It's not hard for a trucking company to become uninsurable after a series of catastrophic accidents and insurance settlements, as insurers leverage new data capabilities in their decision-making. Owners have a lot of things to consider while insurance companies are getting smarter with so many new data points available to them. There are some insurance companies that look to provide subsidies to obtain recordings from onboard devices, electronic data on lane departure, data points on hard braking, and the list of different telematics goes on. New trends are being set as the rapid pace of at which technology is evolving, which makes it even more important to keep focused on the critical data points. Business models are reshaping as this takes place.
The old business model of having one truck to one trailer is now likely closer to having four trailers to one truck. Giving someone your trailer is the same as giving that driver your insurance. It doesn't matter whose fault it was, should there be an accident. It's assumed you provided the driver all necessary safety information about the trailer on braking, tires, or even routes to take. You may think you are protected by a trailer interchange agreement, but how effective is it? Most drivers’ insurance policies are only $1 million. Trailer interchange agreements are a good start, but you may need to dig deeper and have a risk management discussion with your broker before you let other people pull your trailers.
Large shippers are seeking to push insurance policy limits to $10 million from $1 million. This comes at a time where synthetic drugs and opioids are not getting caught in DOT drug tests, so it is critical to maintain strict testing and enforcement to identify this before it becomes a catastrophic problem.
The questions to consider are what data points are deemed to be acceptable for driver behavior, hard breaking or lane departure? How long should you keep such electronic data? At what point do you delete it when the data is no longer of use. Even a 10 second video recording can make your best driver look bad. Do not gloss over on board devices that are communicating over the internet with those vendors who are monitoring the vehicle performance.
As we continue on this journey of evolving technology and business models, statistical analysis will continue to be influential in the future. Failure to address red flags in the available data is a common theme in verdicts against trucking companies. You need to be proactive and continue to monitor your telematics, technology and onboard recording devices. It’s important to push your insurer and broker to help you get better as you’re both on the same side.
Leader of Mazars USA’s New Jersey Transportation and Logistics Group, Michael has over 10 years’ experience in public accounting. He specializes in auditing, tax and consulting services to family-owned and owner-operated businesses in trucking, warehousing, logistics, and heavy-haul businesses, as well as other manufacturing and distribution industries. Michael can be reached at 732.475.2195 / Michael.Rofman@MazarsUSA.com