Opinion: Turn Risk Into a Competitive Advantage
By Chris Mikolay
Assistant Vice President
National Interstate Insurance Co.
This Opinion piece appears in the Nov. 5 print edition of Transport Topics. Click here to subscribe today.
In speaking with hundreds of trucking company executives over the course of my career, I’ve noticed two distinctly different mentalities when discussing insurance: There are those who buy insurance, and there are those who manage risk.
There is a world of difference.
Let’s consider two fictional trucking companies, Ralph’s Rigs and Dan’s Delivery. Ralph and Dan, owners of each fleet, have seen the industry evolve significantly over the past few decades, and each has learned a thing or two about running a trucking company.
When it comes to insurance, for example, Ralph likens his premiums to the current price of diesel — it is a commodity over which he has very little control, other than to shop for the lowest price to find the best deal. In fact, few events are more exasperating to Ralph than his annual insurance renewal. And while Ralph’s Rigs had long ago grown large enough to hire a full-time safety manager, Ralph still believes accidents are more or less random and losses are a cost of doing business.
Like Ralph, Dan has watched as the trucking industry has evolved and become increasingly difficult — driver shortages, a sagging economy, the burdens of the government’s new Compliance, Safety, Accountability program (better known as CSA), an aging workforce and rising fuel prices, just to name a few — it seems like running a profitable trucking company is harder every day.
However, long ago Dan decided he had two choices: He could let the industry’s challenges determine his destiny, or he could meet the challenges head-on and take control.
Dan became an early adopter of electronic onboard recorders and saw his CSA scores decline. He experimented with aerodynamic skirts to fight rising fuel costs and realized a significant return on the investment.
And, significantly, he challenged his insurance broker and insurance carrier to help him control his losses and fight claims aggressively.
Dan decided he could turn risk into a competitive advantage by using the latest techniques to reduce accident frequency and workers’ compensation claims. He found that he could, in fact, control and drive down his total cost of risk.
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