Solutions for Managing Insurance Costs
Every company wants to ensure they receive the best value they can for the money they spend, and insurance is no exception. Here are some tips for controlling the cost of your insurance program, without compromising on the coverage and protection it provides:
1. Make Reducing Claims a Priority: Fewer and less severe claims will have a positive effect on future premiums and save money immediately through indirect costs like deductibles, retraining and administrative costs. Steps to improve safety ratings are a good place to start; being compliant is a basic minimum, but if you want to see lower insurance premiums work toward an "excellent" rating with a program such as Ontario’s Commercial Vehicle Operator’s Registration (CVOR) and the U.S.-based Comprehensive Safety Analysis (CSA). Also, be sure you know who is behind the wheel; the way companies select, hire and train their drivers tend to make the biggest difference in their ratings over time. Carefully reviewing a job candidate’s driver abstract can uncover the threat of claims to come, and the warning signs are not even limited to past collisions. According to research by the American Transportation Research Institute, drivers who receive a ticket for a passing-related traffic violation are 88% more likely than their peers to be involved in a collision. Excessive driver turnover can also predict future claims; are the drivers being fired because of poor performance, or are they leaving because the fleet is forcing them to drive equipment that would barely pass a roadside inspection? For that matter, how are they being replaced? Make sure you’re not hiring the last fleet’s problem.
2. Think About Where You Haul: Many fleets are surprised by how much a small share of their business can influence their overall insurance premiums; hauling an extra load or serving a new route can come at an unusually high cost. Insurance premiums are higher for some jurisdictions because of the potential for lawsuits, and trips in some regions raise the likelihood of weather-related crashes.
3. Think About What You Haul: Cargo choices can make a difference on their own, and higher premiums are not exclusive to dangerous or high-value goods; loads of hay, cotton and scrap metal are all highly combustible. The policies and procedures followed when loading cargo can also make a difference; some fleets will not pick up freight like lettuce or berries early in the morning when the goods are still covered in dew, because if the cargo is loaded before it begins to dry, it will form mold and mildew on the way to its destination. Strategies like these can make a difference between a completed shipment and an $80,000 cargo claim for a load of rotting berries.
Fleets may want to consider higher deductibles to limit the amount that insurance providers are expected to pay when a loss occurs, which will make an immediate difference to premiums. Be careful not to take on more risk than you can afford, though. High deductibles mean more money out of your pocket when a loss occurs, which is why this is a better strategy for fleets that have already addressed the other issues discussed above. Otherwise, it can be short-term gain for long-term pain.
For more tips on managing insurance costs, please see The Top 3 Strategies To Manage Insurance Costs by Northbridge Insurance (August 2, 2013).
Tia Chisholm, HUB International TRANSPORTATION
HUB International TRANSPORTATION specialists are based in Vancouver. Our longstanding relationships with the best providers in the business allow us to deliver the solution that serve you best. With HUB, you can run your business knowing that you are headed in the right direction.