Risk & Business Magazine General Insurance Services Magazine Spring 2018 | Page 29

TRUCKING INDUSTRY
T
he trucking industry has not
been particularly technology
focused, but it looks like
that’s all about to change.
As of December 18, 2017,
truckers that travel beyond a 100-mile
radius are required to keep and maintain
electronic logging devices (ELDs).
These plug-in devices are programmed
to track drivers’ hours, including time
spent waiting to get their hauls loaded
and unloaded. Now, according to
the new federal mandate, which was
issued by the Federal Motor Carrier
Safety Administration (FMCSA), their
maximum 11-hour daily driving limits
will be closely monitored. The industry
has been up-in-arms over the mandate
because of the extra cost associated with
the ELDs, the to-the-minute logging, as
well as the additional information many
feel should be kept privately within the
individual company.
The old system used pen and paper, so
it was less intrusive and more flexible.
Trucking industry executives now fear
that requiring ELDs is just the first step
in forcing companies to surrender data
that they believe is private information,
such as individual driving habits. Many
are already being asked to deliver
such information to their insurance
companies voluntarily in exchange for
small financial incentives or discounts.
Those in the insurance industry have a
different view. We believe that detailed
electronic data will someday make it
easier for companies to control their
insurance costs—not harder. Currently,
rates are calculated as averages of drivers
in a particular industry or geographic
area based on their past history. Someday
in the not-too-distant future, however,
insurance companies will be able to
rely on detailed ELD information to
underwrite policies based on a business’s
actual track record. They will be able to
look at historical rates to evaluate, say,
where the trucks have been driven, what
type of loads they have carried, and how
good a driver’s driving habits have been.
Under the best-case scenario, trucking
companies will be able to implement
safety, training, and hiring programs to
improve their driving profile and lower
their insurance rates. Companies that
choose to monitor not only hours and
speed but also driving styles such as
braking and cornering can identify those
things and provide feedback and training.
Easier driving on the trucks saves on the
maintenance of the vehicles, and training
on how to make the driving safer will
always look favorable to the insurance
carriers. That type of control wasn’t
possible before the implementation of
electronic tracking.
The main focus is the reliability of the
ELDs. They are expected to be tamper-
proof, ensuring insurance companies
that drivers are not running unlawfully.
A common belief, both in the insurance
industry as well as in the general public,
is that a percentage of drivers are driving
illegally. Illegal driving usually means
when drivers are driving without enough
time off, or more importantly, without
enough sleep, between work hours. In
these cases, they are putting the public
and themselves at risk as well as risking
the financial security of the insurance
carrier.
“Logbook violations occur for reasons
other than long driving hours, but having
driven more than 12 hours since the
last main sleep, as reported by drivers,
was associated with an 86% increase in
crash risk, relative to less than 8 hours,”
according to an Insurance Institute for
Highway Safety (IIHS) report.
It’s an easy-to-follow roadmap. Drivers
driving within the Hours of Service
(HOS) rules are less fatigued. Less
fatigued drivers are less likely to crash.
Fewer crashes lead to better safety
scores for the trucking company, which
ultimately lends to lower insurance
premiums.
The new electronic reporting also
eliminates another hassle and cause
for higher Safety Measurement System
(SMS) scores—the actual accuracy of
the logbooks. We have had clients with
violations issued solely because the
duplicate paper was folded underneath
the original and therefore did not copy
correctly. Again, fewer violations equal
lower SMS scores and a better insurance
profile.
Already, just weeks after the new
federal mandate to install and use
ELDs, trucking companies are seeing
some benefits. Nearly 30 percent report
a reduction in compliance violations.
Compliance violations show on the
Compliance, Safety, Accountability (CSA)
carrier scoring reports, which heavily
influence insurance underwriters in both
their willingness to write an account
as well as the premium pricing they
assign. In addition, nearly 20 percent of
trucking companies have reported seeing
improved driver and public safety. For the
industry as a whole, this can only lead to
fewer claims, lower dollar amounts being
paid on those claims, and therefore, lower
insurance rates.
We recommend starting a conversation
with your insurance agent, who may
be able to use your ELD data to help
advocate for better rates. With the ability
to track more information electronically,
your broker will be ideally positioned
to promote your company’s safe driving
record and differentiate your capabilities
from others around you. For more
information about the use of ELDs to
help lower your premium costs, please
visit our website at www.genins.com or
call us at [phone]. +
Alison Williams joined the Commercial
Lines department at GIS in 2016, having
found her niche in the trucking industry.
In her spare time, she volunteers for the
Porter County Court Appointed Special
Advocates and the Chesterton High School
Band Boosters.
Don Long has been in the insurance
industry for close to thirty years, with
a special emphasis on contracting,
environmental, and technology businesses.
Outside of work, you’ll find him spending
time with family or crafting homemade
wine and meads.
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