April 15, 2009 | By Navigator |
I am frequently asked what the secret to insurance is. In other words, how can a client get his best insurance rate? In my years of insurance experience I have seen many prospective clients head down the paths they think will lead them to their best rate, only to have it turn out just the opposite. This month I thought I’d offer up some tips on what may make your trucking company a more appealing risk to the insurance company and to dispel some myths about what will increase your rates:
Experience: Insurance companies like the comfort of knowing that the trucking company owner has previous experience in the industry before starting his own company. Most insurance companies prefer prospective clients who have been in business, and profitable, for at least 2 years. For new ventures, preferred companies will have owners with multiple years of experience as Owner Operators first.
Drivers: Drivers are near the top of criteria that an Underwriter will review. Preferred clients will have drivers with multiple years (five or more) of experience driving the same type of equipment the trucking company operates. In addition it is desirable for a company to have very low driver turn over, not to utilize “finishing programs” for new hires, and for their drivers to have few, if any, moving violations, within the last 3 years.
Safety: Also high up on an Underwriter’s review is management’s attitude toward safety. Less easy to define, management’s attitude toward safety is often demonstrated through the existence of a complete safety program that is not only reviewed with the drivers, but is the standard to which driver’s are held. Regular safety meetings on relevant topics and safety incentive and award programs for drivers also demonstrate how committed to safety a company may be.
Routes: While the nature of the trucking industry makes this one difficult to obtain, Underwriters have a preference for company’s who have regular, known routes hauling commodities that they have had extensive experience with. In addition, long term profitable contracts with the same core group of shippers also appeal to most insurance companies.
Losses: Of course this is the one I am asked most frequently of all. “How will this claim affect my premium?” The answer is complex. Insurance companies expect losses; that is why they are in business. However, they prefer clients who have losses that are infrequent, unpreventable and non-routine in nature. Some examples of loss experience that might impact a company’s premium are if the Underwriter is able to see a pattern to a company’s losses, the losses are minor but frequent in nature, there is a specific driver responsible for the majority of the losses, but no disciplinary action taken or there are a number of high dollar and preventable claims.
Controlled Growth: Insurance companies prefer clients who have demonstrated stable and controlled growth. Newer ventures that have grown from one truck to ten in a three month period can throw a red flag up for an Underwriter, as he or she will begin to wonder if management has enough safety policies and procedures in place to manage the growth well. Often times trucking companies think that the more equipment they have the more “buying power” they yield. This may be true for a company that has been in business and profitable for 5 or 10 years, but is not the case for a company that has been in business for 1 year and has already had multiple claims.
It is important to note that the items above are not all that an Underwriter will take into consideration while reviewing your account, but they are some of the big items I am frequently asked about. If we can help you to understand your company’s snapshot, give us a call at (800) 596-TRUCK (8782). We’d be happy to help you out any way we can. All of us at the Navigator Truck Insurance Agency work hard at being accessible, helpful and result oriented.
Until next month,
Jeffery A. Moss, ARM