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ATRI presentation exposes potential risks for commercial trucking insurance

By Thad Nosal  |  April 4, 2019

Truck imageThis past October, the American Transportation Research Institute (ATRI) gave a far-ranging presentation at ISO’s Engineering and Safety Service (E&S™) 2018 E&S Loss Control Executive Forum. The presentation introduced research and findings on safety risks in the trucking industry and outlined potential risks and exposures that impact commercial auto insurers.

About ATRI

ATRI is a nationally respected research organization run by a diverse board of directors representing a cross-section of the commercial trucking industry. Its Research Advisory Committee consists of more than 30 national trucking and overnight delivery companies and supports research into trucking industry issues such as safety, mobility, economics, technology, and the environment. ATRI reports on trends, disruption points, and emerging issues in the trucking industry and proposes recommendations for solutions.

Challenges in commercial trucking

Although the current economy has caused a boom in commercial trucking with overall loads up, the industry faces some difficult challenges. ATRI identified the top ten:

  • Driver shortages
  • Electronic logging devices (ELD) mandate
  • Hours-of-service issues
  • Parking challenges
  • Driver retention
  • Federal Motor Carrier Safety Administration (FMCSA) rules
  • Cumulative economic impact of regulations
  • Driver distraction
  • Transportation infrastructure, congestion, and funding
  • Driver health and wellness

Many of those issues can work together to exacerbate the risks and exposures for insurers. Often the immediate effect of the challenge seems pertinent only to the trucking industry, until you follow the chain of cause and effect and explore the situation further.

Driver shortage

At the very top of ATRI’s issues list is the serious driver shortage facing the commercial trucking industry, which can hurt the industry’s ability to handle the additional needs caused by increased load deliveries. It’s a problem that’s predicted to grow in severity, made worse by a parallel trend of frequent driver turnover rates. According to a 2017 analysis by ATRI, there was a shortage of 51,000 drivers—a number that could exceed 160,000 by 2026 if current trends continue. The consistently high turnover rate for the last eight years adds to the problem by lowering consistency in performance and potentially creating an artificial demand for experienced drivers.

The twin challenges of finding drivers and retaining them seem to be worse for larger trucking companies versus smaller outfits. ATRI research shows that although larger companies can offer higher salaries and company benefits, especially as they shed trucks to make more money per vehicle, drivers are resisting longer-haul jobs to work for smaller regional companies where hauls are shorter and more local. The short-duration regional hauls offer drivers a better quality of life—particularly a better work/life balance—which often appeals to today’s workforce more than straight monetary benefits.

At first glance, the driver shortage may not seem to affect insurers, but that’s not the case. As loads are still up and trucking companies are forced to do more with less, drivers are pushed to either drive more hours against hours-of-service regulations or make better times—and that can often mean increased speeds on the highways, putting drivers and vehicles at risk for accidents, other safety issues, and legal ramifications. All those factors can increase claims and create premium leakage issues because insurers may not have priced fleet policies correctly for such circumstances.

Parking and congestion issues

According to ATRI research and information based on actual driver diaries, 62.2 percent of drivers park their rigs illegally from one to four times per week. This trend is higher for deliveries within cities and more congested areas because parking is harder to find. Naturally, a driver can’t make a delivery if the truck can’t be parked, but the time spent trying to find a legal spot can be lengthy—and a driver can lose 10 percent of their income (time) trying to park.

Related to the parking issue is the cost of congestion, especially in urban areas. Packed roadways in cities and traffic jams on highways can cost drivers a lot of time—and money:

  • $74.5 billion lost to congestion costs in the trucking industry in 2016
  • 2 billion hours in lost productivity in 2016—equating to 425,533 commercial drivers sitting idle for an entire year

The issue becomes one of claims exposure, with drivers adding risk as they make up time by speeding and parking illegally to avoid violating maximum hours-of-service regulations (11 hours of driving).

ATRI researched the best and worst times of day for driving congestion, using a 41-mile corridor through Atlanta, Georgia, as its base. The study found that traveling overnight increased the number of miles per hour, as evidenced by the chart:

But switching to times of less congestion could cause other risks, such as the ability to deliver goods at off-times and the fatigue factor of driving overnight. However, serious consideration in the flexibility of hours of service is one strong recommendation from ATRI.

Predicting crash behavior

ATRI has conducted a considerable amount of research to understand and identify driving behaviors that can help predict crash risk, something of potential value to insurers, underwriters, and rating professionals. New technologies (such as connected vehicles and telematics), driver monitoring tools, motor vehicle reports, and other products are now available to insurers that detail driver and vehicle histories. The new tools can help assess and predict the risk of crashes, which can help underwriters price and rate policies.

According to ATRI research, specific truck driving behaviors can be used to help predict the likelihood of future crash involvement. These behaviors include prior crashes, violations, and convictions. In 2018, ATRI researchers updated their Crash Predictor Model to examine the effects of driver personal characteristics, such as age and gender, on this risk.

ATRI determined the top ten behaviors by drivers that can predict crash risk, complete with the percentage by which each past behavior increases the risk of a crash (as shown in the chart). Gender was also found relevant for assessing crash risk, with female drivers being safer than their male counterparts in every statistically significant behavior.

Potential crash behaviors are exacerbated, as this article has shown, by the issues of driver shortages, parking, and congestion. All those factors can work together to increase the incidences of reckless or careless driving.

Correlation between challenges and risks

ATRI’s research and reporting supports the many correlations between the challenges for the commercial trucking industry and the risks and exposures for the commercial auto insurance industry. ATRI is currently exploring solutions for driver shortages, including using younger drivers to fill the gaps. Operational costs, which affect both how trucking companies compensate their drivers and maintain profitability, are also a key area of discussion. Rules and regulations by government and safety organizations that affect hours of service, rest periods for drivers, and general rules for long and short hauls are constantly being reviewed and examined for changes that can cut costs while maintaining safety for drivers.

New technologies and InsurTech solutions that provide driver and vehicle histories to insurers, increase application accuracy and speed, and ensure up-to-date data and analytics are important tools. Such products and services will be paramount in properly pricing policies, maintaining insurance to value (ITV), and helping increase profitability. For more details on the full range of commercial auto services Verisk offers, contact your sales representative or visit the Commercial Auto website. For more information on loss control, visit the visit the Engineering and Safety Service website.


Thad Nosal is director, Engineering and Safety Service at Verisk. You can contact Thad at Thaddeus.Nosal@verisk.com.

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