55 Things Learned from Expert Commercial Insurance Underwriter
Insurance premiums and renewal rates continue to be one of the biggest expenses incurred by trucking companies. Rates have increased exponentially in recent years due to accident frequency, truck driver shortage, and the ever-present threat of nuclear verdicts. But, we are here to help.
Understanding the role of a Commercial Insurance Underwriter is crucial in managing these escalating costs. A Insurance Underwriter evaluates and assesses the risks associated with insuring trucking companies. Their assessment impacts the premiums and renewal rates that companies face. Here’s a deeper dive into the factors affecting these rates:
- Underwriting Process: The underwriting process involves evaluating the risk associated with insuring a trucking company. This includes assessing the company’s safety records, driver qualifications, and the types of goods transported. The goal is to determine the likelihood of future claims and set premiums accordingly.
- Industry-Wide Premium Increases: Recent years have seen a surge in commercial insurance premiums across the trucking industry. Factors contributing to this include increased accident rates, higher repair costs, and a shortage of qualified truck drivers.
- COVID-19 Effects on Insurance: The pandemic has added new challenges, such as supply chain disruptions and changes in freight demand. These have contributed to the fluctuating insurance rates and the need for more comprehensive coverage options.
- Premium Increase Factors: Key factors that lead to premium increases include accident frequency, company size, and the history of claims. Companies with higher safety standards and fewer claims generally enjoy lower premiums.
- What You Can Control: Trucking companies can take proactive steps to manage their commercial insurance costs. These include:
- Implementing robust safety programs
- Regularly training drivers
- Maintaining vehicles properly
- Safety Culture: A strong safety culture can significantly impact premium costs. Regular safety meetings, driver incentive programs, and strict adherence to safety protocols can lower the risk of accidents and claims.
- Be a Real Partner: Collaborating closely with your Commercial Insurance Underwriter can lead to better risk management and potentially lower premiums. Open communication and transparency about your operations can help underwriters accurately assess your risk profile.
- Technology: Utilizing technology, such as telematics and GPS tracking, can provide valuable data to underwriters. This data can demonstrate safe driving behavior and efficient operations, which can lead to lower premiums.
- Additional Tips from the Underwriter: Underwriters recommend maintaining comprehensive documentation of all safety measures, conducting regular internal audits, and staying updated with industry regulations to mitigate risks.
- Commercial Insurance Take-Aways: Understanding the factors that influence commercial insurance rates can help trucking companies make informed decisions. Regularly reviewing and updating insurance policies ensures adequate coverage at the best possible rates.
- Get Your Commercial Insurance Questions Answered: Don’t hesitate to reach out to your Commercial Insurance Underwriter with any questions. Their expertise can provide valuable insights and strategies for managing your insurance needs effectively.
By understanding these factors, trucking companies can better navigate the complexities of commercial insurance underwriting and potentially lower their premiums. Collaborating closely with a knowledgeable Commercial Insurance Underwriter can provide valuable insights and strategies for mitigating risks, ensuring smoother operations and financial stability.
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Underwriting Process
- Fleet safety program managers and front-line operations are the ones who must maintain the safety culture with the drivers. If they are not ‘singing the safety tune,’ no one is.
- Operations MUST believe in safety culture and live it every day. It is a continuation of the top-down culture that commercial insurance underwriters take into consideration.
- Underwriters will not convince you that safety culture is important. You should already be living it.
“Safety is doing the right thing for a long time.” – Tony Hoff, Napa Valley Insurance
COVID-19 Effects on Insurance
- In the beginning, COVID-19 slowed everything down in the commercial insurance market.
- Initial reduction in claims due to:
- Less congestion on roads
- Increased productivity
- Fewer losses
- Decreased accident frequency
- The trucking industry rebound has led to more claims due to the resurgence of traffic, congestion, and sudden backups.
- Speeding is OUT OF CONTROL!!! Unsafe Basic scores are rising across the board.
- “Accident rates are increasing at an unprecedented level. We need to slow these drivers down.”
Premium Increase Factors
- Everything is more expensive. (Claims frequency and amount, medical coverage, defense attorney fees.)
- Insurance companies are seeing losses where their vehicle never touched the insured truck but are still paying out.
- Plaintiffs are getting better at what they are doing. Ten years ago, they did not even know what a CSA score was. Not they could teach you about CSA.
- There is a lot of uncertainty in trying cases. Settling may be cheaper than going to court (fees/attorneys) even if you were clearly not liable.
- Loss development – the longer the claim is pending, the more it costs.
“A 300% increase in 6 years is dramatic. It is unsustainable. Something has to give. Who is it going to be?”
What You Can Control
- Know the process – know what steps of underwriting consist of.
- Underwriters who have time to thoroughly vet the submission feel more comfortable writing.
- Strongly suggest you shop early. Get ready at least 3 months before renewal. Have your documents ready.
- If you are going to shop with more than one broker/carrier, have a standard submission-ready.
- Know where you stand. Is my expectation to get a decrease? Or do I want to manage my increase?
- (Loss Ratio + Incurred Total Loss) / Your Premium. If you are over 65%, your insurance carrier is losing money.
Safety Culture
- Online continual training is key in proving your commitment to safety.
- Look at your drivers’ attitude. Do they accept responsibility? Are they willing to learn?
- It is absolutely crucial to have a remedial training program. Find drivers’ weaknesses and coach them.
- Insurers look at loss development, are you trending in the right direction. If you have a stellar loss history, a new loss may not significantly affect your premiums.
- Find the carrier that you enjoy doing business with and then figure out the pricing.
- Put some faith behind your trusted safety program. Invest in yourself.
- Let Underwriters know what makes you “Best in Class.”
