In this month’s article I want to briefly address the issues we are all currently facing in the Commercial Truck Insurance Market. Most reading this will be well aware of the tightening market for insurance in some portions of the country, the worst region being the Ontario market. While I think it is well known that higher repair costs as a result of new technology in vehicles, and higher claims as a result of lawsuits, has had a significant impact on loss rates with insurers. It may even be well known that years of a hyper competitive insurance market resulted in a number of insurers underpricing their risk exposure, resulting in underfunded reserves for claims. What isn’t as well known, is the loss of premiums, and claims being paid for uninsured trucks as a result of fraud being conducted by not only some trucking owners, but also being willingly and knowingly done by a number of Insurance Brokers as well. The fraud involves underreporting the number of vehicles a company is operating, and underreporting their exposure to the US market, and in some cases the volatility of the freight they are hauling, in most cases, while placing the fleets under facility insurance, as a last resort to get insurance. The Truck owners do this to try and keep their insurance rates lower than what they should be, and the Insurance Brokers do it mainly as a result of getting paid a commission on the point of sale by the insurance company, knowing they wont get the sale if they report accurate information on the fleet. All of these factors have resulted in poor loss ratios and the tightening of the insurance market to the point where it is stifling competition. I understand that insurers must make a profit, and I fully support them vetting their clients and refusing to ensure carriers who have poor safety records, poor loss records, and very poor and unsafe management practices. I think we all agree these types of carriers and drivers need to be removed from the industry. The problem I have is the spin off that has brought us to where we are now. Massive increases are being seen by even safe and compliant carriers. Some carriers who haul dangerous goods, or other high-risk freight, that have good safety ratings and records, are being refused normal insurance and having to go under facility. One such Ontario carrier, who has a CVOR rating of 15%, was told to go to facility in the last few months. On top of this, insurers are now refusing to insure any new start up company, regardless of driver experience, unless they have a history of having a vehicle they owned under an existing fleets policy for at least 3 years. In some cases, even with this, they are still refusing to insure them as their own stand-alone entity. This in effect, is shutting down the free market system, and reducing competition. Any driver who wants to own their own truck, and have a chance at starting their own Trucking Company, is in essence forced to take their truck and lease on with a fleet for at least three years to get their required insurance experience before an insurance company will even look at them….this is wrong, and in fact gives larger fleets a major, and unfair advantage over potential small to mid size carriers, which is the back bone of this industry. While the Trucking and Insurance Industry has formed a task force to address these idea’s, and it is doing great work to address some of the fraud and facility misuse issues, which is sorely needed. I applaud the effort and work that is being done by this group, however it is not addressing the closure of the market to safe or new carriers, and the competitive imbalance it is creating. Some potential safe new carriers, and some current ones, are being punished for the failures of a small group in the insurance industry to properly monitor and vet companies prior to insuring them, and the Insurance Brokers they do business with. Hopefully the task force, and the spotlight that is being placed on this, will flush the non complaint Insurance Brokers and carriers out of the market, and we can move a step closer to having only good carriers, brokers and insurers, working together to make our industry the best and safest it can be, all on a level playing field for all….
Mike grew up on a beef farm in rural Southwestern Ontario in Huron County. Mike began his career in the Trucking Industry in 1990 at the age of 18, spending three years working for a local carrier Hauling Livestock and bulk agriculture products. At the age of 21 Mike went to work for a long Haul Refrigerated and general freight carrier and spent 5 years hauling all sorts of freight in all 48 US Mainland States and 6 Canadian Provinces. The Carrier then opened a Certified Driver Training School in 1998 and Mike came off the road and become one of the Schools first Certified Driver Trainers. In 2000 Mike Transitioned into Safety and Compliance for the Fleet, while still working part time as a Trainer for the School. In 2002 Mike moved over to a Private Fleet and became the Safety, Compliance, Maintenance and Training manger for the Hensall District Co-operative’s Commercial Trucking Fleet. Mike spent the next 12.5 years with Hensall and oversaw the Fleets as it grew from 40 Trucks in 2002 to over 140 in 2015. In January of 2015 Mike moved into the Trucking Association business and was named the President of the Private Motor Truck Council of Canada, where he remains in his current role.