INSURING MOTOR CARRIERS THAT HIRE DRIVERS OF COMMERCIAL VEHICLES - - PowerPoint PPT Presentation

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INSURING MOTOR CARRIERS THAT HIRE DRIVERS OF COMMERCIAL VEHICLES - - PowerPoint PPT Presentation

Apr 14, 2023 34 likes •1.21k views

INSURING MOTOR CARRIERS THAT HIRE DRIVERS OF COMMERCIAL VEHICLES Presented by M. Thomas Ruke, Jr. CIC, CPIA, CWIS, TRS and John H. Love, CIW, TRS W. E. Love & Associates, Inc. C.M.G.A. THESE SESSIONS ARE FILED FOR STATE CE CREDITS You

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INSURING MOTOR CARRIERS THAT HIRE DRIVERS OF COMMERCIAL VEHICLES

Presented by

  • M. Thomas Ruke, Jr. CIC, CPIA, CWIS, TRS

and John H. Love, CIW, TRS

  • W. E. Love & Associates, Inc. C.M.G.A.
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THESE SESSIONS ARE FILED FOR STATE CE CREDITS

  • You must attend all four (4) hours to receive CE credits
  • There will be a ten (10) minute break every fifty (50) minutes
  • States require us to verify not only your attendance but that you are

paying attention/awake

  • During this session you will be asked a question and you will need to

type the answer in the Chat window

  • These will not be hard questions

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CONTINUING EDUCATION QUESTION

  • Did you attend the first two sessions?
  • A

Yes

  • B

No

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THE THREE W.E. LOVE CE SESSIONS

  • Available on the W.E. Love website if you missed them to view, but for

information only:

  • Session One – Business Auto – Liability Considerations
  • Session Two – Government Regulations
  • Session Three – Insuring Motor Carriers
  • Next Presentations for Continuing Education Credit:
  • Session One: November 2, 2016 and March 8, 2017 1-5pm et
  • Session Two: November 16, 2016 and March 22, 2017 1-5pm et
  • Session Three: November 30, 2016 and April 5, 2017 1-5pm et

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INSURING MOTOR CARRIERS

  • Must know their operations and how their operations

affect their insurance

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INSURING MOTOR CARRIERS CONT.

  • If the insured is a user of commercial autos that are 10,001 GVW or

larger in interstate commerce, they have to obtain a DOT number

  • They are subject to FMCSA rules and regulations as well as oversight
  • 10,001 GVW unit with six wheels (small wheels) private as well as for-

hire

  • Yes – Not an 18-wheeler
  • Yes – All for-hire
  • ALL!!

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INSURING MOTOR CARRIERS CONT.

  • A motor carrier is hauling a load down the highway
  • DOT enforcement officer notices them
  • Why would they?
  • Enforcement officer puts motor carrier’s DOT# in their onboard

computer

  • Screen reflects
  • ISSD
  • Pass – Green 0-49
  • Might be with a local vehicle – 50-74
  • STOP – Red – 75-100

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INSURING MOTOR CARRIERS CONT.

  • Are motor carrier just unlucky when stopped for an

inspection?

  • Inspection levels

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NORTH AMERICAN STANDARD DRIVER/VEHICLE INSPECTION LEVELS

  • LEVEL III – Driver-Only Inspection
  • A roadside examination of the driver’s license, medical

certification and waiver, if applicable, driver’s record of duty status as required, hours-of-service, seatbelt, vehicle inspection report and HM requirements, as applicable

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NORTH AMERICAN STANDARD DRIVER/VEHICLE INSPECTION LEVELS CONT.

  • LEVEL II – Walk-Around Driver/Vehicle Inspection
  • An examination that includes each of the items specified under the North

American Standard Inspection. As a minimum, Level II inspections must include examination of: driver’s license, medical examinee’s certificate and waiver, if applicable, alcohol and drugs, driver’s record of duty status as required, hours-of-service, seatbelt, vehicle inspection report, brake system, coupling devices, exhaust system, frame, fuel system, turn signals, brake lamps, tail lamps, head lamps, lamps on projecting loads, safe loading, steering mechanism, suspension, tires, van and open-top trailer bodies, wheels and rims, windshield wipers, emergency exits on buses, and HM requirements, as applicable. It is contemplated that the walk-around driver/vehicle inspection will include only those items which can be inspected without physically getting under the vehicle

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NORTH AMERICAN STANDARD DRIVER/VEHICLE INSPECTION LEVELS CONT.