- Be prepared for renewal, provide a packet with the following documents:
- Financial documents and review
- Loss History
- Commercial Insurance History
- Profile of Operations
- CSA Roadside Results
- Reportable Accidents not on Loss Run
- Onsite Loss Control Survey
Be a Real Partner
- Solidify a business relationship with your Insurance Partner.
- You can get a quote from anywhere, be engaged.
Technology
- Track everything. You can’t know where you are trending unless you can track it:
- Turnover, Retention, Ops Performance, CSA Scores, Driver Safety Performance, Loss Trends, Accident Costs, Recordable Accident Rates, Total Accident Rates, Commercial Insurance Costs
- Benchmark yourself and maintain accountability.
- Find out what metrics are causing your losses and attack those.
- Use front end data to make back end decisions.
“Safety Professionals who make future decisions based on past results and analysis are the most effective. BE PROACTIVE.”
- “Every lawsuit involves being able to produce documents quickly. “Have you trained your drivers? Can you provide the documentation that you’ve trained your drivers?” Camera/online training combination can take a nuclear verdict and knock it out of the courtroom.” – Mark Rhea
- The greatest myth in trucking is that safety is too expensive. The advanced technologies that are now in place are a game changer in the industry. Technology is embraced by commercial insurance companies because it gives us a claims “edge” that we otherwise would not have.
- Onboard cameras and collision mitigation are proven to influence courtroom decisions. BUT it only makes sense if you are willing to act on the data. You will need to have policies in place before you utilize these technologies.
Addition Tips from the Underwriter
- We will look at how many times you have switched commercial insurance carriers in the past.
- If you have favorable loss history that extends beyond 5 years, and then have a bad year, it will come up at renewal. You need a relationship history with your insurer.
- Be 100% honest about what kind of carrier you are and what makes you the best.
- Bring to renewal: What do we do best? What do we need to do better?
- Have Best Practices in place, not the easy out. (PSP, Long-form physicals, etc.)
- Invest money in the onboarding process. Invest in your training.
- 10% of drivers cause 90% of your problems. Get them in and coach them before we lose them.
- Reporting the issue is huge! We track day loss happened vs. when it was reported to us.
- 3 things that will result in plaintiff verdict:
- Leaving the scene of an accident.
- Failure to report an accident.
- Positive drug test after accident.
Commercial Insurance Take-Aways
- 2021 will continue to be a very challenging year from an commercial insurance standpoint.
- Losses are up and so is speed. Slow your drivers down.
- We are living in different times and we need to adjust.
- What makes you an exceptional risk? Can we fix those areas that are not exceptional?
“Safety Culture = Commitment. If everyone in your organization stays committed, you WILL succeed.”
Get Your Commercial Insurance Questions Answered!
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INFINITI Fleet Safety Training has partnered with the Motor Carrier Insurance Education Foundation (MCIEF.org) to help you get your commercial insurance questions answered. INFINITI and MCIEF have joined together to provide access to “Ask Tommy”.
This is a service provided to MCIEF members, but it is being opened up to INFINITI visitors to give you the opportunity to ask your most pressing commercial insurance questions.
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FAQs
What is the role of a Commercial Insurance Underwriter?
A Commercial Insurance Underwriter evaluates and assesses the risks associated with insuring trucking companies, impacting the premiums and renewal rates that companies face.
How do accident frequencies affect commercial insurance premiums?
An increase in accident frequency directly influences the hike in commercial insurance premiums.
What impact does the truck driver shortage have on commercial insurance rates?
The lack of experienced drivers elevates risks, leading to higher commercial insurance premiums.
What are nuclear verdicts, and how do they affect commercial insurance?
Nuclear verdicts are large legal settlements that can significantly impact commercial insurance rates.
How can telematics help in reducing commercial insurance risks?
Telematics and GPS tracking can reduce risks by monitoring driver behavior, which is favored by commercial insurance underwriters.
What are the benefits of investing in advanced safety systems for commercial insurance?
Investments in technology like automatic braking systems are favored by commercial insurance underwriters, potentially lowering premiums.
How did COVID-19 impact commercial insurance for the trucking industry?
COVID-19 disrupted supply chains and increased pressure on the trucking industry, leading to changes in commercial insurance underwriting assessments.
How important is safety culture in commercial insurance underwriting?
A strong emphasis on driver training and safety programs can positively impact commercial insurance underwriting evaluations.
What should trucking companies do to prepare for commercial insurance renewal?
Trucking companies should shop early, get ready at least 3 months before renewal, and have all necessary documents ready for commercial insurance underwriting.
How can trucking companies manage their commercial insurance premium increases?
Trucking companies can manage their premium increases by understanding the underwriting process, maintaining a strong safety culture, and collaborating closely with a knowledgeable Commercial Insurance Underwriter.
What factors contribute to industry-wide commercial insurance premium increases?
Factors include claims frequency, medical coverage, defense attorney fees, and plaintiffs becoming more adept at handling claims.
How can technology help in managing commercial insurance costs?
Tracking metrics such as turnover, retention, CSA scores, and driver safety performance can help make informed decisions, reducing commercial insurance costs.
What is the significance of loss history in commercial insurance underwriting?
A favorable loss history extending beyond 5 years can positively influence commercial insurance renewal, even if there has been a bad year recently.
How do commercial insurance underwriters view safety training programs?
Commercial insurance underwriters favor companies that invest in continual online training and remedial training programs, as it shows a commitment to safety.
Why is honesty important in commercial insurance underwriting?
Being honest about the kind of carrier you are and what makes you the best helps build a solid relationship with your commercial insurance underwriter, positively impacting the renewal process.
How can trucking companies demonstrate their commitment to safety to commercial insurance underwriters?
Trucking companies can demonstrate their commitment to safety by implementing safety protocols, investing in training programs, and maintaining detailed records of safety measures and driver training.
