Category: Insurance

Focus on Company Snapshot

Some transportation companies’ safety and training programs are complicated and difficult to navigate. However, these programs should be straightforward, easy to understand, and documented. Company employees should focus on the areas that their automobile liability insurance company and the Department of Transportation (DOT) regularly focus on – BASIC scores, MCS-150 data, accidents, and safety rating.

What many companies don’t realize is that their insurance carriers look at their company information on a regular basis, in some cases every 30 days. This is especially true for companies they insure that have BASIC scores above the intervention threshold, high accident frequency rates, and/or a poor safety rating.

Behavior Analysis & Safety Improvement Categories (BASIC)

These are the core matrices that your insurance company and the DOT watch to determine the safety of a transportation company. These scores are updated every 30 days in the Compliance Safety Accountability (CSA) system. If any of your company’s scores are above the intervention threshold, meaning a poor score, it can trigger a loss control review, and in some cases, an outright cancellation of the company’s insurance policy. Insurance companies do not mess around with poor BASIC scores; if they think your company is a bad risk, they will cancel your insurance policy.

Therefore, keep your company’s MCS-150 report up-to-date. Regulations require it to be updated every 24-months. Correct information will ensure your data in the company’s BASIC scores are correct. Review your company’s scores every 30 days and be sure to DataQ any challenges as soon as possible. Remember, this is your company’s safety report card.

Accidents

The other area your insurance company monitors closely is accidents. If your company has had an accident, it is important that you speak with your insurance agent to let him/her know what happened in the accident, what the company is doing to reduce the frequency of accidents in the future, and what information the insurance company needs in order to handle the claim. Always report any accident to your insurance company within 24-hours. Failure to report claims/accidents to insurance companies within 24-hours can result in cancellation of the company’s insurance policy.

Safety Rating

If your company has any rating with the Federal Motor Carrier Safety Administration (FMCSA) other than “No Rating” or “Satisfactory,” you need to provide a detailed explanation to your insurance agent about why the company received the rating. Insurance companies are cancelling insurance policies for “Conditional” and “Unsatisfactory” safety ratings. It is important to maintain a “Satisfactory” rating and not let your insurance company have a reason to cancel your policy.

Focus

Poor BASIC scores, incorrect MCS-150 data, high accident frequency rates, and poor safety ratings can lead to higher insurance premiums or cancellation of your company’s insurance policy. When you are designing the company’s safety and training programs, keep them simple, documented, and focus on the areas mentioned in this article.

Filed under: Insurance, Operations

What is Loss Control?

For the purposes of this article, the focus will be on transportation companies and their auto liability insurance carrier. So, what exactly is loss control? Simply put, it is the controls you have in place to ensure DOT compliance and safety. Your insurance carrier wants to ensure that the company has sufficient controls in place to limit losses that can affect them paying claims.

Your insurance carrier may conduct a loss control visit either in person or over the telephone.

This is a requirement of the policy conditions of your auto liability insurance and those policy conditions can have similar language noted in Figure 1.

Figure 1

Failure to comply with completing a loss control visit may result in cancellation of your insurance policy.

These types of meetings usually occur right after a policy has been bound, or near a renewal date of the policy. The insurance company uses loss control agents, many of which are third party consultants, to conduct these meetings; they are “the eyes and ears” of the underwriter for your insurance policy. The main objective of these loss control meetings is to determine how well a company understands DOT compliance and the quality of their safety program. The agent’s primary focus is to determine if your company is a good risk or a bad risk. Recommendations are made at the end of a loss control meeting and should be given serious consideration by the company to improve its safety program.

So, what does a loss control agent do during the meeting?

The agents’ main foci are DOT compliance and the elements of your safety program. They should start the meeting with questions about the operation. What type of operation is the company? Is it a passenger operation, paratransit operation, dry van operation, flatbed operation, intermodal operation, or some other type of operation? How long have they been in business? How many drivers and power units do they have? Are they subject to USDOT regulations? What is the radius of their operation? Do they transport hazardous materials? Has the company had a DOT compliance review? If so, what was the rating?

Figure 2

The next area they examine is a company’s BASIC scores. Loss control agents review the violations for each section in Figure 2. They may ask specific questions about violations a company has received in the last 24-months, and will also analyze trends. For example, does a company have a lot of hours of service violations? If so, what are the causes and what is the company doing to reduce the frequency of those violations?

Insurance company underwriters also look at these scores and violations. They, too, are trying to figure out if the company has a problem and whether or not they want to insure the company.

It is important for companies to keep their MCS-150 report updated and to use Data-Q challenges to maintain accurate information in the sections above. To verify issues involving the BASICs, the loss control agent will review driver qualification files, maintenance files, the drug/alcohol program, and electronic logging reports. They may ask to meet dispatchers, managers, and maintenance personnel as well as inspect vehicles and take pictures.

