The autonomous vehicle is coming. In the transportation industry, many of the technologies that are needed to support such vehicles are already available. However, until the self-driving features are fully operational and appropriate regulations are in place, the transportation industry will continue to depend on their drivers to reduce losses. The Electronic Logging Device is one tool that will provide real time risk management information that can encourage drivers to follow the rules and reduce accidents.
Transportation clients are looking for insurance agents to help them navigate to the brokers and carriers that provide the needed coverage and also help them to keep rolling through effective loss prevention and safety programs.
FOCUS ON TRANSPORTATION
Industry experiences new technology and automation trends and a continuation of driver shortages
By Lori Widmer
Since the 1920s, the world has been trying to get autonomous cars to be a thing. So when the first self-driving Uber fleet hit the streets of Pittsburgh, Pennsylvania, the buzz began about how autonomous fleets could revolutionize transportation. Not far behind was the buzz surrounding the myriad risks that come with removing drivers from big rigs and trusting computers to make the right decisions.
Yet despite all the hype and concern, the automated transportation issue is, by most accounts, not much of one. At least not yet. According to analysis released by DB Squared, Inc., self-driving vehicles will continue to steal headlines and be considered; but for now, the prediction is that such automation won't significantly impact the trucking industry. What will impact business? The analysis suggests technology, automation and the ongoing driver shortage will dominate the conversation.
While the rule itself only requires the collection of data necessary to determine compliance with hours and service regulation, there are also products that collect more data. For example, Rooney says some ELDs capture critical events, such as hard braking or speeding, which can also be recorded by some of these products to help with efficiency and safety. And while compliance is uppermost in the minds of insureds and agents alike, Rooney says now is a perfect time to think beyond the required information. "On the path to achieving ELD compliance, there are many options for motor carriers to choose from. Now is a great time to explore them, before the deadline looms too large."
Ward Stein agrees. Stein, president of Greenwich Transportation Underwriters, Inc., says there is an "avalanche of data" available via the Federal Motor Carrier Safety Administration (FMCSA). "With just a computer and Internet connection, an agent can learn a lot of valuable information: ownership, experience, type of authority, commodities hauled, equipment count, territory served, inspection history, out-of-service violations, safety ratings and enforcement actions, relative comparison to others, even down to specific inspections and violations by unit and location," says Stein. "This helps an agent determine the relative safety snapshot of a trucker and separate them into healthy and successful operations, those needing some help, and those to avoid altogether."
Other technology is also impacting the trucking industry. David Brown, senior vice president and transportation leader for Chubb Global Casualty, says that alongside the ELDs, there's been an evolution in transportation-related technology of late. "Company fleets are now being equipped with event recorders (cameras), lane departure warning, collision avoidance and roll stability control systems," Brown says. "All of these newer technology features, in addition to assistance from specifically designed training, are helping to contribute to greater road safety, which can lead to lowering the overall cost of risk."
While such trends are creating positive impact, there are also coverage trends that aren't so positive. Steve Shepard, transportation underwriting manager for Burns & Wilcox, says the "wheels-related businesses that have more hazardous exposures" are seeing downward pressure. "The current trend is a hardening of pricing from insurers in regards to commercial auto and trucking risks as compared to other risks. There is also a trend in the tightening of underwriting guidelines; this is being driven by poor loss results in the commercial auto and trucking arena."
Another area of focus, Shepard says, is safety scores and driver turnover, which he says are being interpreted by carriers as a higher likelihood of loss. "Knowing that there is a greater emphasis on DOT compliance, many carriers now utilize Central Analysis Bureau (CAB) to analyze the safety results of potential insureds. In the past, carriers would make exceptions, but now they are less likely to accept submissions with these issues," Shepard adds.
That could be why Brown says large carriers are either leaving or pulling back from the transportation space. With an increase in litigation, carriers are reducing capacity and repricing auto liability coverage, Brown adds. "The result is that transportation companies, and in particular trucking companies, whether small, mid-sized or large, are faced with greater premium cost for their auto liability coverage and a reduction in the pool of insurers willing to provide the coverage."