  • LEVEL I (Full) – North American Standard Inspection
  • An inspection that includes examination of driver’s license, medical

examiner’s certificate and waiver, if applicable, alcohol and drugs, driver’s record of duty status as required, hours-of-service, seatbelt, vehicle inspection report, brake system, coupling devices, exhaust system frame, fuel system, turn signals, brake lamps, tail lamps, head lamps, lamps on projecting loads, safe loading, steering mechanism, suspension, tires, van and open-top trailer bodies, wheels and rims, windshield wipers, emergency exits on buses and HM requirements, if applicable

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THE INSPECTION INFORMATION IS PUT INTO THE FMCSA SYSTEM

  • The information goes into a “formula” to develop the

Absolute Score

  • The Absolute Score then is compared with other motor

carriers in the same Safety Event Group

  • The comparison becomes the CSA score

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COMPLIANCE, SAFETY, ACCOUNTABILITY (CSA)

  • How is it affecting:
  • The motor carrier
  • Carrier Safety Measurement System (CSMS) – Rating
  • Control of operations
  • Focus on the “small things”

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COMPLIANCE, SAFETY, ACCOUNTABILITY (CSA) CONT.

  • The driver
  • Driver Safety Measurement System (DSMS)/PSP
  • The shipper
  • How do they use this information?
  • Third party to arrange
  • Pay more for “safer” motor carriers

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COMPLIANCE, SAFETY, ACCOUNTABILITY (CSA) CONT.

  • Auto liability
  • Underwriting and pricing
  • After almost six years finding the information being

used by plaintiff attorneys to increase the cost of claims

  • Insurance carriers use CSA’s information as an

underwriting and pricing consideration

  • Pressure on smaller motor carriers

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FAST ACT PASSED 12/15

  • Scores hidden
  • Why did Congress order FMCSA to hide scores
  • The scores are flawed

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SAFETY EVENT GROUPS

  • Unsafe drivers and crashes
  • Function of power units as reported by motor carrier on

their 150 report update

  • Others by relevant inspection
  • No inspection in type of operation and for relevant

inspections no factors for number of power units

  • Is this a fair comparison?

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CSA/SMS/BASIC

  • Short time with us – A project in the “making”
  • Concerns
  • A small number of motor carriers have “ratings”
  • Safety Event Groups
  • Not true peers

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CSA/SMS/BASIC CONT.

  • Uneven enforcement
  • More violations depend on where you operate
  • Texas/Indiana/Georgia
  • Yet in a safety group with other states

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CSA/SMS/BASIC CONT.

  • Information’s effect on:
  • Court cases
  • Loads
  • Insurance

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CSA/SMS/BASIC CONT.

  • “The program does not have a means to account for enforcement

differences among the states” – Dan Murray, ATRI

  • 2013
  • Texas
  • 547,987 inspections
  • 1,613,087 violations
  • 2.94
  • California
  • 536,300 inspections
  • 542,375 violations
  • 1.01

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CSA/SMS/BASIC CONT.

  • “Indiana is very tough on speeding” – Steve Bryan, Vigillo
  • “One motor carrier – 7% miles in Indiana and 60% of the

violations”

  • “Arizona writes far more non-English speaking violations”
  • “If you have exposure in one of these many difficult states,

then you start off behind” – Rob Moseley, Jr., Esq.

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CONTINUING EDUCATION QUESTION

  • Exceeding the thresholds:
  • A

Good

  • B

Bad

  • C

Who cares?

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BASIC (BEHAVIOR ANALYSIS AND SAFETY IMPROVEMENT CATEGORIES)

  • Unsafe Drivers
  • Hours-of-Service (HOS) Compliance
  • Driver Fitness
  • Controlled Substance and Alcohol
  • Vehicle Maintenance
  • Hazardous Material
  • Crash Indicator

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PERCENTILE

  • Peer Group
  • Based on
  • Number of units/miles (for unsafe driving and crash)
  • Relevant inspections (all other)
  • Intervention Threshold
  • Unsafe driver, Fatigued driver, Crash – 65%
  • Other – 80%
  • Intervention
  • Warning letter
  • Increased inspections
  • Phone call
  • Focus on site visit
  • Full compliance

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INSPECTION RESULTS

  • The results of the inspection are recorded in SMS and part of

CSA scores

  • What is reflected and available to the public from

inspections?

