Trevor Toohill, TruckSure
There has been plenty of chatter in the press and on trucking blogs about truck crashes over the past year. I have written extensively about this and included truckies own discussions and thoughts.
There is no doubt that there is plenty of awareness out there and it would be fair to say that you all know how to fix the problem – but here’s the thing, the problem is not getting fixed.
Still the crashes happen.
The subject has been bashed around and every topic and cause dissected by numerous experts:
Driver distractions.
Driver health.
Speed.
Maintenance.
Sleep deprivation.
Dispatch and deadlines.
Road conditions.
Weather conditions.
Other road users.
Training.
and the list goes on...
The answer lies firmly in the drivers hands as 90% of all crashes where the truck is at fault are caused by the driver!
This fact is not in dispute. I am sure that plenty is going on behind the scenes at company and fleet level and owner drivers are also aware of the problem, but what is the solution.
Well that is another problem because the causes are multiple and not a single issue.
Fix all the problems?
Easier said than done, but you can chip away at it.
Small steps can have a profound impact and will show a tangible result.
Improvement is not an option it is essential.
Improvement in crash statistics is essential for the very survival of some operators.
I have previously highlighted the cost to transport operators when a crash occurs – both in time and money:
Driver safety, death or injury.
Insurance excess.
Loss of No Claims Bonus
Loss of Profit Share
Time off the road.
Load recovery inconvenience,
Vehicle recovery inconvenience,
Lost client confidence and even lost contracts.
Replacement vehicle hire.
...and now there is another big issue.
Insurance companies have had enough!
The premiums you pay to insure your trucks are not enough to cover the costs of claims.
Over the last 5 years competition between insurance companies and a worldwide “soft” insurance market has been a bonanza for trucking companies and the price of buying truck insurance has fallen considerably.
But not any more.
The insurance companies have flagged that they need more money in the pool and the market is now entering a “hardening mode”
No different to the government just raising the natural disaster and earthquake rates in the last budget – the fund is out of money and so they increase premiums to build a reserve.
So we now have a “perfect storm”:
Hardening market.
Worsening claims statistics.
Plus, truck insurance claims records indicate their own “perfect storm”:
Number of claims increasing by volume.
Damage increasing by severity.
Repairs increasing by cost.
Insurance companies only have 3 tools at their disposal to build reserves:
Increase premiums.
Premium rates for trucks are at an all-time low, but the cycle has turned.
In the early 2000’s log trucks were tipping over like flys and the rate to insure a truck and trailer was sitting around 8%. With considerable effort, mainly the result of the work of the LTSC, crashes started to diminish to the point where the technical premium rate fell to around 3.5%. But with soft market conditions that rate is now sitting at around 3% for a good operator – below profitability for Insurers.
However, the problem now is that the claims tail is wagging the dog and the technical rate should be around 4% and rising.
The same applies to line haul operators.
You can expect to see pressure for a 25% increase in your truck premium this year.
Increase policy excess.
Previously standard excesses of 1% with a minimum of $500 – now $1,000 minimum is the norm.
And Insurers are imposing additional $2,000 to $5,000 minimums for high claimers.
Plus, single vehicle accidents on line haul now have a mandatory $10,000 excess.
Eliminate risk – withdraw from the market.
Risk elimination has already commenced. As an example, 2 insurers have withdrawn from the heavy motor market for line haul.
And then there are 4.
Reminds me of the kid’s nursery rhyme – “there were 10 in the bed and the little one said, roll over. So they all rolled over and 1 fell out, then there were 9.
Well in this case we only started with 6 insurers and 2 have fallen out of bed.
So the market just got tougher.
What to do about this?
That will become the burning question.
As a transport operator, it is more imperative than ever to address the issues and causes of crashes and to action meaningful plans to educate drivers on the merits of safe travel.
Embrace all forms of technology that will assist in bringing the driver and the rig home in one piece.
In the meantime, it is vital to trust your business into the hands of only the very best specialist transport insurance brokers working in this dynamic industry.
They have a history and the experience to minimise the impact of these pending changes.
Need to discuss www.trucksure.co.nz
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