“Warm and lateral” was a phrase Lancer Insurance Company’s now-retired Jack Burkert would mutter when he thought a motor carrier cared more about having a warm body in the driver’s seat than a trained, skilled, well-rested, qualified driver.
One of the most frequent calls we get here at UMA is, “My insurance rates are through the roof and the agent says it will likely increase at renewal. What can I do?” Unfortunately, all too often owners believe there is a secret sauce, when the fact is most simply do not want to learn the process and take the steps to convince an insurance company underwriter that their company is better than average and deserves top consideration.
When applying for bus and motorcoach insurance, the company is eventually asked, “What are your driver hiring policies?” Usually, the answer is somewhat generic, and often the real answer is “whatever the insurance company will approve.”
A recently released report by the American Transportation Research Institute (ATRI) confirms the imprudence of not having a narrow, enforced hiring policy for drivers.
Driving history sign of future performance
In ATRI’s Crash Predictor Analysis, violations are a good predictor of future crashes. For instance, a failure to yield the right-of-way violation increases the likelihood of a future crash by 141%. A failure to use/improper signal conviction increases the likelihood of a future crash by 116%.
Perhaps the two most sensitive issues are past crashes and speeding. A past crash, regardless of fault, increases the likelihood a driver will have another crash by 113%. We use a lot of rationales to hire drivers with past crashes; however, past crashes are a consistent predictor of future crashes. You should know this – actuaries are always brutally correct.
A speeding conviction (1 to 15 miles per hour over the speed limit) increases the likelihood a driver will have a crash by 48%. While that likelihood is not as high as those associated with other driving incidents, the number of drivers in a motor carrier’s pool with one or more violations speaks volumes to an underwriter.
Because of the current driver shortage, some motor carriers are making actuarial compromises. However, increased insurance premiums are the mathematical conclusion.
At a time when there is “more business than we can handle,” it may be a good time to begin incorporating a more stringent hiring policy. By improving loss ratios and actuarially reducing the propensity for future crashes, in time your premium, relative to the current marketplace, should improve. You will increase profitability by putting the numbers on your side.
So, what’s your driver hiring policy? Warm and lateral?
Ken Presley is the longtime Vice President, Legislative & Regulatory Affairs & Industry Relations/COO of the United Motorcoach Association, which works tirelessly for the motorcoach industry.
