Skip to main content

Commercial Auto: Profitability, Capacity and Coverage: Part 2

By June 22, 2021July 13th, 2021Charlie's Corner, Iroquois News

In this episode of The Trusted Advisor, Charlie Venus continues his conversation with John Woods from Burns & Wilcox’s transportation department. The two cover the best ways to obtain and maintain commercial auto coverage. John touts the pros of incab technology in the form of front and rearfacing cameras and more. Tune in to see what you can take away and implement at your agency. To check out part one of this episode, click here

commercial auto coverage 3 best practices


Edwin K. Morris (3s):
Welcome to the trusted advisor podcast brought to you by Iroquois. Iroquois is your trusted advisor in all things insurance. This week, you’re listening to the special segment of Charlie’s corner hosted by our very own Charlie Venus.

Charlie Venus (19s):
We are back with John Woods, of Burns and Wilcox transportation unit, to continue our discussion the a state of the Commercial Auto market. When you look at auto losses, you know, I have a background in loss control and when I was doing loss control, I don’t remember the exact percentage, but the preponderance of auto claims were due to driver error. Is that still the case?

John Woods (44s):
Every claim is a different trial. And there’s always a, he said, she said kind of a discussion that goes on after a client. Clearly distracted driving is a huge issue, but I think it’s just as much of an issue for the general public driving as it is for somebody that drives professionally for a living. I don’t know what the statistics are. But if, if you we’ll look at a, a thousand tractor trailer, private passenger vehicle claims, you’re going to find that a greater proportion of those are due to some form of error on the private passenger vehicle than it is on the tractor trailer.

John Woods (1m 31s):
That’s just a well-known issue. The unfortunate part, and this goes back to our social inflation claim, whenever a big truck and a small car are in an accident, small car always loses. And the big, bad trucker is always the one that’s suggested they’re to blame. The reality is it’s typically the reverse

Charlie Venus (1m 54s):
And because of deep pockets or a contributory negligence, comparative negligence. The trucker’s the one that is being asked to come up with all the money.

John Woods (2m 2s):
And that’s why whether, when I was on the carrier side and certainly on the wholesaler side, and I would encourage all your clients and, and your brokers: in-cab technology, and I’ll refer to camera’s directly, are such a critical component of anybody’s loss control program. It almost assuredly eliminates the, he said, she said. The facts are clear, and that just helps the situation.

Charlie Venus (2m 32s):
That’s a great segue, John, because the, the, the next thing I wanted to get to talk to you about is so what can we tell, you know, our members and to tell their clients in terms of what they need to do to better control those fleets, to enable them to get a reasonably priced auto coverage.

John Woods (2m 53s):
So there is a number of things. I mean, first off, everything starts with the driver, right? Hire the best drivers, the most experienced drivers you can, the ones with the best records that you can find. It’s much easier said than done. Huge driver shortage out there, a lot of freight that’s got to get moved. So there’s always that balance, but hiring people that are not qualified or that have suspicious records, that’s a really bad combination. The technology today that’s available is incredible. Whether it’s the, anti-collision systems, the, or what they call accident event recorders, which, or the cameras to me, those are the, those are the end all be all.

John Woods (3m 35s):
And probably the least expensive thing that you can put in your truck that will help you resolve a claim, whether you’re at fault or not at fault. If you are at fault, it allows the carrier to understand what happened, adjust a claim quickly, get out of it, try to minimize any costs associated with adjusting that claim. And if it’s not a fault, certainly fight it to the best of their ability and try to get a better solution. Those are the keys. The other thing is, is if you have a defined procedure, whether it’s a safety procedure, a maintenance procedure, driver hiring procedure, if you have a defined and documented procedure, do not violate it.

John Woods (4m 19s):
The moment you violate it, the moment you make an exception to it, You have set yourself up for a bad result. Should that enter into a claim situation? If you have a defined driver profile that this is the people I hire and you hire somebody that’s much different than that. And that person’s involved in an accident. That’s where the, just write a check comes in.

Charlie Venus (4m 46s):
Yeah. So if you say that I’m gonna hire a driver of that has less than five points or six points, and you make an exception. And that case goes to the court because of that driver has been involved in an accident, you’re going to pay for it.

John Woods (4m 59s):
There are times where exceptions are warranted, but it has to be a really judicial decision and, and well-documented, and not I hire only people with the five points and then hire somebody with 15 points. You know, we want to hire somebody that has got seven points and here’s the reason that I’m hiring them and I documented it and so on and so forth. Those things are, are sometimes well warranted and shouldn’t lead to a problem. It’s the ones where you go way outside the box that there’s a challenge. So those are the three things that I would suggest. And, and, and those, are hiring the best drivers you can, invest in as much technology as you possibly can. Accent event recorders key on top of that was, and then follow the procedures that you have.

John Woods (5m 41s):
You’re better off not to have procedures than the violate written the procedures that they have them. And I’m not suggesting. Yeah, I’m not, I’m not suggesting don’t have them. I’m just suggesting have them, but follow them.

