The Insurance Report

SHOPPING COVERAGES
By Roland L. Enz - President, California Plus Insurance Services, Inc.

Well, are we in or out of a recession? Were we ever in a recession? It seems that we have too much information and too many talking heads giving lip service to areas that they have little or no knowledge, other than what is fed them. Contrary to the past economic reports, the economy continues to grow - at a sluggish pace - but it is still growing.

I can usually summarize the economy by the number of insurance inquiries I receive each month. From new start-ups, those of you that are purchasing equipment for the first time, to seasoned owner-operators shopping for their renewals. New owner-operators constitute the bulk of my inquiries. Currently, the number of inquiries from new operators is up many times more than any past year.

There are two major factors driving these new inquiries. The first is increased business and the second is increased insurance premiums. Insurance premiums have escalated to the point that many prime carriers are wanting to pass the cost of insurance to their leased operators directly. They are giving these operators the option of purchasing their own insurance or opting into the carrier's plan.

I stated last year that the industry was looking at a 25% increase in insurance premiums. This appears to be holding true for all lines of coverages - liability, physical damage and cargo. Now, to magnify the problem, the market continues to shrink. There are less companies offering coverages to the trucking industry than last year and there will be less in the future. For the most part, once you have given your information to an agent, the majority of the existing markets have seen the submission. I have taken inquiries that underwriters have seen six or seven times. What happens when an underwriter sees a submission that many times? They usually become suspicious of the buyer's intent and pull the quote.

For the most part, the insurance industry is made up of insurance brokers. As brokers, we develop relationships with general agents, companies and underwriters that underwrite within the trucking industry. With the current shrinking market, many of us (brokers) use the same markets. As a point of information, I would strongly recommend that you choose only two brokers to work with you. You will get better service. Once a broker finds that you are shopping coverages with every broker in town, he will stop searching and loose interest in your business.

It is important that you develop a relationship with your future agent. It will save you time and money in the long run. Information is the key in obtaining a quality quote. As they say, throwing it up against the wall and hoping that it will stick doesn't work. Your information goes to only a limited number of underwriters and the integrity of the submission is based upon current and factual information.

The rate of claims have been on the increase lately. It must be that time of year. The majority of all claims submitted are caused from a lack of attention on the driver's part and, clearly, most could have been avoided. The number one submitted claim is running into someone else's truck either at the dock or at a truckstop. The second most popular claim is an incident occurring while changing lanes. I strongly suggest that if you are an owner-operator that you take time out of your day to reflect on your driving habits. It is not always the other guy like we all want so much to believe. If you are a fleet operator or if you have leased or employee drivers, review your risk management procedures. Many of you can't hold meetings as a group, but I urge you to review your own material and present it personally with each driver. Information often seems to go in one ear and out the other. Repetition or a wooden stick is sometimes needed to get your driver's attention.

With insurance markets shrinking, it will become harder and harder to get competitive coverages with excessive losses charged to you or your company. Excessive losses can be construed as one major loss or many minor losses. Now is the time to make a case for your renewal, not 30 days prior to expiration. If you have any comments or if you would like to discuss an insurance question, I can be reached through California Plus Insurance Service in Modesto, California at 1-800-699-7101.