lowering, trucking companies are looking for ways to trim insurance rates, and industry experts say investing in technology, combined with other factors, can help.

“There have been very sharp rate increases to clients because of what I'll call industry challenges and industry deterioration in profitability … If all of a sudden you have to come out with significant rate increases year-over-year-over-year, it becomes unsustainable,” Gary Flaherty, senior vice president of commercial auto E&S wholesale at Nationwide said in a TCA webinar about leveraging driver data for the best insurance rates. “It's really important to have good data. Your insurance agents can certainly work with you on that; experts in the field can tell really good stories related to the things that you've done as a motor carrier, and lots of motor carriers have done really good things. Whether that be investments they've made in technology, investments they've made in equipment and people, you want to be able to show your insurance company those things so that you're getting the best rate that you possibly can.”

Flaherty, along with Brandon Guiliani, principal and transportation practice leader at insurance brokerage Seubert & Associates, offered some tips on how carriers can get the best insurance rates during their next renewal.

Transparency in data

While using technology can benefit carriers, it can also hurt, so transparency is key, they said.

The insurance industry as a whole reported a $4.1 billion loss last year. That means for every dollar in premium, the insurance provider is paying out $1.05, Guiliani said.

“Technology is great. It's out there for everybody. But you also have to understand if you're not using technology to benefit you, unfortunately, these plaintiff attorneys are going to use it against you, which is taking claims usually where they were paying out X to a multiple of X,” he said. “When you go to market, open your doors up to these insurance carriers. They want to see where you guys are not doing well; they want to see where you are doing well.”

Data plays a big role in how insurance providers assess carriers. With so much data available from ELDs and cameras to the FMCSA portal and internal accident registry, among other things, what data actually matters?

Flaherty said an insurance provider is going to look for the basic data like vehicle and driver files as well as deeper information like retention rates and hiring and training processes.

But in the end, he said it’s all about bringing the data together to share the story of how the carrier is using it to gain insights to lower the frequency of accidents. He said it’s important for an insurer to understand the process of how carriers are using data to push a culture of safety.

Guiliani added that it’s important to analyze fleet data and use it accordingly so others can’t use it against you.

“I think a lot of fleets out there today, they're well behind the eight ball. You have to get out in front of it. You have to tell a story before the underwriter gets your account, and they let the data tell that story for them,” Guiliani agreed. “I know we're talking about how to lower your renewal costs. Guys, unfortunately, the litigious environment we're in, not just underwriters, but plaintiffs’ attorneys are using your data against you. If you're not putting those proactive coaching steps in place [and] finding the drivers that are causing some of your problems, you're not getting out in front of that.”

Managing relationships

Guiliani’s best advice to do that is to start the process of gathering data for your next renewal right after you finalize your current renewal. To combat the current litigious environment, he said to take that time to also evaluate your insurance agent and how the agency manages its claims because no matter how much a carrier preaches safety, human error can’t be controlled, so claims are inevitable.

Flaherty said your insurer’s claims department matters for the longevity and livelihood of a carrier, and there are a lot of imposters coming onto the scene these days.

So he said it’s important to report claims, no matter how small, immediately.

“Those tractors and trailers have targets on them,” Flaherty said. “I can't tell you how many incidents get out of hand, settle for policy limits, and there wasn't even contact between the tractor and trailer and the other parties involved, and it's because we didn't have an opportunity to investigate thoroughly. We didn't have an opportunity to take action to mitigate the overall exposure of that particular claim.”

Gone are the days of keeping the insurance provider at arm’s length.

If a carrier hides or omits information, a provider will assume the worst, said Hayden Cardiff, founder and chief innovation officer at Idelic, which provides predictive analytics that identify risky drivers coupled with professional development plans to help change behaviors.

“The devil you know is better than the devil you don't,” Cardiff said.

If a carrier has data that doesn’t show them in the best light, he said there are steps they can take to get them back on the right track and use that data as a growing point for the next renewal. He advises carriers to seek feedback from their insurance providers regularly to determine what they’re doing well and what needs improvement and develop and enact a plan that illustrates a desire to improve.

“Transparency has certainly been king. If you're not transparent, we absolutely don't assume the best. There's probably a chance we wouldn't even necessarily want to offer terms,” Flaherty said. “Bad things happen. Be accountable. Have a plan. And that's what some of these technologies we're talking about help you do.”

Leveraging data from technology

Flaherty has been a big fan of camera technologies – especially driver-facing – for over a decade because they are incredibly valuable in exonerating drivers in nuclear verdicts cases, he said, and there are additional technologies like safe and optimized routing, for example, among many others, that can provide opportunities to lower rates.

But a camera – and other technologies – isn’t a magic pill, Flaherty said.

A carrier must decrease losses in a way that is sustainable. In general, insurers are looking for five or more years of consistent loss reduction. But he said loss history is merely a small slice of the pie and doesn’t carry much weight because if driver scores, for example, are elevated and a carrier has high turnover rates, an underwriter will view that account as lucky with expectations that it’s only a matter of time before a bad claim occurs.

He said carriers need to constantly make investments in people and safety technologies, yes, but “don’t just enable tech and then not use it.” There has to be proof of its benefits.

“It's all about action in my mind and how you take insights that are being delivered by (technology) … and how you then turn that into improved performance through your drivers; how you apply management and training and support to a driver,” Flaherty said. “It improves the overall driving performance of the fleet, which we believe there's a direct correlation to (accident) frequency, which we directly correlate to overall losses. So if you can create that happy circle over a couple or few policy periods, I think you're going to be sitting in the catbird seat with some of the best rates, terms and conditions that you can get in the industry.”