Not too long ago, I can remember when only the larger, national insurance companies would look at a motor carrier’s SafeStat Scores before giving a quote to a trucking company. These would be big companies like Great West, Northland, Lancer, Carolina Casualty, etc. At the same time, very few of the smaller carriers even knew where to look for this information, let alone how to interpret it. For some motor carriers, this was a good thing – it made it easier for those carriers who had marginal SafeStat scores but had good loss experience to find another insurance carrier. Well, those days are over.
Everyone has heard of the CIA (Central Intelligence Agency), and now the insurance industry has its own version of transportation intelligence, thanks to the Central Analysis Bureau (CAB). CAB has been around for the last 70 years, but the technology of CSA and SMS has now made this the newest tool in the insurance carriers’ toolbox. CAB has developed a proprietary rating system which, based on a series of specific ratios and equations, is utilized to analyze a motor carrier’s financial records to determine the financial strength of that carrier. A financial analysis is a critical element in the underwriting process, given its proven correlation to a company’s safety performance.
Now, just about every insurance carrier specializing in trucking insurance subscribes to CAB. A CAB Submission Report gathers information from ALL of the various FMCSA websites, including SAFER, SMS, Licensing and Insurance sites. They also collect past motor carrier addresses and phone numbers. They take all of this raw data information and provide a true reflection of the motor carrier’s current situation. This information is then put in a nice, easy-to-read report focusing on several key points for underwriting. Even the novice trucking underwriter will now be able to pick up on problem areas.
In addition to pointing out all of this relevant information, the underwriters can sign up for alerts and be made aware if there are any serious violations or changes in SMS scores. For the first time, I have actually had trucking companies who wanted to get quotes for workers’ compensation and liability insurance turned down, not because of loss problems, but strictly because of a conditional rating and/or SMS scores. The insurance company actually wanted a written explanation of how this motor carrier was going to correct the situation.
So, how is all this information used? The information is used in three ways: 1) as an initial screen of eligibility, to verify all sorts of stuff like the radius of operation and type of operation, the type of commodities hauled, prior insurance carrier information (to see how often you switch carriers and/or the number of cancellations), to get your CSA rating, out-of-service violations (how often and why), the number of trucks and mileage, and hazmat indications; 2) to determine pricing – higher CSA scores translate into higher rates, while lower scores translate into more favorable rates; and 3) underwriters will use this report to see if there are any other operations that had authority at the same address (they are checking to see if there were any “chameleon carriers” operating under a different name at the same address). They will even check the vehicles listed on the SMS violation inspection reports with those submitted on the equipment list, and if a carrier had inspections showing unknown tractors, they will want an explanation.
Some insurance companies are even imposing specific scoring criteria. It’s more important now than ever before to be constantly trying to lower your SMS scores. As Will Rogers said, “Even if you are on the right track, you will get run over if you just sit there.” Now for the icing on the cake.
Very few people in the industry know that the Motor Carrier Safety Advisory Committee (MCSAC) in 2011 submitted to the FMCSA a four-page letter that identified very specific definitions for persons involved in patterns of safety violations, namely re-entrant carriers, reincarnated and/or chameleon carriers, and officers. The following are just some of the highlights. An officer is defined as “an owner, director, chief executive officer, chief financial officer, safety director, vehicle maintenance supervisor, and driver supervisor of a motor carrier, and any person, however designated, exercising controlling influence over the operation of a motor carrier.” A re-entrant carrier is an entrant with prior motor carrier experience who applies for a new US DOT number. A reincarnated and/or chameleon carrier is a carrier that attempts to register as a new entrant to operate as a new entity to evade detection or consequences for a prior or ongoing non-compliance issue. Further, if you knowingly utilize an individual violator, you are responsible for that violator’s past, present and/or future actions.
If you or your company, based on the above described definitions, are deemed to have a “serious pattern” or to have a “pattern of violations” an egregious action could result in an immediate suspension or permanent revocation of registration and permanent ban from the industry. In these tough economic times, it’s more important than ever to join an organization such as the NorthAmerican Transportation Association (NTA), with the tools that can dramatically affect your bottom line. This is done through their experience, knowledge and proper resources.
Safety is one of the best investments you can make when you consider the high dollar awards being made by today’s juries. Trust me when I say, a $25 investment at the NTA Online Institute can save you thousands in the future. These CSA Corrective Action online courses were developed in conjunction
with the experts at the DOT/Transportation Safety Institute (TSI). Before you hire that next driver, make sure he has had the proper training and can show you his/her certificate of compliance. For more information, contact NTA at (800) 805-0040 or visit them online at www.ntassoc.com to see how you can lower your risk, stay in business, and save money. You will not regret it – call them today!