  • Report number
  • State inspection was performed in
  • Unit description

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INSPECTION RESULTS CONT.

  • What are the inspection results
  • Violations if any
  • Severity of violation
  • Out-of-service or not
  • Total severity during inspection
  • Time weight
  • 3X – Within 6 months
  • 2X – 6-12 months
  • 1X – Beyond 12 months

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INSPECTION RESULTS CONT.

  • The total of the inspections are then reflected in the CSA/SMS

BASIC

  • Is the BASIC a reflection of a safe operation by the motor carrier?
  • FMCSA says “no”, but insurance providers deal with the results

when underwriting and court cases

  • Depends on where operating – States differ
  • Scores were public until 12/15 – Now only “raw” information

unless access to scores is from a third party provider

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RETAIL AGENTS

  • How do you use scores in the underwriting, acceptance and pricing of a

motor carrier?

  • If you do not have access to scores, could you send in a submission without

“checking” the scores?

  • Provider has some scores
  • How will the underwriter react?
  • Will it be less if you know and could explain how improvements are being made?
  • Or
  • If you can find out early and help insured improve before underwriter has to review
  • DOT enforcement officer intervention

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HOW SCORES ARE DEVELOPED

  • Absolute Score for each BASIC
  • The scores are then compared with other motor carriers in

Safety Event Groups

  • The comparison is the percentage reflected and if it exceeds

the threshold, a triangle

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ABSOLUTE SCORE

  • The “absolute score” or “measure” is not a peer comparison but a

reflection of the individual motor carrier’s inspection results in five of the BASIC’s. This eliminates the problem with peer groups but the state variances remain. What is the absolute score? – A simplified description for all but Unsafe Driving is the total of each violation’s severity multiplied by its respective Time Weight divided by the total

  • f the number of Relevant Inspections each multiplied by its

respective Time Weight.

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ABSOLUTE SCORE CONT.

  • A Time Weight of 1, 2, or 3 is assigned to each applicable violation

and each relevant inspection based on its age. Violations/inspections recorded in the past six months receive a Time Weight of 3. Violations/inspections recorded for six months and up to twelve months ago receive a Time Weight of 2. All violations/inspections recorded earlier (older than twelve months but within the past twenty-four months) receive a Time Weight of 1. This time-weighting places more emphasis on results of recent inspections relative to

  • lder inspections. The Time Weight is applied to all relevant

inspections including those that do not result in a violation in the

  • BASIC. A Time and Severity Weighted Violation is a violation’s severity

weight multiplied by its Time Weight.

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ABSOLUTE SCORE CONT.

Measure = (Total Time Weighted Severity Points) (Total Time Weighted Relevant Inspections) Let’s look at an imaginary motor carrier, Tom’s Trucking LLC who has four relevant inspections with two in the most current six months, one in the next six months and one older than a year: 2 x 3 = 6 1 x 2 = 2 1 x 1 = 1 9 9 becomes the denominator of that BASIC.

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ABSOLUTE SCORE CONT.

  • Now let’s look at the Vehicle Maintenance BASIC – Our imaginary

motor carrier, Tom’s Trucking LLC, had inspections during the past twenty-four months that had violations for Vehicle Maintenance. In looking at March 2016 absolute scores, one of the inspections was in February 2016 for obstructed windshield which has a severity rating

  • f 1. An inspection in December 2015 for no brakes as required had a

severity rating of 4. An inspection in May 2015 for Inoperative required lamps which has a severity rating of 6 and no pre-trip inspection which has a severity rating of 4. The fourth inspection in December 2014 was for improper machinery securement with a severity rating of 1

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ABSOLUTE SCORE CONT.

The total Time-Weighted Severity for Vehicle Maintenance used to calculate the VM absolute score in March 2016 would be: February 2016 severity of 1 x 3 = 3 December 2015 severity of 4 x 3 = 12 May 2015 severity of 10 x 2 = 20 December 2014 severity of 1 x 1 = 1 36 for a total Time Weighted severity for the Vehicle Maintenance BASIC in March 2016 of 36. To get the absolute score, you divide the 36 by the Total Time Weighted Relevant Inspections of 9: 36 ÷ 9 = 4.00

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THIRD PARTY VENDORS CAN HELP BY PROVIDING

  • “Estimated – Calculated” CSA scores in enhanced underwriting

analyses

  • Monitoring to keep track of motor carrier safety data
  • Using roadside inspection and violation data
  • Approximate CSA scores can be calculated
  • Calculated scores can still be available
  • They have access to the “raw” data from FMCSA and have written

programs to project the motor carrier scores

  • Will they be “exact”? – No – But close - Yes

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WHY USE A THIRD PARTY?

