The surge in auto claim costs is putting pressure on the trucking industry, leading to increased premiums for fleet owners. Rising inflation, escalating litigation, medical expenses, and the growing intricacy of modern vehicle technologies are contributing to the yearly escalation of auto claim expenses.
Despite a temporary respite during the COVID-19 lockdowns, commercial auto insurance rates soared to their second-highest level during the second quarter of 2023. To counteract these escalating expenses, insurance carriers have resorted to hiking premiums, tightening underwriting criteria and scaling back coverage options to stay profitable, burdening fleet owners with higher costs in the process.
Truckers can mitigate these challenges and curb escalating expenses by leveraging data-driven solutions and investing in technology. Embracing tools like telematics allows work truck fleet managers to identify risky driving behaviors, potential vehicle issues, and near-miss accidents, leading to significant cost savings and bolstering operational efficiency. By maximizing the use of data analytics, fleet managers can effectively minimize risks and secure favorable insurance terms.
Here are some ways work truck fleet managers can optimize their risk management approach and strengthen their resilience against unforeseen disruptions.
PRIORITIZE ONGOING EDUCATION
Implement frequent education and awareness campaigns and use telematics to inform drivers about the hazards of unsafe driving practices and encourage proactive measures to reduce accident risks. Consider instituting programs that provide safe driving tips and promote responsible behavior on the road. Incentives like bonuses, days off or other rewards can motivate adherence to safe driving practices.
INVEST IN TECHNOLOGY
Leverage technological advancements to reduce accidents and subsequent claims. Telematic devices, for instance, can monitor driving behavior, offer real-time feedback to fleet operators on route conditions and promote safer practices behind the wheel. Incorporating advanced safety features such as automatic emergency braking, collision detection and lane departure warnings further diminishes the likelihood of accidents.
Integrating affordable dashcams and side-view and back-up in-cab cameras not only lower accident rates and fatalities but also significantly influence litigation outcomes. Road-facing cameras absolve drivers in 63 percent of cases, while driver-facing cameras relieve drivers of responsibility in nearly half of all accidents, highlighting the indispensable role of technology in enhancing safety and minimizing legal liabilities.
Moreover, leveraging technology helps mitigate risks associated with business expansions. For example, companies venturing into the last-mile segment may underestimate the heightened risk of theft and delivery failures. Factors like weather, traffic and less experienced drivers in this new segment can profoundly impact the overall risk management framework of a company.
CONDUCT RISK ASSESSMENTS
Analyze fleet exposures and pinpoint potential risks such as severe weather events that are associated with fleet vehicles and driving habits. This entails scrutinizing driving records to detect patterns of accidents or violations that may lead to increased claims. Additionally, assess vehicle safety features and upgrades to mitigate accident risks.
Streamline claims management.
Develop a structured plan for collecting all necessary documentation in the event of an incident to expedite the claims filing process with your insurance broker. Share pertinent data, such as video recordings or telematics, which can help your broker negotiate with the carrier to secure fair compensation for your claim.
COLLABORATE WITH BROKER
Engage in open communication with brokers to exchange insights and refine risk management strategies. Share data and best practices to minimize the impact of escalating claims on your bottom line. Regular communication with your broker also can help align insurance policies with your company’s risk profile.
By embracing telematics, data analytics and proactive risk management strategies, work truck fleet managers can help navigate the challenging landscape of rising auto claim costs and help safeguard their organizations’ bottom line by optimizing routes and enhancing road safety measures. Developing a robust risk management strategy rooted in best practices is paramount for fleet managers to mitigate exposures and secure optimal insurance coverage.
FOR MORE INFORMATION
Jason Eisman, CAIA, CBCA, is an insurance broker at Hub International. He has prior experience in finance, having worked at a top-tier investment bank. Jason is in the process of obtaining an MBA from the Kelley School of Business. Leveraging the knowledge from both his past work experience and education, Jason has been able to understand and interpret past and current market environments resulting in practical risk management opportunities.
