THE TRUCKING INDUSTRY
Trucking Industry Faces Insurance Challenges
Donny Cunha has built his career around the trucking industry, first as an underwriter for a large trucking insurance company, then as a partner and commercial account executive at Jones DesLauriers Insurance Management in Ontario. He describes both“ hard” and“ soft” markets in the trucking insurance industry, each of which has different impacts on his clients.
In a soft market, insurance companies are doing well, with low loss ratios( premium income / claim payouts) for each client. In this type of economic environment, insurance companies tend to price aggressively, lowering premiums wherever possible as they try to grow their portfolios. Of course, premiums still are largely determined by a company’ s loss ratio.
Now we are in a hard market, in which insurance companies are paying out more in claims than they are collecting in premiums— largely the result of a strong American dollar. Although Canadian companies take in their premiums in Canadian dollars, their claims are largely paid in American dollars because the majority of their clients operate primarily in the United States. Fewer insurance companies choose to remain in the trucking insurance business under these circumstances, so the market tightens, premiums rise, and insurance providers become much stricter about safety and compliance.
In the trucking industry, every truck of every fleet is assigned a safety rating by either the CVOR( Commercial Vehicle Operator Registration) in Canada or the SMS( Safety Measurement System), the American equivalent. These ratings take into account a host of factors, including hours-of-service violations and maintenance issues, such as balding tires and brakes that need replacing. Trucks that are ticketed can expect a hefty rate increase on their next premium— especially with a poor loss ratio. Carriers that have a high frequency of violations can expect that this will be a factor to justify rate increases on their next renewal— especially when combined with a poor loss ratio.
Clients with poor claims histories and a history of safety and compliance violations can expect to be hit hard when renewals roll around. They are in the worse possible position to dispute an increase and usually have no choice but to pay up.
To avoid these rate hikes, companies should make sure their vehicles are maintained regularly, addressing problems before they can blow up into violations, injuries, or even fatalities. Safety training is imperative, and the company also should work hard to instil a culture of responsibility and awareness among its employees to try to minimise premium increases.
As an agent for Jones DesLauriers, I always stress to my trucking clients how much influence they can actually exert over their own premiums. If they are serious about safety and compliance, it will reflect on their attitudes and actions, usually lowering premiums in the long run. As the link between the insurance companies and my clients, I work with my clients to help them understand their policies and premiums, and I always fight hard to advocate on their behalf.+
BY: DONNY CUNHA, ACCOUNT EXECUTIVE JONES DESLAURIERS INSURANCE
Donny Cunha is an Account Executive at Jones DesLauriers Insurance specializing in Transportation & Logistics. Throughout his 17 years in the insurance industry, his niche specialization in fleet insurance, vast transportation experience and trucking telematics expertise has served as a valuable asset to his clients.
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