  • Saves time!
  • Time cost money!
  • Retail agents will not have information available that

insurance providers will unless they develop an arrangement with a third party

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THIRD PARTY PROVIDERS

  • MCIEF Members
  • Central Analysis Bureau (CAB)
  • www.cabadvantage.com
  • Carrier Software
  • www.carriersoftware.com

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Using analytical reports to seek the direction of risk safety and stability:

  • a. Understand the data
  • b. Use the reports to inform yourself and your

customer.

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IS CSA MISUSED?

  • A look beyond the triangle

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CONTINUING EDUCATION QUESTION

  • Triangles are hidden per Congress but:
  • A

Still available

  • B

Gone forever

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ADDITIONAL INFORMATION ON SMS

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CONTINUING EDUCATION QUESTION

  • When a DOT reported crash happens, the driver will be drug

tested

  • A

All crashes

  • B

Only when at-fault

  • C

Some but not all

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DRIVERS

  • Who screens?
  • How good?
  • How long with insured

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CONCERNS FOR WHO IS DRIVING A COMMERCIAL MOTOR VEHICLE (CMV)

  • By the motor carrier
  • Driver selection will affect:
  • Their safety rating
  • Ability to obtain
  • Insurance
  • Loads

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CONCERNS FOR WHO IS DRIVING A COMMERCIAL MOTOR VEHICLE (CMV) CONT.

  • By the FMCSA
  • The bad “actors” must be stopped from driving CMV’s
  • Carrier selection of new drivers
  • Monitoring of current drivers
  • By the insurance industry
  • Acceptance and pricing of insurance is based on the drivers the

motor carrier selects

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DRIVER CONCERNS

  • The insurance industry (companies, wholesalers, retail agents) cannot

provide MVR’s to their insureds! – When the MVR is used in employment – To hire, dismiss, promote or change of employment (job)

  • This is a session about motor carriers so most of your insureds have

motor vehicles 26,001 GVW or larger – Drivers must have a CDL

  • Do all insureds have driver hiring standards?
  • How do the insurers know these standards?

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DRIVER CONCERNS CONT.

  • Can all insureds obtain insurance no matter how bad their drivers

are?

  • The quality of their drivers affects their costs!
  • Do the insureds meet all the requirements for hiring DOT drivers?
  • If so, then they have to obtain their own employment MVR
  • Does the DOT care about drivers that the motor carrier uses?
  • CSA – More focus on their activities

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YOUR INSURED ASKS YOU ABOUT A DRIVER OR TO “ADD” A DRIVER TO THE POLICY

  • What is your reaction?
  • Good driver?
  • Bad driver?

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DO’S

  • Help insured establish driver hiring standards (yes, even small risks)
  • Advise the insured of the federal (DOT/CDL) hiring procedures and

standards and review compliance

  • Advise insurance carrier of hiring standards and adherence
  • Encourage insured to reduce driver turnover
  • Obtain list of drivers from insured
  • Review and discuss any problems with insured (before submitting

risk)

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DO NOT’S

  • Send MVR to insured
  • Approve a driver
  • Reject a driver
  • The hiring decision is the insured’s
  • The insurance industry’s decision is to either insure or not and at what price

based on the hiring practices

  • Suggested communication
  • “We have reviewed your drivers (some, one, current proposed hire) and find

him/her/them not within the agreed upon quality – Tell us how you intend to get back within the quality”

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CDL REQUIREMENTS – MOTOR CARRIER ACT OF 1986

  • Who has to have a CDL?
  • All drivers of “Commercial Motor Vehicles” (CMV’s)
  • For-hire – But also private
  • Employers of drivers who operate CMV’s must make sure

drivers have proper driver licenses or could be fined or held liable

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CDL REQUIREMENTS – MOTOR CARRIER ACT OF 1986 CONT.

