Choosing the right insurance policy can be a lengthy and complicated process for the average person. For fleets, no matter whether it’s large or small, insurance policies are a vital aspect of the business. Brandon Guiliani, department head of transportation at Seubert & Associates, joined Hayden Cardiff, founder and chief innovation officer at Idelic, to discuss how companies can improve their relationships with underwriters and what they can do to create the most effective insurance policies for their fleets.
According to Guiliani, insurance carriers have not turned a profit since 2010, despite the continuing increase in insurance costs for motor carriers.
“The losses are outweighing what they're charging in rate—that's causing a hike,” Guiliani explained. “Inflation—that's causing a hike. Nuclear verdicts—that's causing a big black cloud over our industry. Also, there are more expensive vehicles on the road. Those are just a few of the multitude of reasons why these insurers are getting hit with astronomical increases year after year.”
Nuclear verdicts, Cardiff reports, have grown 235% over the last six years, and they are becoming incredibly common with the average cost of a claim going from $50,000 to 60,000 to hundreds of thousands of dollars.
“In the last six to eight months, there have been over 300 nuclear verdicts,” Guiliani explained. “When you look at years dating back from 2006 to 2011, there were under 30, so our industry as a whole is changing. And, unfortunately, there are a lot of insurance carriers that are now exiting the marketplace, leaving few and far apart carriers that want to take on that risk. Not only that, nuclear verdicts have changed the capacity levels these carriers can offer. Previously, they were offering $5 million of coverage, but because of the nuclear verdicts, they are reducing their capacity to $3 million, $2 million and even $1 million, unfortunately, causing motor carriers to reduce the amount of insurance coverage that they have, which is actually leaving them at risk.”
To avoid the overall consequences of nuclear verdicts and higher insurance costs, Guiliani suggests fleets evaluate the current protocols in place surrounding safety and driver training.
“Carriers need to start evaluating what they are doing to prevent these accidents,” Guiliani said. “Evaluating your drivers, making sure that you're identifying problem areas and putting a proactive approach in place. A lot of our clients have the technology, but they're not managing it efficiently. Almost like they have it, but only because they were told they needed to have it.
“Dash cameras are a huge topic right now,” Guiliani explained. “A lot of people don't want them. If it's out there, and you don't have it, what do you think an underwriter is going to do when you're not utilizing all the technology that's at your disposal? Underwriters are under a magnifying glass and they're underwriting you extremely hard right now. If you give them any ambition to increase that rate, they're going to take it because they know it's not a matter of if but when you're going to have a bad accident. And unfortunately, if your i's aren’t dotted and your T's aren’t crossed, guess what? You're at fault, and the carrier's at fault for insuring you.”
Cardiff reiterated that cameras, predictive analytics, machine learning— all these kinds of technologies are readily available in the market. They help fleets to protect their drivers and help create safer roads for everyone. Underwriters are going to wonder why you aren’t using everything that is at your disposal. By adopting the available technologies, fleets can provide factual data to back up their safety protocols that will better protect themselves on the road and in the courtroom.
The Texas Department of Transportation worked vigorously to get that role changed, where the courts are not using reptile theory anymore and playing off the emotions of the jurors, according to Guiliani “They're looking at true hard facts and what fleets are doing toward prevention,” he said. “The big draw here is they— the plaintiff's attorneys—don't put the driver or the facts of the case on trial. They put you as a motor carrier on trial. Are your processes consistent? Are you training the drivers? Are you training the right driver? With the right information at the right times, can you document that? Are you being proactive and predictive? These are all questions fleets need to prepare to answer.”
To do this, Cardiff urges fleets to open up to their insurance providers. Share the process, and talk about what’s going well and also what’s not going so well.
“The relationship between a fleet and their insurance provider is a marriage,” Guiliani explained. “Many times, I sit down with clients and I discover that they have never met their underwriter. So after signing a contract with an insurance provider, they’re getting married before dating. Does that make sense? No. Get to know the person that's putting numbers to paper. Build that relationship with that individual. That underwriter wants to see where your weaknesses are, because he believes if you're doing that, guess what? There's common ground here. You guys can collectively work together to build the best protection plan possible.”
