Canadian Underwriter

Trucking 101

May 13, 2013   by Angelique Magi

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What does the “big picture” of trucking insurance look like to a newly licensed broker eager to take on the market and win? For starters, the premiums are really high, and news from south of the border indicates that pricing is starting to firm up. How hard could it be to get a prospect list, write a couple big trucking accounts and then take the summer off?

Let’s take a moment and back the truck up. I have written articles discussing the perils an unprepared insurer can face when wading into trucking insurance’s murky waters without the proper infrastructure. But brokers new to the trucking industry will also face hurdles when building a career in this specialty marketplace. To help new brokers build up their portfolio, I have compiled some simple tips I have picked up working with the true specialists in this niche market.

Getting Started

The most successful brokers have a unique blend of patience, credibility and passion for the trucking industry. They have a deep understanding of their customer’s business operations and, more importantly, the tools necessary to help make their customer’s future business plans come to life. These brokers have demonstrated their ability and value to the customer and don’t rely on price in this highly competitive class of business. They also know that if you are going to call yourself a trucking insurance expert, you better know what you are talking about because professional transportation companies have seen and heard it all.

It may seem as though properly assessing a risk profile of a trucking company is a matter of piecing together off-the-shelf commercial coverage into a package policy—provincial auto coverage, property, liability and cargo—but each trucking company has unique needs based on their operational scope. Insightful brokers take the time to dig deep into the details that reflect their clients’ business exposures. Brokers should begin by asking:

  • Where do they travel? Is it a little bit of US exposure, or a lot of US mileage?  How do they classify their drivers?  Owner Operators or Sub-Contracted Fleet Drivers?
  • What are they hauling and what is the value? $1 million worth of iPads or $10,000 worth of potatoes?
  • Who reviews their dedicated contract with the “solely responsible” clauses?
  • When do they need a full-blown environmental remediation solution rather than relying on the auto policy’s third-party liability coverage?

In situations when the tables have turned, brokers need to be prepared when their client asks, “Why can’t I be charged a premium on the basis of just my operation?”

Brokers need to be flexible and expand or alter questions depending on their customer’s operations and specialized coverage options. Sometimes coverage not requested is specifically required after the insurer has assessed the submission. The client doesn’t always know what they need—that’s why they have a broker. It’s also why it is crucial a broker new to the trucking industry gets to know their market’s appetite for this specialized type of business.

Communication is Key

The key to understanding appetite is communication—communication with insurers and with clients. Not just handing the customer marketing material with a row of Freightliners on the front page, but engaging in real conversations about the type of risk and operations that each insurer wants to make up their company’s trucking portfolio. When the broker doesn’t fully understand those needs, there will be frustration felt by both parties for not being successful. New trucking brokers can learn a huge amount in a short time by talking with their underwriters and claims adjusters. You have to remember if the market truly specializes in trucking—if they have seasoned professionals that have worked on these types of accounts their entire careers and may already know the account you are presenting to them. Asking for detailed explanations of coverage, or proposing claims scenarios, can prepare a new broker for when those tough questions come their way.  Reaching out to the insurance company’s risk solutions specialists can help a broker navigate through some of the day-to-day changes that can be a real frustration to a transportation client, including regulatory changes.

Reading up on Regulations

Keeping on top of trucking regulations is essential. Take, for example, a Long-Haul Cross Border Transportation Company. They will have some regulatory accountability depending on their operations, from any or all of the following agencies:

  • provincial and US state authorities such as the Commercial Vehicle Operator’s Registration (CVOR) system,
  • Canadian Ministry of Transport,
  • Canadian Ministry of Environment,
  • Canadian Department of Transportation,
  • Canadian Border Services,
  • US Border Services,
  • US Homeland Security,
  • Federal Motor Carrier Safety Administration – FMCSA,
  • International Fuel Tax Agreement (IFTA),
  • Carmack Amendment to the US Interstate Commerce Act,
  • customs and performance bonding,
  • Highway Traffic Act,
  • Insurance Act.

There is a lot of information to absorb and understand when entering this market, coupled with the need to constantly be managing updated changes and information as they happen. It can be a full-time job. You can’t commit every detail coming out from these agencies immediately to memory, but there is a real expectation, as a specialist in the trucking industry, that any crucial information that could affect the customer’s business and any potential coverage modifications is brought to their attention.

New brokers need to be up to speed on the newest technologies and legislation around them such as electronic on-board reporting (E-Logs) and satellite geo-tracking for fast-tracking border crossings. The dramatically increased usage of telematics by the transportation industry leads customers to ask questions around usage-based pricing and driver behavioural profiling. These are complicated subjects that customers are relying on their brokers to explain and advise about. Brokers are now part of the conversations on the operational costing side of their customer’s business, not just the simple insurance purchase. The broker of tomorrow needs to be ready for these conversations by bringing substance to the table on future state items, and impacts. Getting ahead of the learning curve with regulatory changes and future technology advancements will demonstrate a commitment to their customer’s business and build value based on credible advice.

There are a lot of facets to the transportation industry that a newcomer has to understand, so keep it simple and scalable. As your knowledge of the sector grows, so will your book of business.

Here are five things to keep in mind when entering the industry:

Don’t make promises you can’t keep. Trucking clients are highly educated about insurance costs and the market cycle.  Leading pricing and coverage discussions with “I can save you X%” will likely cost a broker their commission to make it happen.

Get involved in the trucking industry. Don’t just become members of a trucking or safety association; get involved in some committee work. This will give you an opportunity to listen to issues affecting your prospects and customers on a grass roots level. There is no mystery to the trucking community as to why brokers are there. They know brokers are trying to make connections, but by getting involved it demonstrates a willingness to learn and increase knowledge—all while networking.

If you don’t know, don’t fake it. When asked a question about a change in regulatory issues or about specifics around coverage, don’t just pretend to be an expert—become one. In the short-term, use their inquiry as an opportunity to demonstrate responsiveness to their needs by getting accurate, usable information as quickly as possible that meets their expectations.

Slow and steady wins the race. Work with a brokerage that can provide a good mentor in the transportation segment. The ability to learn from early mistakes can create an excellent foundation for growth and knowledge. A seasoned veteran will have the knowledge and experience to help a newcomer on smaller accounts and provide valuable assistance on medium to large accounts.

Get to know the markets. What does Transportation mean to each market? Is it sand and gravel, US long-haul, Oil Rig Servicing? Each market will have different appetites and areas they are really good at. Knowing what each market needs from a broker will reduce the amount of frustration from not having successes.

As the insurance industry matures there will be an increased need for brokers that zero in on a niche segment like transportation and make that segment their career. This new wave of transportation specialist brokers will be faced with a fast-paced environment where the customer’s needs include practical advice on changing business models, the impact on their business from regulatory changes and emerging technologies. The broker that views himself or herself as an extension of the transportation industry first, stays ahead of the changing landscape and holds true to the basics of patience, credibility and passion for the trucking industry will be rewarded with a reputation and portfolio they can bank on.

Angelique Magi is vice-president of strategic initiatives for The Guarantee Company of North America.


Copyright 2013 Rogers Publishing Ltd. This article first appeared in the April 2013 edition of Canadian Insurance Top Broker magazine.

This story was originally published by Canadian Insurance Top Broker.