Staying Ahead of the Rising Challenges of Complex Risk

Finding adequate and affordable insurance coverage has become a laborious task in recent times for fleet operators, driven by workforce issues and rising costs across the board.

One of the greater hurdles has been the endemic shortage of qualified drivers — and there doesn’t appear to be relief on the horizon. More than 75% of commercial drivers are over the age of 40, and experts predict the industry will need an additional 25,000 drivers each year until 2030 to meet the demand.

The inevitable increase of inexperienced drivers — who are 3.7 times more likely to be involved in a crash than more experienced operators — will not help insurance costs.

Meanwhile, the industry has seen juries award accident victims an average of $22 million, a nearly tenfold increase from 2010, according to ATRI research. Medical payments for accident victims continue to rise, and the cost to maintain and repair damaged commercial trucks has jumped 10% from 2021 to 2022.

Taking all these pressure points into account, it’s a wonder that any fleet can find coverage, as underwriters have raised premiums and lowered coverage limits in response.

Managing Complex Risk in a Challenging Environment

The good news is, fleets still have a path to better terms and lower premiums for complex risk coverage if they properly manage their complex risk and proactively pursue strategies to mitigate exposures.

Here are four ways transportation companies can manage complex risk and show underwriters that they’re worth the business:

1. Train and re-train to support a safety culture. With the expected influx of inexperienced drivers, transportation companies must make training and continuing education a priority. Underwriters use several variables to determine each driver’s risk rating and may reject drivers with less than two years of commercial driving experience. Requiring new hires to complete an extensive onboarding program and using technology to identify and correct new hire behaviors can make a difference to carriers. In addition, online insurance dashboards that take multiple risks into account give transportation companies insight into insurance costs and the success of risk management strategies such as additional training.
2. Identify patterns in loss history. Review past claims, noting those that are aberrations and those showing a pattern of behaviors contributing to the loss. By evaluating these claims, organizations can identify the root causes of the loss and implement changes to prevent future incidents. For example, an organization that sees an increase in accidents from brake failures can reduce risk by improving its maintenance and inspection program. Dissecting any large claim can help show how to avoid a repeat.
3. Use technology to lead to truth. Many insurance carriers are requiring fleets to install telematics to monitor driver behavior, and some are incentivizing policyholders who install front-facing and driver-facing cameras. Telematics can identify and help address driver errors such as speeding, hard braking and sudden swerves. And cameras can reduce the likelihood of a nuclear verdict from even being filed, showing hard evidence of what happened at the time of an accident. New integrations with camera technology can push the video automatically to first notice of loss claims reporting to adjusters, who can then lead to faster and better identification for defense for transportation companies.
4. Share your safety success stories. Commercial auto insurance premiums are rising and insurers expect organizations to prove that they are mitigating their complex risk. Showing progress in training programs and the use of technology to reduce accidents — while demonstrating revenue and leadership stability — will make an organization more attractive to underwriters.

Risks that come with owning and managing trucking operations are complex. There’s no way around it. Fleets that are training drivers, engaging available technology, assessing their loss history and putting their best foot forward will be doing everything they can to keep complex risk at bay.

Want to learn more about how technology and driver behavior data will transform transportation insurance? Learn more today! 

About the Authors: Lisa R Paul, CPCU, is chief strategy officer for Transportation at global insurance brokerage Hub International. Dain Dockter, CPCU, AAIl, AU, is a senior vice president with global insurance brokerage HUB International’s transportation specialty. This article was authored and edited according to WT editorial standards and style. Opinions expressed may not reflect that of WT.