Mitigating Factors

If you run trucks, then, you face two basic realities today. First, no one’s saying that rates will go down any time soon. Second, the days of lax underwriting are over.

More than ever, you have to look at your trucking operation through the eyes of your insurance company before you start to complain about your latest premium hike. What sort of risk are you? What are you doing to show the guy writing your contract that you’re cutting those risks? How do you stack up not against the run-of-the-mill trucker but against the best in the business? Because these days, they’re all any insurance company wants to touch.

Let’s forget about trucks for a second and look at three different fleets of company cars. All three are identical in their makeup: each one operates 20 2003 model year Ford Taurus sedans and logs 40,000 kilometers per vehicle, per year.

Fleet No. 1 requires any person provided with a company car to have a clean driving abstract. Prior to being hired, each employee is screened for drugs and a criminal history, and once he’s given a company car to use, he has to provide a current copy of his driver’s abstract every six months. The abstract is part of a general job performance review by the employee’s manager. He also has to pass a recognized full-day defensive driving course, and take refresher training every two years thereafter. This training is documented and signed by the employee and placed in his file.

If a driver’s conduct behind the wheel results in the accumulation of three or more moving violations in a 24-month period, the employee loses the company car privilege. If he is charged with dangerous or impaired driving, he’s terminated. These consequences are clearly stipulated in the employment contract. There’s no excuse for the employee not knowing.

Only a Ford dealer can service a company car, and while maintenance must be done according to the manufacturer’s recommended service intervals, it’s the employee’s responsibility to get the car to the shop. He turns in all invoices quarterly so they can be filed at head office, where they are routinely audited. Once again, compliance with these maintenance and recordkeeping standards are part of the employee’s job performance review. If an employee fails to keep up, there are financial and/or disciplinary penalties.

Fleet No. 2, meanwhile, requires each employee with a company car to provide an abstract for review prior to hiring and once a year after that. The employment contract states that an impaired driving charge will result in termination. The cars are maintained as per the manufacturer’s manual. These policies are formalized, but there is no audit process in place.

Fleet No. 3 has no formal requirements for a driver’s abstract review or criminal background check. There are few if any formal policies regarding driving performance, accidents, or vehicle maintenance standards.

Now put yourself in the position of an insurance underwriter. Which company’s business would you rather have? Which one is the better risk in the event of a serious accident?

Fleet 2 has some obvious holes in their program. Fleet 3 is low-hanging fruit for any Crown prosecutor.

Fleet 1, on the other hand, treats the company car as an asset that needs to be protected against abuse and premature component failure. It actively manages risk with formal, comprehensive, clearly communicated policies that link on-road safety with overall job performance. It can demonstrate concrete ways to weed out high-risk drivers and discipline poor performers. And when it talks to its insurer about renewals, the fleet manager makes sure the underwriter knows about its safety initiatives and improving trends.

These are steps one company takes with its sales reps driving $25,000 automobiles. Compare that with how you manage the risks associated with your professional drivers running around in $125,000 tractors.

Next time you’re confronted with spiraling insurance costs and severely limited alternatives, put yourself in the shoes of the insurer. How do your driver files, hours-of-service records, inspection reports, maintenance files, and safety policies match up with the best risks on the road?

Managing risk is hard work and a never-ending job. But it just may put you in a position where insurance companies are calling you for business, rather than the other way around.

Raymond Mercuri is senior manager, safety and maintenance, for FedEx Ground. His articles about safety and maintenance appear regularly in Today’s Trucking. He can be reached at 905/602-4445.
rmercuri@ground.fedex.com.