  • What is a “CMV”?
  • Vehicles having a gross vehicle weight of 26,001 or more
  • Vehicles having a gross combination weight rating of 26,001 or more

pounds inclusive of a towed unit with a GVW of more than 10,001 pounds

  • Passenger vehicles designed to carry more than 15 occupants

including the driver

  • Vehicles that have to be placarded due to their hazardous lading
  • Exemptions
  • Ag – 150 air miles of starting point

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TESTING AND VERIFICATION

  • Complete application – Date of birth must be shown on application
  • Past three (3) years of employment must be shown and verified
  • 10/29/04 standards
  • New employer must verify information within first 30 days of employment

– Make inquiries

  • Employment (who, how long?)
  • Accidents (preventable, mon-preventable)
  • Drug testing (refused or failed)
  • Confirmation – Previous employer must respond within 30 days
  • Errors, differences between application and previous employer must be

addressed

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TESTING AND VERIFICATION CONT.

  • Current and proper driver license (CDL) to operate the equipment
  • Current MVR (no older than one [1] year) – An employer MVR and

the MVR must be acceptable

  • Drug test results must be in possession of insured for all new hires
  • All employees must be subject to random testing and the selection

process as well as results must be in possession of insured

  • DOT physicals must be in possession of insured – Cannot be older

than two (2) years – Must be acceptable – The driver must also retain a copy to carry with them at all times when driving a CMV

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KEY CONCERN IN PROVIDING INSURANCE TO MOTOR CARRIERS IS “WHO IS DRIVING THE COVERED AUTO”

  • The insured
  • Hiring standards considerations
  • Freight rates
  • Benefits
  • Home time
  • Pay
  • Driver turnover – Both “employees” and independent contractors
  • Safety rating – Control of operations
  • Knowledge of all drivers

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KEY CONCERN IN PROVIDING INSURANCE TO MOTOR CARRIERS IS “WHO IS DRIVING THE COVERED AUTO” CONT.

  • The driver
  • Experience (not age)
  • Past history
  • On-road
  • State enforcement officers
  • DOT violations
  • PSP – Hiring consideration
  • MVR’s – Business and personal
  • Insurance carrier requirements for acceptance and pricing
  • Share with insured

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OTHER REQUIREMENTS THAT AFFECT DRIVERS AND THEIR SELECTION TO HIRE AND INSURE

  • Pre-Employment Screening Program (PSP)
  • Available information to motor carrier hiring new drivers about

drivers’ past on-road activities, inspection reports (36 months – 5 years crashes)

  • Every time a motor carrier gets cited for a violation, the driver will

be cited too

  • The history carriers with them to new employment
  • Additional hiring and disciplinary standards based on on-road

activities

  • EPL coverage needs

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MOTOR CARRIER HIRING AND DISCIPLINE OF DRIVERS

  • Presented to new hires
  • Ask: “Do you meet these requirements?”
  • If yes, then conditional job offer and process the driver for

meeting DOT requirements as well as motor carrier

  • After hire
  • Control the activities
  • Must be monitored and enforced

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MOTOR CARRIER HIRING AND DISCIPLINE OF DRIVERS CONT.

  • Include
  • Experience requests
  • MVR and on-road activities (PSP – CSA validation)
  • Physical and other requirements
  • Employee handbook
  • Independent contractor – In agreement??

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CONSIDERATIONS

  • To meet the motor carrier’s promise to their

customers to be at the location to pick-up a load, there must be a driver behind the wheel

  • At least today –
  • Have you heard about Freightliner’s inspiration

truck that is self-driven and licensed to operate in Nevada?

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DRIVER SHORTAGE

  • More freight but fewer people who want to be an over-the-

road trucker (stay overnight – 300 mile plus radius)

  • Depends on who you are talking to –
  • 25,000 to 30,000 driver shortage today
  • 300,000 in 10 years
  • Driver turnover
  • 97% for truck load carriers over 300 mile radius

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DRIVER SHORTAGE CONT.

  • Age of over-the-road drivers is over 45 years of age
  • Where will drivers of the future come from?
  • What training will they have?
  • What experience will they have?

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FMCSA REQUIREMENTS FOR DRIVERS

  • 18 years of age
  • Intrastate – CDL
  • 21 years of age
  • Interstate – CDL
  • Risk in Wilmington, NC with a driver
  • Less than 21 years of age – Intrastate CDL
  • Delivering soft drinks
  • Cannot have driver deliver to North Myrtle Beach, SC (50 miles) but can send to Ashville, NC (320 miles)
  • Which is more important?
  • State lines or distance?
  • Physical condition
  • DOT physical
  • Age or condition

8/10/2016 Session Three WELWebCE 2016 87

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SLIDE 88

REQUIREMENTS FOR DRIVERS CONT.