Charlie Venus (5m 52s):
How many carriers are there out there now that are starting to mandate the telematics – whether it’s GPS, cameras, any of the technology that you are talking about?

John Woods (6m 3s):
That couple of, and again, I think these are more program oriented carriers that are saying, here’s our quote, but it is subject to the installation of accident event recorders. There are very few what I’ll call long term name brand transportation writers out there that mandate it. What they are doing though, is that they are offering typically offering to subsidize these telematics a, whether it be, you know, we’ll subsidize on a monthly basis, if your camera costs, the camera and the management of that camera costs you $35 a month, we’ll pay $20 a month.

John Woods (6m 49s):
As long as you continue to remain, you know, write you’re business with us, a, some of them or say, we’ll pay for the cameras outright. A lot of them are doing that. And then what they hope is that their loss history will improve. Very few are giving upfront discounts – some of them might, but very few of them are – what they’re doing is they’re saying, this will help us control your loss history and together we both win. And so in the future, you’re not going to see the next, the rate increases that you might see if you didn’t have that.

Charlie Venus (7m 22s):
Okay. So mitigating the amount of future increases to keep that as a, as low as possible,

John Woods (7m 27s):
That would be the incentive to the Commercial Auto risk. That’s what it is, is we’re going to help you reduce your exposures. We are going to help you help manage your drivers, because that’s the best thing with the event recorder’s the front or rear facing recorders. You can get to see what the driver is doing. And what does, is it helps you evaluate that driver, helps you manage that driver, or if they’re not doing something correctly, you can train them to do it correctly and therefore keep a talented driver versus having them always doing it wrong and saying at the end of the day, I’m sorry. I gotta let you go.

Charlie Venus (8m 4s):
Because of the shortage of drivers, of qualified drivers out there, do you see more companies starting to train their own? Is that becoming commonplace?

John Woods (8m 14s):
I won’t say it’s commonplace, but you know, because these truck driving schools always, they’re the first line of defense for some of these people that are, that need drivers. So they’ll go through this formal truck driving school. Ah, and then they essentially have all of the qualifications that they need in order to get hired. The only thing that sometimes gets in their way is some carriers will say, or they’ve got to have two years of experience, but typically what will happen is they’ll take ’em out of a truck driving school, and then they’ll be with a mentor driver for a period of time. And once they pass the sniff test for these trucking risks, then, then they go out on their own. There’s a lot of talk in the industry about what they call the safe care act, which is going to, if passed, will allow drivers that are under the age of 21 to drive across state lines.

John Woods (9m 8s):
And that’s really to help minimize the continuing driver shortage that we have. So it’ll be interesting to see how that goes through the legal system and if it gets approved.

Charlie Venus (9m 16s):
Now do you see anything coming on the Commercial Auto side like we have on the personal auto side, where you are using the telematics to measure the actual amount of driving the mileage driven and then charging based on miles driven?

John Woods (9m 30s):
Yeah, there are, there are actually some carriers out there right now that do that. Canal has that program out there. There are a few others out there. I think even progressive might have something more on the personal side, but I don’t know a, yeah, I, I do see that happening. And I think for those carriers that have thought it out and have the technology in order to monitor that, I, I think it could be really good, but I don’t think as an industry, we’ve never been one that has been too technologically advanced. And so I think there are a lot less carriers that are willing to take that step, but the few that have and do it right I, I think will benefit.

Charlie Venus (10m 9s):
You know, with all of the technology that’s being used today, is it the Commercial Auto client or the fleet management people themselves, are they managing all of this telematics or is that the insurance carrier or is it a third party or just kind of a mix of all three?

John Woods (10m 28s):
Yeah. Rarely will the insurance carrier, they we’ll ask for access to the data, but they typically are not managing it. Most of these technology companies that offer these accident event recorders to not only the transportation risks, but also for the insurance companies, offer what they call a managed service and you pay more for that managed service, but it, what it does is it that they aggregate all the data and then they send that data to the trucking risk on, you know, an every so often basis that tells them by typically driver, what that driver was doing, how many event triggers they had, what those event triggers were, was the driver doing something they shouldn’t have been doing.

John Woods (11m 12s):
And that goes back to what I said before to wows that risk then to manage that driver. And that is the key. Yes, the camera captures, and it differs by camera, 15 seconds before a claim and 15 seconds after a claim, as well as the claim itself, which is key, but really where that truck risk or, or that commercial water risk benefits is by getting that data and allowing them to train and manage the drivers. If they don’t do it, all it is is a camera and that’s the only benefit you’re going to get out.

Charlie Venus (11m 48s):
So when we were talking about the fleet safety procedures and having documented procedures, that if the trucking firm doesn’t, violates those procedures, that puts them in a tough spot, a from a claims standpoint, when you have these telematics. So you have a driver that is frequently been found to be going over the speed limit, and they, at some point in time, get into an accident, you know, that data is gonna end up in court. Is That going to play the same role if they haven’t taken any corrective action on that driver, that they were eventually exceeding the speed limit yet there was nothing documented in a file. How, how is that going to play out from a claim standpoint?

