Category: Operations

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

Avoid Fines: Update Your MCS-150 Report

Avoid a $10,000 Fine and Being Shut Down

One of the costly mistakes a transportation company can make is not updating its Motor Carrier Identification Report (MCS-150 Report). This report must be updated every 24-months; failure to do so can lead to a fine up to $10,000 and your company being shut down by the FMCSA. It is important to update this report on a regular basis, not only to avoid the fine, but also to ensure the company’s CSA SMS BASIC scores are accurate.

Figure 1

The federal code that mandates this requirement is 49 CFR 390.19(b)(4). To look at the most current wording, always review regulations at eCFR.gov. This is the Electronic Code of Federal Regulation website maintained by the United States government. When reviewing regulations for transportation, begin at the FMCSA website for guidance, but always review the regulation on the eCFR.gov website to ensure you have the most current version of the regulation. As you can see from Figure 2, the regulations were last updated on December 20, 2018.

Figure 2

Now that you know you must update this report, why is it so important to your operation? The data in this report is used to calculate the company’s CSA SMS scores. If there is inaccurate information in your company’s report, then your scores will be incorrect. Below is an example from Publix SuperMarkets, the store where I buy groceries.

Figure 3

Their listing contains:

  1. The number of power units.
  2. The number of drivers
  3. The MCS-150 Mileage (Year)

All of those numbers determine what group your company is compared to in the CSA SMS system and affects your scoring. Wrong data means wrong scores! Transportation companies that have not updated their MCS-150 reports have wondered why they had scores above the intervention threshold. One of the main reasons was due to the wrong information on their MCS-150 report. So, why is this so bad? Because your auto liability insurance carrier looks at your company’s CSA SMS scores frequently, higher scores can negatively impact the premium rates you pay.

Figure 4

CSA SMS scores are the company’s report card to your insurance company and the DOT. Having the wrong scores can lead to increased premiums and loss of coverage. Underwriters review your scores when they review an insurance application and during policy renewal. An important task to keep your insurance costs down is to keep these scores as accurate as possible. Another is using the Data-Q system to challenge violations. We will discuss the importance of Data-Q in a separate article.

Figure 5

As you can see from Figure 5, the fine for noncompliance can be large and can deactivate the company’s USDOT number. You certainly don’t want that headache!

Figure 6

The best strategy to avoid a fine or deactivation is to maintain a diary system. Every time you update the company’s MCS-150 report, you should immediately mark your calendar to update the report 24-months later. In the example above, I updated my company’s report on January 29, 2019, so the next report update would be January 29, 2021.

But wait! There’s more! You don’t have to wait 24-months to update your company’s MCS-150 report. You are allowed to update it sooner if you have significant changes to the company’s operation. If the number of power units, drivers, or mileage significantly changes, you should update that information on your MCS-150 report. Updated information leads to accurate scores in the CSA SMS system. So, update the report as you see fit. Its free!

Filed under: Operations

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