  • Insurance industry
  • 23 years of age and 3 years’ experience or not qualified
  • Options for large motor carriers
  • Students from driver training schools
  • Have standards
  • In-house training – Post driver training school
  • Will insurance carrier accept?
  • Smaller motor carriers
  • Any hope?

8/10/2016 Session Three WELWebCE 2016 88

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SLIDE 89

PSP SAFETY IMPACT ANALYSIS

  • Every time a vehicle is stopped and inspected the results are placed in

the data base

  • Carrier Safety Measurement System
  • Basis of CSA
  • Driver Safety Measurement System
  • 3-year’s inspections
  • 5-year’s crashes
  • Used for information and available through PSP for new

employees

8/10/2016 Session Three WELWebCE 2016 89

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SLIDE 90

PSP SAFETY IMPACT ANALYSIS CONT.

  • FMCSA reports results of a study that shows crashes are reduced and

OOS are reduced when motor carriers use PSP

  • FMCSA evaluated the safety performance of carriers’ use of PSP at

least monthly

  • Crash and driver OOS rates were compared for a 12-month period

prior to and 12 months after the start of using PSP

  • The data was then compared to a control group of motor carriers

that did not use PSP

8/10/2016 Session Three WELWebCE 2016 90

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SLIDE 91

PSP SAFETY IMPACT ANALYSIS CONT.

  • All driver class sizes experienced decreases in crash and OOS results
  • On average, carriers who use PSP reduced crashes by 8% and driver OOS rates fell

by 17.2%!

8/10/2016 Session Three WELWebCE 2016 91

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SLIDE 92

THOUGHTS

  • Rob Moseley has used this example
  • An accident happens –
  • The representative of the motor carrier is on the witness stand and asked,

“If you had used PSP, the problem that caused the accident would have been found and the driver would not have met your hiring qualifications so would not have been hired, therefore, the accident that injured my client would not have happened. What would it have cost you to have used the government provided system to assist you in screening drivers to keep bad drivers from behind the wheel of an 18-wheeler? -- $10?”

  • How will that float

8/10/2016 Session Three WELWebCE 2016 92

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SLIDE 93

THOUGHTS CONT.

  • As an insurance provider, you are considering PSP as a part of your

underwriting and claim information at crash time?

  • Retail agents, how are you discussing with your insureds and also

letting your insurance providers know if your insureds are using PSP?

  • What does PSP reflect that motor carriers or the insurance industry

can use?

  • Past employment
  • On-road activities
  • Verification of exposures

8/10/2016 Session Three WELWebCE 2016 93

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SLIDE 94

THOUGHTS CONT.

  • Safety technologies – Can they help with less experienced drivers?
  • Automatic transmission
  • Anti-rollover
  • Lane departure warnings
  • Crash prevention
  • GPS – Monitoring activities – Informing drivers
  • Drive cam – Event recorder
  • Training
  • Crash information
  • “Keep it green”

8/10/2016 Session Three WELWebCE 2016 94

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SLIDE 95

THOUGHTS CONT.

  • Speed limiters
  • Gas saving
  • Crash prevention
  • Electronic logging devices
  • Address HOS and paperwork
  • Do your insureds use?
  • Does the insurance provider know and how are they

reacting?

  • Home more often

8/10/2016 Session Three WELWebCE 2016 95

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SLIDE 96

CONTINUING EDUCATION QUESTION

  • To drive a CMV per FMCSA regulations, driver must be:
  • A

18 years old

  • B

21 years old

  • C

23 years old

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SLIDE 97

INSURING MOTOR CARRIERS HAS NOT BEEN TOO PROFITABLE FOR INSURANCE COMPANIES

  • Recent articles –
  • Agent Broker
  • “Road ahead for fleet owners renewing insurance looks rocky”
  • National Underwriter
  • “Hardening Ahead – Commercial auto rates on the rise:

Trucking operations grapple with the new reality”

  • Fitch Report
  • “Tough times for commercial auto insurers”

8/10/2016 Session Three WELWebCE 2016 97

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SLIDE 98

THE INSURANCE MARKET FOR COMMERCIAL AUTOS

  • John Love’s thoughts --

8/10/2016 Session Three WELWebCE 2016 98

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SLIDE 99

ADDITIONAL CONSIDERATIONS

8/10/2016 Session Three WELWebCE 2016 99

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SLIDE 100

ADDITIONAL CONSIDERATIONS CONT.