John Woods (12m 29s):
Yeah. Whether they’re able to, to dive deep enough and, and have that information as discoverable, I think varies, but it it’s like anything else, Charlie, if the insured is getting that data and they’re not doing anything about it, then yes, they’ve set themselves up. But the reality is it doesn’t necessarily have to be that data. If their habitually speeding, you are probably going to see a motor vehicle record that looks a little bit adverse, that’s enough to hurt them. Whereas if the risk identifies the fact that they’re speeding, takes corrective action. And then that guy gets in an accident a year down the road, and they, an attorney, a plaintiff attorney tries to introduce the prior speeding.

John Woods (13m 13s):
I think that’s really beneficial that the risk has taken the, the steps necessary in order to crack that and said, yes, we recognize that. Look what steps we’ve taken and look at that driver’s actions since that point.

Charlie Venus (13m 25s):
So it can work as a benefit as well, if they use it correctly.

John Woods (13m 29s):
It absolutely can, and one of the key components of it is that a risk can actually award and praise a driver if we’re doing the good things. How many times on the road and in videos, have we seen drivers doing the right thing and they never get recognized for them. Now, these cameras capture that and a risk or an insurance carrier will look at it and go, that guy did a great job. He should get an accommodation. He, whether it’s a piece of paper of slap on the back as thank you, whatever it is, those are the things that sometimes go a long way/

Charlie Venus (14m 4s):
Cause normally what you’re always seeing is what the driver did wrong. Not what they did right.

John Woods (14m 10s):
Yeah, absolutely. Absolutely.

Charlie Venus (14m 11s):
And we have a, a member or anybody out there are, any agent out there that is submitting an auto account to Burns and Wilcox. In addition to the, the app and the loss runs, what’s additional information that’s critical for you to be able to do the best job possible for that agent as well as they’re client

John Woods (14m 36s):
Carriers and wholesalers are inundated with this transportation business right now. You hit the nail on the head, Charlie, it’s all about completeness of submission. That’s really the key. If it’s complete, you know short of missing this little piece or I’m missing that little piece, and the more complete, the higher to the top of that stack it’s going to go and the better response time you’re going to have. Aside from that, because that’s kind of a given in today’s market, it’s really highlighting on the top. Here’s our opportunity. And here’s why it’s an opportunity. You know, it’s getting non-renewed, these carriers have declined.

John Woods (15m 16s):
Here’s my relationship with this risk. Here’s why in a dog fight with somebody else, I’ll win the day. It’s really about defining the opportunity. As I said, we’re slammed with business. Everybody is on the transportation side, it’s growing like there’s nobody’s business. Tell me why I want to work on this risk for you and how you’re going to win the day for us if we provide you with a competitive solution. That is that.

Charlie Venus (15m 44s):
Man, and all too often, that information is missing.

John Woods (15m 47s):
I got one today just because somebody found my name on the internet, sent it to me and it said, I have this risk. So I don’t typically work on transportation risks, but I noticed that the premium was, you know, over $150,000. So I got excited about it. So that’s the lead in, Charlie. Now, how excited am I gonna get about that? But we’re going to do our best. It doesn’t give me a great deal of confidence that this person is going to win the day. Maybe I’m wrong, but it’s not the story that you want to tell.

Charlie Venus (16m 15s):
You know, and if you’ve got to make a decision of, am I gonna work on this with, or work on that one that’s got that executive summary that tells you about the opportunity and what it’s going to take to win and why they are the best horse to win it, you know, is going to be an easy decision on your part or one of your broker’s parts.

John Woods (16m 35s):
I work with the people that know the score and are able to punch something over the goal line. That’s who we want to work with. And I think you and your team or that group, you know, we really look forward to our partnership and building a book of business. Sometimes it’s a struggle, but as you get rolling, all of the sudden it’s like, oh, these things are starting the click. And it’s like aahhh now we’ll roll. That’s kind of been how I’ve seen my history. And, and it’s the one where the greatest and deepest partnerships come about when you both want to win.

Charlie Venus (17m 6s):
And we certainly wanna win. And we certainly appreciate the partnership with Burns and Wilcox and all that you’ve done for us. Thanks again, John really appreciate you being with us today.

John Woods (17m 15s):
Oh, I appreciate the opportunity that was given to me. I appreciate our conversation and thank you very much. We look forward to building a very solid and profitable book of the business with the organization. So thank you.

Charlie Venus (17m 29s):
Thanks, John.

Edwin K. Morris (17m 30s):
Thanks for listening to this edition of Charlie’s corner brought to you by Iroquois Group. I am Edwin K. Morris, and I invite you to join us for the next edition of the Trusted Advisor Podcast.