Many companies have experienced 20–50 percent increases in premiums for excess coverage, and even higher if they have had severe losses. Risk advi- sory firms like Aon suggest clients con- sider keeping their primary insurances at a higher level because they are more predictable, and to continue to buy excess coverage so they are protected in case of catastrophic events. Another step companies can take is to review their corporate structure, to be sure that their assets are protected when catastrophic events do occur. Brockinton also noted that there
are still many domestic insurers in the game, and the foreign markets (notably Bermuda and London) have increased their interest given the higher rates. He acknowledged, however, that Arkansas companies will not only have to look to alternative solutions — both domestically and globally — but also double down on safety and risk control initiatives. They will need to be better prepared for increased scrutiny from underwriters. The mounting costs can be formi-
dable for some companies. Small fleets operating with the minimum limits or, perhaps, $1,000,000 in primary insur- ance might be seriously rolling the dice on the off chance that they won’t have any accidents, and hoping if they do, the claimants will be willing to settle for the policy limits. With recent ver- dicts and settlements surpassing $20 million, there can be no assurances that this will be the case.
FIGHTING RISK WITH SAFETY TECHNOLOGY Both Brockinton and Kaiser agree
that what is most likely to have a long- term positive effect is lowering the accident rate by improving safety stan- dards. “In order to mitigate any kind of expense in the future, we have to show we have a safety culture,” Kaiser commented. However, even with a strong safety culture, accidents are still going to happen. As Kaiser pointed out, “Trucks are heavy and don’t stop on a dime, and accidents are usually serious when they do occur.” This translates
ARKANSAS TRUCKING REPORT | Issue 6 2016
“IN ORDER TO MITIGATE ANY KIND OF EXPENSE IN THE FUTURE, WE HAVE TO SHOW WE HAVE A SAFETY CULTURE.”
—JOE KAISER, VICE PRESIDENT AND CHIEF ACCOUNTING OFFICER OF USA TRUCK
into higher medical claims and higher settlements. Brockinton confirmed that when underwriters are establish- ing insurance premiums they look for the frequency of accidents, the severity of accidents, along with the company’s safety profile. There is often a hue and cry against
rules, regulations, and risk control requirements. Yet, we are in a litigious culture, and insurance companies are well aware that trucking companies are typically carrying high limits. “USA Truck profit margins are relatively small,” commented Kaiser. “The law- yers aren’t going after the profits; they know we have insurance coverages.” Attorneys are skilled at doing a deep dive and narrowing in on critical areas like driver hiring, the company’s written driver standards (including drug poli- cies), continuing driver education or the lack thereof, and equipment issues. They will exploit weaknesses and combined with the medical costs, attorneys are often able to garner large settlements. “If a case goes to trial,” said Brockinton, “you’d best have your ducks in a row.” So, what can Arkansas companies
do? Well, it keeps coming down to one major thing — safety. “USA Truck,” said Kaiser “is addressing safety and risk management in a significant way through technology.” He spoke of ELDs, collision mitigation technology and tilt technology for roll overs. He said they have been exploring dash camera tech-
nology that will enable them to monitor drivers and have documentation if and when an accident occurs. Brockinton concurs, and suggests
that mere ‘hope’ is not a strategy when it comes to dealing with regulation and compliance. “The best of breed trucking firms
are embracing the tools available to cre- ate a safety culture that permeates the entire company while protecting their balance sheet by buying adequate lim- its. Regardless of how good you are, it just takes one mistake to have a really bad day,” he stated. The trucking firm may be on the wrong end of a large loss purely because they are the ‘deep pock- et’ — the party with the insurance limits to pay for serious injury or death in an accident they did nothing to cause. It’s a lot to digest for companies that are just trying to haul all the products that con- sumers take for granted — products that are routinely being delivered by a truck. Of course, safety is worth pursu-
ing for its own sake. As Kaiser said, “Our biggest goal is to get drivers home safely…” Managing risk can seem like a burden—just one more layer of govern- ment bureaucracy—but on the highways and in business, it’s always better to be safe than sorry. ATR
Renee Miller is CEO of rescue18wheeler. com. She can be reached at rmiller@res-
cue18wheeler.com.
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