Other areas the loss control agent will look at are the company’s safety and training programs. Specifically, are these programs structured and documented? They will ask to see copies of company safety policies, disciplinary policies, procedures, quizzes, memos, safety meeting agendas, and other documentation that verify the training and safety programs. It is best to provide them with copies of these items so they can prove to the underwriter that the programs are structured and documented. Remember, the underwriter is trying to determine if a company is a good risk.

Preparing for a loss control meeting should not cause you to go into panic mode. This is an opportunity to show the insurance company that your operation is a good risk and that you take compliance and safety seriously! Here is a checklist to help you prepare: Link

Final Thoughts

Don’t forget to notify your insurance agent of any loss control meetings. He/she may want to attend the meeting and/or provide assistance for the meeting. Verify that the person claiming to complete the loss control meeting is working for your insurance company. You can request that the individual provide you with the insurance policy number and then ask your agent to verify him/her.

Filed under: Insurance

Case Study: Bus Crash

What Happened

I received a telephone call from a motorcoach company today and the owner advised that they had had a multi-bus collision over the weekend. He advised that he had already reported it to his insurance company and his insurance agent. He wanted to know what I would recommend doing after this accident.

All of the buses involved in the accident were owned by this company and they were driven by company drivers as a shuttle service. All the buses were following each other; the accident occurred because the first driver had to slam on the brakes to avoid hitting another vehicle and this resulted in the other three buses rear ending each other. There was damage to all vehicles. The owner stated that his insurance company had asked how many passengers were on each of the buses. Since this was a shuttle service, there was not an accurate count of the number of passengers on each bus.

What to Do Now

There are a couple of lessons we can learn from this situation. First, when you have multiple vehicles following each other on a trip, it is a good idea to leave enough space between each vehicle, so there is not a possibility of a multi-vehicle collision. Second, even though they were operating a shuttle, the drivers could have kept a headcount. Using a simple counting device as passengers enter the vehicle can help your insurance company know how many potential claims they are facing.

We also discussed the importance of maintaining evidence. Remember, the goal after an accident is to “freeze time.” You don’t want to have a claim for spoliation of evidence on top of all the other claims. I advised the owner to make sure that he makes a complete copy of the driver files and maintenance files. He advised that he had his drivers complete a drug and alcohol test immediately after the accident and that was the right thing to do. I also suggested that he tell his drivers to be prepared to have their phone records reviewed and their social media accounts reviewed. More than likely, this type of accident will involve some type of attorney and they generally review that type of information.

I also suggested that the owner talk to all of the drivers and make sure that they only speak to the insurance company representative. I further recommended that the drivers should notify the owner immediately if anyone tries to contact them about the accident and for the owner to verify that the contact is from his insurance company. You don’t want to have your drivers giving a recorded statement to someone other than your insurance company. It’s also a good idea to advise your drivers in this type of situation to cooperate with your insurance company’s investigation.

Lessons Learned

Remember, to avoid these types of accidents don’t follow too close. Try to maintain some type a headcount on each vehicle to help your insurance company understand how many potential claims they may have. Maintain records that are pertinent to the investigation and cooperate with your insurance company’s investigation.

Filed under: Insurance, Operations

Report All Claims Within 24 Hours

[Problem]

The conditions of your automobile liability insurance policy state that you should report all claims in a timely manner. So, what does that mean? Should you report claims when you get all the information? Report them when you feel like it? No, you should report any claim the same day it occurs and no later than 24 hours from the time of the accident. Late reporting of claims is something that your insurance company tracks in their reporting system. If you are trying to obtain new insurance or renewing insurance and there is late reporting of previous claims, the insurance company may hold that against you when evaluating your company. The insurance company equates late reporting to increased claim costs. Don’t put yourself in this situation. Remember, you want your company to be in the best position to obtain the best insurance rates.

[Solution]

So, what should you do to train your employees to report claims timely? To start, have a written post-accident policy stating that all claims should be reported to management the same day an accident occurs. Any claim reported more than 24 hours late will result in disciplinary action. Be sure to have your employees sign and date this policy. Having a reminder of this policy in your accident kit may help them remember to report claims timely.

You should train your employees to obtain contact information of the other party involved in the accident and any witnesses. This should include names, telephone numbers, and email addresses of all potential parties of the claim. This is critical information for the claim and generally the hardest to obtain. The simple solution is to provide blank index cards in every accident kit. That way, your employee can quickly hand those to any potential witnesses and ask them to put their names, telephone numbers, and addresses directly on the cards.

After your employee has obtained witness information, they should write a personal statement of what happened and send it to management within 24-hours. This statement should include the weather conditions, location, law enforcement contact, statements made by the adverse party, and the mechanics of what happened.

Once you receive the information, do not delay in reporting the claim to your insurance company. You should always have the insurance company’s contact information handy. Additionally, you should report the claim to your insurance agent, since they may be able to assist you with investigation and reporting.

Filed under: Insurance, Operations