The Insurance Review - February 2008
WHAT'S TO COME IN 2008
By Roland L. Enz - President, California Plus Insurance
With the start of the New Year, I thought that I would make some comments and observations on the state of the insurance industry as it relates to the California trucking industry, and even more importantly, for those of you out there that are owner operators. My comments are not generated by the insurance industry, but are my own – as I see it through the retail side of our business.
Generally, renewals have remained static in recent months. I am no longer seeing the increases like we have had in the past. Many companies are offering renewal credits for loss-free business. Some companies are offering credits on both renewal and new business based, in part, on your credit score. There is a strong preponderance of credibility linking profitability to your credit score. Insurance companies are starting to realize the benefit of having seasoned businesses that maintain adequate loss ratios, and are now rewarding those companies with better rates.
Due to the tightening of underwriting guidelines, business has been profitable for the insurance industry. We see it every day. Underwriters are requiring more information, including loss runs for the last three or four years from your previous insurance carrier. If you are new to the business, underwriters are requiring documented employment history. Underwriters are also asking for documentation for any accident on your MVR indicating that you were not at fault, or documentation from your previous insurance company that no money was paid out on your behalf.
Keep this one thing in mind – even if you were involved in an accident that was not your fault but your insurance company paid money out on it, you now have a loss on your insurance record. If you are ever in an accident, make sure that there is a police report (not just a courtesy report) from the responding officer – always! Be sure to get the names and phone numbers of any witnesses that would support your case.
Even larger credits are available when you keep all of your coverages with one insurance company. Many times coverages are split between two or more insurance companies, which is not necessarily bad. Sometimes, when your agent is putting your coverages together, he/she is looking at the bottom line for your particular situation – but having all of your coverages with one insurance company makes claims handling easier.
For the past several years we have been dealing with a stagnant insurance market. Year after year the same players have serviced the trucking industry. The market was small and for those of us selling insurance, we were all chasing the ball with the same stick. Recently there has been a surge in new companies entering the California market. This is good for the consumer and will allow more choices for you to consider. California is a rich insurance premium playground. The down side for the insurance industry in California has always been the litigious environment that exists in the state. But as long as the industry can make money, companies will hang around and participate in the spoils.
Along with the good times, opportunists will always take advantage of a good thing. Beware! When you are purchasing your coverages, take the time to know who your insurance broker and company are. Don’t buy on price alone. You want the insurance provider to stand by you in the event of a loss.
We are starting to see the emergence of Risk Retention Groups, commonly known as RRGs, in the market. Initially, this concept was created by the United States Congress and signed into law by then President Reagan on October 27, 1986. The concept was created to provide an alternative for those industries that could not find coverage through the conventional insurance market. RRGs exist through loose guidelines and I question their ability to survive. If you purchase your insurance through a Risk Retention Group, they are required to inform you of this in writing. There is no lacking of good markets, and even if you are in the “marginal” category, California still has the Assigned Risk Program available to you.
Many truck brokers and prime carriers are requiring you to have insurance through insurance companies with a particular A.M. Best rating. I have also seen brokers and prime carriers reject coverage from Lloyds of London. Simply put, the people that you are pulling loads for are paying more attention to the strength of the insurance that you are providing to them. The ability to pay a claim is the bottom line, and without this, you could soon find yourself out of business.
And lastly, like I have said before, know your insurance agent – you are putting a great deal of trust in his or her hands. Feel comfortable with what he/she is telling you. Ask questions about the insurance company that you are being placed with and what their claims practices are. If you do nothing else when you purchase insurance for your truck, take time to familiarize yourself with the cargo part of your insurance package. More problems come up in this category than any other. Do not leave any questions that you have until after a loss occurs. By then, it’s too late to do anything about it.
Here’s hoping that we all have a healthy and prosperous 2008. Do your part – drive safe and avoid an insurance claim. Your wallet will thank you later! If you have any comments or insurance-related questions, I can be contacted at California Plus Insurance Service at 1-800-699-7101.