One effective method for trucking companies to lower insurance expenses is to recruit skilled drivers and emphasize safety compliance.
by Danny Sellers, Insurance Office of America
January 2, 2024
The ongoing driver shortage in the trucking sector has prompted some companies to relax their hiring standards, bringing in less experienced drivers to fill vacant roles. Such practices can elevate risk levels for these firms, leading to increased insurance rates.
From a risk management viewpoint, employing skilled drivers is crucial for keeping the Federal Motor Carrier Safety Administration (FMCSA) safety scores low. Lower scores translate to reduced insurance premiums, making it essential for trucking companies to prioritize hiring experienced drivers, especially given the rising insurance rates in the current market.
Focusing on quality driver recruitment and implementing rigorous standards can help carriers manage their insurance costs effectively, ensuring the financial stability of their businesses.
FMCSA’s Safety Measurement System
The FMCSA, an agency within the U.S. Department of Transportation, is responsible for the oversight and regulation of commercial motor vehicle safety. Its CSA (compliance, safety, and accountability) program holds both carriers and drivers accountable for maintaining safety standards.
This program uses a percentile system within its Safety Measurement System (SMS), where higher percentiles indicate a greater likelihood of needing FMCSA interventions, such as warning letters and investigations.
The SMS evaluates and quantifies carriers’ and drivers’ on-road safety performances by analyzing significant factors organized into seven BASICs, including unsafe driving and compliance with hours of service. This data helps identify carriers and drivers who may require interventions.
Trucking companies’ safety data is publicly accessible online via the SMS and is refreshed monthly, incorporating information from roadside inspections, driver and vehicle infractions, recent crash reports, and the results of investigations.
Insurers utilize these percentiles for determining premiums during the underwriting process. A high-risk percentile can result in elevated rates and deductibles, or even denial of insurance coverage. Trucking companies focused on risk mitigation typically achieve lower percentiles, keeping their insurance costs controlled.
Hiring Quality Truck Drivers
Recruiting experienced drivers is essential for maintaining low SMS percentiles, thereby making trucking companies more appealing to underwriters.
Thorough vetting is crucial in the onboarding process, emphasizing candidates with strong records and extensive incident-free driving experience. Motor vehicle records (MVRs) are vital in this assessment, documenting applicants’ driving histories over the last five years to filter out those with unsafe records.
By hiring drivers with clean records, trucking companies can lower their commercial insurance costs since insurers factor in safety records when determining premiums. Experienced drivers also contribute to a lower overall risk exposure, as they can handle challenging driving scenarios more effectively than novices.
Enhancing Driver Performance and Compliance
Recruiting quality drivers is just the beginning; maintaining high operational standards and prioritizing driver performance is also necessary for lowering premiums.
Another strategy is to collaborate with a Department of Transportation consultant who can help manage FMCSA percentiles, ensuring compliance with regulations, providing training resources, and conducting annual evaluations of drivers.
Implementing technology, such as dashboard cameras, can significantly improve driver safety and performance by identifying risky behaviors like distracted driving. These devices enable data analysis to develop effective coaching programs, ensuring safer driving behaviors that ultimately reduce risk.
Moreover, electronic logging devices (ELDs), mandated by the FMCSA, assist drivers in adhering to hours of service regulations, thus minimizing fatigue and streamlining recordkeeping. By adopting these technologies, trucking companies can effectively manage insurance costs and enhance compliance, fostering better financial health for their businesses.
This article was created in accordance with Heavy Duty Trucking’s editorial standards and aims to provide valuable insights to our audience. The views expressed may not align with those of HDT.
Danny Sellers is a Vice President at Insurance Office of America and possesses over 25 years of experience in the commercial insurance field. He can be contacted at danny.sellers@ioausa.com.
