iTECH: Insurers Are Not Swayed by Safety Devices
By Stephen Bennett, Contributing Writer
This article appears in the December 2011/January 2012 issue of iTECH, published in the Dec. 12 print edition of Transport Topics. Click here to subscribe today.
An ever-increasing number of fleets today are investing significant capital to outfit their trucks with the latest safety technology to reduce accidents that harm people and disrupt freight operations.
While one of the goals of these investments is to reduce operating costs, these fleets are discovering that installing the equipment is no guarantee that they will receive a break on insurance premiums, according to several insurers and trucking executives.
“All they really want to see is experience,” Bert Mayo said of insurance companies and brokers. Mayo, vice president and fleet specialist in risk services for Denver-based insurance broker Lockton Cos., said a fleet must tell “a great story,” specifically documenting reduced frequency of accidents as well as decreased average cost per accident.
Simply investing in technology that warns of potential collisions or lane changes, or helps prevent loss of stability, will not prompt insurers to reduce premiums, Mayo said.
“At the lower deductibles, [insurers] really look at the loss history and determine pricing from that,” he said.
A motor carrier might get some credit or discount by investing in accident technology, but the true savings will come in subsequent years as their collision-related losses are reduced, Mayo said.
“The proof is in the pudding, not in a promise,” he said.
Mayo said another hurdle is that trucking insurance is “so expensive [that] motor carriers shop for it annually.” And for that reason, he said, an underwriter may be reluctant to offer an immediate discount when, a year later, the customer might move to a different insurer.
Offering a specific discount for a specific safety technology is not the practice in insurance, but a fleet’s investment in safety technology will be included as “part of overall rate development,” said Larry Loving, managing director for broker Aon Risk Services South. He said if a safety system doesn’t show results, “on renewal there will be a frank discussion” — a review of the system.
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