No Answer to No Insurance

Happy New Year!

Lately, trucking Insurance has been making the news. Or I should say the lack of trucking insurance or the lack of affordability of trucking insurance. On October 23, 2020, Doug Ford, the Premier of Ontario, told insurers, for the second time, to rein in the “astronomical” rate increases. He also talked about the denial of coverages for the trucking industry.

What is driving this lack of insurance for the industry? Is it you the driver?

Well, kind of. Since the trucks are still being driven by you or in other words, humans. Humans make mistakes from time to time. Even though statistically, commercial motor vehicles are only at fault 71% of the time in crashes, it does not mean that you are blameless. Certainly, the lawyers try to make it your fault. And they are very successful at it. The lawyers will try to make the driver out to be the bad guy. If they cannot smear any mud on you, then the lawyers will go after your employer. With all the paperwork in trucking companies today, such as truck driver files and truck maintenance files, most lawyers can find flaws and mistakes. They can make even the best of drivers and their trucking company look like they are the evilest devil ever created. This drives up the cost of the court-ordered settlements. Thus, court awarded judgements are part of the problem.

Another huge factor in the court are the safety records of both you the driver and your trucking company. In the USA it is called the Safety Management Score or SMS. In Canada, most provinces call the safety record their National Safety Score. Trucking companies from Ontario call the safety record the CVOR. It doesn’t matter what you call it, the safety record of the company and your safety record impacts the settlement.

Thus, the safety department gets their shorts in a knot when you hand in a Commercial Vehicle Inspection Report (CVIR) with an “X” on it. An “X” means that a defect was found. Every defect carries points for the trucking company. So even though you didn’t get a ticket, the trucking company acquires points. And that is not good for them! When it comes to a crash, when the safety score is put on display for the judge and jury, they don’t understand how to read the scores and they don’t know what a good score is. So, this becomes a battle between the prosecuting lawyer and your defence lawyer. Between them, the one who can best explain this very complicated topic to the court will win.

Poor safety records also have a huge impact on insurability. Every insurance company has investors, and the investors demand a return on their investment. When you combine a poor safety record with a good prosecuting lawyer, the court awards are often skyward bound. This makes it extremely difficult for the insurer to make a profit and to give a sufficient return to the investor. Then, the insurance company must make a difficult choice. They decide which trucking companies they will offer insurance to and those with poor records will not be offered any coverage. For those of you that say, “let the government ensure the trucks because they don’t have to make a profit and worry about investors”, you would be correct in a sense. But remember that the government is using our taxes and why would the government choose to insure a trucking company that hires any driver and does not care about public road safety? I don’t believe that the government being in the insurance business is the answer.

Then what is the answer? The answer is: great drivers, driving more miles with fewer crashes -and trucking companies with great safety records who can afford to pay more for insurance so that the insurance companies can make a profit. Of course, this would mean rate increases for the shippers and the shippers don’t want any part of that. The shippers want to move the freight at the lowest cost for them. So, this really is not an answer.

As long as the shippers keep pushing rates to the bottom and trucking companies keep moving the loads, we will continue to have an insurance problem. Rates must go up. For everyone’s safety on the road, freight rates need to be raised so that everyone can make a profit.

Stay Safe!

Chris Harris
Top Dawg, Safety Dawg Inc.
@safety_dawg (twitter)

About Chris Harris, Safety Dawg

Chris has been involved in trucking most of his adult life. He drove truck for and worked in various office/management positions for a major truck company. His last position of 5 years in the safety department where he was responsible for the recruiting of Owner Operators and their compliance. He joined a trucking insurance company in 2001 and has been in the insurance side of things until making Safety Dawg a full-time endeavour.