  • New applicants: URS Phase One impacts only new registration applicants, who

will be required to use the URS online registration application beginning on December 12, 2015. Only the initial registration by new applicants will be done using the URS online registration application until 2016

  • Already registered with FMCSA: All other aspects of the URS regulation, including

the new fee structure, will roll out during a later phase. All existing entities with a US DOT, MC or FF number, or combinations of them will continue to use existing agency forms and processes to conduct updates, seek additional registration authorities, make administrative filings, and other registration related transactions until September 30, 2016. The requirement for all existing private hazmat and exempt for-hire carriers to have proof of financial responsibility in place will take effect December 31, 2016. The requirement for all existing private and exempt carriers to have BOC-3 filings in place will take effect December 31,

  • 2016. New applicants will begin providing this information September 30, 2016.

8/10/2016 Session Three WELWebCE 2016 100

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SLIDE 101

WHAT DOES ALL THIS MEAN?

  • For the “true trucker” using 18-wheelers
  • If they have a MC# now and an insurance filing – Nothing
  • Except to make sure they update their federal information to

meet the bi-annual requirement

  • Last two digits of DOT#
  • But with the “new” portal
  • MCSA-1
  • After 9/30/2016

8/10/2016 Session Three WELWebCE 2016 101

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SLIDE 102

CERTIFICATES OF INSURANCE

  • Customer of a business (insured) requires a COI before:
  • Work can be started
  • Loads can be picked up or delivered
  • Services provided
  • Leased premises can be occupied
  • Leased equipment can be used
  • Business can get paid
  • Do retail agents have permission to issue? – “Authorized

representative?

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SLIDE 103

COVERAGE PROVISIONS

  • Auto Liability
  • Auto symbols
  • General Liability
  • Premises and/or completed operations
  • Workers Compensation
  • All workers
  • Coverage required
  • Additional insured
  • Primary
  • Non-contributory
  • Waiver of subrogation
  • Notice of Cancellation

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SLIDE 104

CONSIDERATIONS

  • Besides the COI notice of cancellation requirement, typically there are

four areas of risk transfer where the customer asks the insured to provide protection for them while hauling a load arranged by them. The four areas are:

  • Additional Insured
  • Hold Harmless Agreement
  • Waiver of Subrogation
  • Primary and Non-Contributory

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SLIDE 105

AUTO LIABILITY POLICY WORDING

  • 1. Who Is An Insured
  • c. Anyone liable for the conduct of an “insured” described

above but only to the extent of that liability.

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SLIDE 106

AUTO LIABILITY POLICY WORDING CONT.

5. Other Insurance a. For any covered "auto" you own, this Coverage Form provides primary insurance. For any covered "auto" you don't own, the insurance provided by this Coverage Form is excess over any other collectible insurance. However, while a covered "auto" which is a "trailer" is connected to another vehicle, the Covered Autos Liability Coverage this Coverage Form provides for the "trailer" is: (1) Excess while it is connected to a motor vehicle you do not own; or (2) Primary while it is connected to a covered "auto" you own. b. For Hired Auto Physical Damage Coverage, any covered "auto" you lease, hire, rent or borrow is deemed to be a covered "auto" you own. However, any "auto" that is leased, hired, rented or borrowed with a driver is not a covered "auto". c. Regardless of the provisions of Paragraph a. above, this Coverage Form's Covered Autos Liability Coverage is primary for any liability assumed under an "insured contract". d. When this Coverage Form and any other Coverage Form or policy covers on the same basis, either excess or primary, we will pay only our share. Our share is the proportion that the Limit of Insurance of our Coverage Form bears to the total of the limits of all the Coverage Forms and policies covering on the same basis.

