Risk & Insurance
Data Analytics Leads to Lower Premiums and a Safer Fleet
A Northern California motor carrier with a fleet of 65 power units. The firm has been in business nearly 10 years and hauls refrigerated goods nationwide.
The Federal Motor Carrier Safety Administration (FMCSA) has a violation-alert status-rating system that evaluates fleet performance based on five categories, including driver fitness, vehicle maintenance, and inspection violations. Underwriters access this data and, with each one-point increase in an operator’s alert score, insurance premiums increase and the number of insurers willing to quote decreases. When we started working with this client, they had three categories in alert status—and no clue as to what was driving their scores. They were paying more than $10,000 per unit for liability coverage from an insurer targeting distressed risks. Their former agent had offered no loss-control support, nor any guidance on how to establish a safety program.
Unlike most other brokers, we begin with an analytics-based approach to pinpoint the unique problem areas for each client. We access the FMCSA database and drill down to create a detailed, easy-to-read report identifying the underlying issues driving the fleet score and determining the most cost-effective remediation steps to lower that score. For this operator, we determined they were hiring inexperienced drivers and failing to complete detailed pre- and post-trip inspections. Most significantly, we identified specific drivers who were negatively impacting their score. The analysis enabled our loss-control team to develop a targeted, written service plan including samples of driver-selection procedures, incentives for clean inspections, and fines for out-of-service inspections. A focused remedial plan was developed for the more problematic drivers.
With the safety program in place, we approached insurance carriers from a position of strength. Our underwriting submission described affirmative steps the firm had taken to address their historic alert score issues and that their aggressive safety culture made them a better-than-average risk going forward.
The client recognizes the return on safety program investments will take several years to mature, but they are off to a great start with a high-quality preferred insurer and a 10-percent premium reduction. To prevent any backsliding, we continue to provide them a monthly Fleet Safety Management Report so they can catch emerging problems early and take immediate corrective action. Overall, a safer fleet and a satisfied client.