Coverage, too, seems to be tightening, according to Brenda Ryberg, vice president and program manager of Hazmat Trucking for Freberg Environmental Insurance. She's observed carriers pulling back on availability and pricing due to trends they're seeing within the underwriting results from 2011-2015. "Carriers seem to be leaning toward taking at least one of the following actions to try and improve their bottom line: some carriers are taking rate increases while others are changing their appetite by premium size, commodity, radius, etc., and a few markets have pulled back and are talking about completely exiting their trucking books of business," Ryberg says.
Still, Ryberg says there's no shortage of capacity for accounts with "great loss ratios. Carriers seem to be finding a way to keep those accounts in spite of their new directive," she says.
The aging driver
Yet, there is one area where a shortage is impacting business: finding and retaining qualified drivers. Rooney says the current driver demographic is of an experienced, yet aging driver workforce with few new entrants to replace them. "That's where the need for more robust driver retention, training, and onboarding programs becomes increasingly acute," says Rooney.
Yet, good luck finding those drivers in the ideal demographic-the current shortage of drivers comes in at an estimated 25,000, some of which is due to the demographic, according to the American Trucking Associations. "Currently, transportation and trucking companies are having difficulties hiring experienced and qualified drivers; some companies are even offering incentives for new drivers, including discounted training sessions along with higher pay and benefits," says Brown. "As the shortage of drivers persists, companies within this industry sector are continually finding themselves competing with one another for qualified employees."
The agent/broker partner
Despite these setbacks, the transportation industry can reduce its loss exposures and improve its risk portfolio, but it's going to take an agent/broker who is going beyond just selling insurance. "Producing agents and brokers need to be prepared, keep in touch with their clients and prepare them for the possibility of changes coming their way," says Ryberg. "Agents need to be well informed about their clients' operations and understand the basics of what makes their clients who they are. This includes everything from garaging locations, commodities, radius, loss history, hiring, training, safety, maintenance, and financials."
Stein says agents can get their customers there by helping them develop better monitoring methods, including watching safety trends, and training programs. "Insurers feel better about offering broader coverage at competitive prices if they believe the insured has good experience and can demonstrate that it's effectively managing its business by adhering to the rules, and hiring, training, and retaining good drivers who they don't push beyond the limits when they're tired or when weather or traffic conditions are dangerous," Stein adds.
Stein and Ryberg both suggest that agents and brokers ensure that their client companies are monitoring the Safety and Fitness Electronic Records (SAFER) system activities and looking for potential trends and issues. Ryberg says that evaluating drivers and applying predictive modeling to each client helps agents and brokers find accounts that provide the best fit with their program. "The more informed the agents and brokers are, the better chance they have to write or retain the business," Ryberg says. "Oftentimes, knowing all the ins and outs of their clients' operations will also put them in a better position to negotiate better terms, pricing, retentions or coverage options."
Brown suggests a more holistic approach to customer account management. "Brokers/agents should work with their customers to ensure they understand and recognize the benefits of achieving greater loss prevention, which in turn can lead to overall longer-term savings."
Brown advocates for brokers and agents to provide loss control, benchmarking, training/education, and other services to differentiate themselves in the market. Shepard says that adding knowledge to the mix can help brokers and agents differentiate. "It would be beneficial to not only understand what insurance carriers expect but also understand the issues/concerns that your clients face on a day-to-day basis," Shepard says. "Having both perspectives is important when matching the insured with the appropriate carrier that provides the best available coverage and the best available pricing"
That means investing time and energy into being industry experts and trusted advisors, says Rooney. He says successful agents and brokers are active in both state and national trucking?associations, and they take the time to learn the industry and issues that truckers face. "Everyone is looking for the value added and what every party brings to the table. That's where agents and brokers can thrive. The bottom line is that truckers want to work with specialists who know their business."