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SLIDE 107

ADDITIONAL CONSIDERATIONS

  • Hold Harmless Agreement

H. “Insured contract” means: 5. That part of any other contract or agreement pertaining to your business including an indemnification of a municipality in connection with work performed for a municipality) under which you assume the tort liability of another to pay for “bodily injury” or “property damage” to a third party or organization. Tort liability means a liability that would be imposed by law in the absence of any contract or agreement

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SLIDE 108

WAIVER OF SUBROGATION

  • As I read the auto liability form, if the insured agrees to a

waiver of subrogation in the agreement with their customer and it is signed before the “accident”, the insurance carrier has to honor the agreement

  • But again some customers want to see an endorsement –

ISO has a “Waiver of Transfer or Rights of Recovery Against Others to Us (Waiver of Subrogation) – CA0444 10/13

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SLIDE 109

ADDITIONAL CONSIDERATIONS

  • Primary and Non-Contributory
  • To make the protection provided in the policy for the motor

carrier’s customer/shipper “primary and non-contributory”

  • The protection provided to the shipper under the coverage form

(Business Auto or Motor Carrier) is primary and non-contributory

  • The policies we issue to insureds cannot be any more primary than

they already are

  • Owned auto – Primary
  • Non-owned auto - Excess

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SLIDE 110

ADDITIONAL CONSIDERATIONS CONT.

  • The bottom line – One of the reasons a business purchases

insurance is to meet the requirements of its customers/shippers –

  • When providing insurance the provider must understand

what the customer’s requirements are and be prepared to meet these requirements

110 8/10/2016 Session Three WELWebCE 2016

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SLIDE 111

THOUGHTS ON PROVIDING ---

  • Med Pay
  • Uninsured Motorist/Underinsured Motorist
  • If you provide
  • Why
  • Do you do it right?

8/10/2016 Session Three WELWebCE 2016 111

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SLIDE 112

CURRENT COURT CASES CONCERNING UNINSURED MOTORIST COVERAGE

  • A case that address UM/IUM for a driver, Stinton v. Old Republic

Insurance Company, 2016 U.S. Dist. Lexis 15921. In looking at any court case, you need to keep in mind that this is one court in one state in most cases so it might not be held the same in all states. In some states an insured can select to reject all UM/IUM and some states have a minimum amount that they must select.

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SLIDE 113

CURRENT COURT CASES CONCERNING UNINSURED MOTORIST COVERAGE CONT.

  • When talking to the insured about UM/IUM an agent should start by

explaining that providing workers compensation is the insured’s only duty for a job-related injury to an employee. There is no other

  • requirement. If UM/IUM is provided when not required, then I would

consider it a “benefit” like medical insurance or vacation time. In my

  • pinion, you would never be required to provide UM/IUM to an

independent contractor unless it is required in the ICA.

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SLIDE 114

CURRENT COURT CASES CONCERNING UNINSURED MOTORIST COVERAGE CONT.

  • As an insurance provider you would not want to insure the motor

carrier who allows a non-employee to be in a covered auto so why would you consider providing UM/IUM to non-employees? If there is UM/IUM on the policy, there is a premium which is a cost to the motor carrier and the covered person can collect which would be reflected on loss runs and could cost the insured at renewal. Lastly, the employee/independent contractor, if concerned about being injured while operating a motor carrier’s auto, can obtain UM coverage on their own personal policy.

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SLIDE 115

CURRENT COURT CASES CONCERNING UNINSURED MOTORIST COVERAGE CONT.

  • I know that most of you have been told to make sure you offer policy limits
  • f UM/IUM or you would have an E&O concern. I agree but for personal

lines/ personal auto policies not commercial policies. When dealing with motor carrier clients and discussing their obligation for UM/IUM, you need to explain to the insured about the selection process and what the selection means to their business. You may select up to the policy limits for UM/IUM that you feel you should provide to your drivers. In the selection, remember that there is a premium connected to the selection, that as an employer and insurer of the unit you do not owe UM/IUM to your drivers, but if there is coverage and the driver can collect, it will be reflected on your loss information. If the driver is concerned, he/she can obtain UM coverage on their own personal policy. Please select the limit that is best for your business.

8/10/2016 Session Three WELWebCE 2016 115

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SLIDE 116

THOUGHTS ON THE FUTURE – AT LEAST THE NEXT FEW MONTHS

  • Will the economy stay good so something to haul – Slowed some

recently

  • Will the cost of fuel stay low – Who trusts the oil companies?
  • How is the move by FMCSA going to affect productivity?
  • ELD’s – Monitor drive time
  • Speed limiters – How fast?
  • Enforcement of rules and regulations
  • Do it right or stop doing it
  • SFD

8/10/2016 Session Three WELWebCE 2016 116

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SLIDE 117

MOTOR CARRIER INSURANCE EDUCATION FOUNDATION

P.O. Box 2030 Fort Myers, FL 33902 (239) 997-49084 trs@ibci.net www.transportationriskspecialist.com

8/10/2016 Session Three WELWebCE 2016 117