July 1, 2005
If any industry could possibly know as much about the relationship between safety and profitability as trucking, it is the insurance industry where risk and revenues are the two opposing factors at the very heart of their business model. Insurers are committed to identifying and reducing risk for their clients and, as a result, they have valuable insights on how to improve fleet safety and trade loss-related

If any industry could possibly know as much about the relationship between safety and profitability as trucking, it is the insurance industry where risk and revenues are the two opposing factors at the very heart of their business model. Insurers are committed to identifying and reducing risk for their clients and, as a result, they have valuable insights on how to improve fleet safety and trade loss-related costs for more bottom line revenues.

“I am responsible for the services we provide to our transportation business, and I spend the bulk of my time with trucking, developing service plans for fleets to help them improve safety over time,” explains Peter Van Dyne, technical director transportation for Boston-based Liberty Mutual ( “I look for individual factors that correlate with better safety and offer customized programs to help companies set performance expectations.”

Since 1996, Liberty Mutual's Business Market has conducted benchmark and best practices surveys to discover what sets the safest fleets and owner-operators apart from the rest. “The goal is to help our trucking customers achieve and maintain the lowest possible crash rates and reduce the overall cost of risk,” Van Dyne says. Liberty Mutual's 2004 Truckers Survey reveals some interesting and even surprising information about the process of building and managing a safe fleet operation.


For starters, although good training is essential, just providing drivers with more training is not enough, according to Van Dyne. “Training assumes that most crashes happen because of lack of skill, but that is not true,” he says. “While training is important, those who focus their safety program entirely on training do not see positive results. Instead, companies have to improve their driver selection process and driver performance monitoring as well if they expect safety improvements.

“Many crashes are caused by drivers' habits and practices, not by their lack of technical knowledge,” he explains. “For example, a driver may be careless about making lane changes, or the use of cruise control, even though he or she knows the proper procedures.

“The best fleets set clear performance expectations and then constantly monitor driver behavior and take action to correct problems,” Van Dyne continues. “Based on our research, we recommend that fleets download engine control module (ECM) data at every service, for instance, because that data can help identify behaviors more likely to cause higher crash costs. Too many instances of sudden hard braking, for example, can indicate that a driver has a habit of following too closely.

“Companies that downloaded ECM data at every service had 34% better crash frequency rates and 50% lower crash costs than those who did not regularly download the data. We also know that companies with GPS have lower crash frequencies and cost rates,” he adds.

Greg Golden, COO for Aon Truck Group (ATG), a practice group within Aon Corp. (, also stresses the importance of driver monitoring as well as training. “While every company is different, there are a handful of things that can have the greatest impact on fleet safety,” he says. “The top three on our list are driver selection, training, and management commitment to safety, that is to monitoring driver performance and to follow-up. You can have a very experienced driver with very bad habits.”

In a January 2005 report (“Surviving a Severe Crash,” by David Mitchell, director of risk control for ATG) ten driver errors are identified as causing the most severe crashes: following too closely, excessive lane changes, excessive speed on ramps and curves, inattention or fatigue, inappropriate U-turns, failure to reduce momentum, speed too fast for conditions, failure to get off cruise control, in-cab distractions and stopping on the highway shoulder.

Setting expectations and educating drivers concerning these high-risk behaviors is only part of the job, however, Mitchell notes in his report. “Experienced drivers may develop unsafe habits that create severe crashes,” he observes. The only way to identify those bad habits and correct them before they cause an accident is to monitor driver behavior in some way.

“We have all heard stories about high jury verdicts due to a truck driver's previous performance,” Mitchell notes. “The driver had a previous history of four moving violations and three crashes, but fleet management had not taken steps to counsel, retrain or discipline the driver…the high settlements imply that juries are furious that fleet management ignored the driver's unsafe performance.

“With continual monitoring of driver performance, you will be able to take immediate action when a driver shows unsafe habits,” he adds. “Monitoring driver performance, but delaying or neglecting corrective action places you in a dangerous position. Completing both of these activities will help your fleet reduce the number of crashes and reduce the cost of liability crashes.”


It seems logical that offering incentives would further encourage truck operators to practice the safe driving behaviors that are expected of them. According to Liberty Mutual's research, however, this is not the case. “Incentives work for rewarding good performance, such as improving fuel economy,” says Peter Van Dyne, “but they do not work for reducing accidents. Incentives, like training programs, are sometimes used as a quick fix for safety problems, but they are not. Better fleets simply tell their drivers, ‘we expect you not to have crashes; that is our entry-level expectation for your performance.’

“In our 2004 survey, companies not using incentive programs actually had better results than those with incentive programs,” Van Dyne continues. “Companies spending less than $1,000 per driver on incentives were compared to those spending more than $1,000. The group spending more had higher crash rates and costs than those spending less. Incentive programs cannot be used in place of driver training and performance monitoring, and good management safety policies and driver selection practices.”


The driver shortage has made it much tougher for fleets to optimize asset utilization and tougher still to grow their businesses. It has also pushed the importance of rigorous driver selection procedures and practices into the forefront of trucking and insurance industry concerns. For safety professionals, it is clearly better to do without than to hire a high-risk driver.

“The key to running a safe operation is to focus on hiring the right people,” says Alan Shetzer, executive vice-president in charge of the transportation division of Hilb, Rogal and Hobbs (HRH), a national insurance broker specializing in large fleets and hazardous materials carriers ( “Generally, companies that hire the worst drivers have the worst claim records. When I speak to groups of carriers, I tell them there is a shortage of good drivers, but not necessarily a shortage of poor drivers.”

“When we are considering covering a fleet, one of the first things we do is get a driver list and screen all or a high percentage of their drivers,” agrees Liberty Mutual's Van Dyne. “We are checking to see how they compare with our current customers' drivers. Among our surveyed customers, those who set a hiring criterion of less than three violations in three years had a median crash frequency 32% better than those allowing three or more violations, and their crash costs were 47% better. That is very significant.

“Our research has also shown us that fleets using road tests that are two hours long or longer as part of their driver selection process had 45% better crash frequency and 23% lower crash costs than carriers using shorter road tests or no road tests,” he adds. “We believe that a truck operator's long-time habits are more apt to show up during an extended driving test.”


Impeccable driver selection, training, performance monitoring and follow-up have been identified by the insurance industry as factors that can contribute the most to fleet safety. However, certain fleet management practices can scuttle even the best risk management program by making it more difficult for drivers to do their best.

“Some companies may create situations that actually encourage bad driving habits,” observes Van Dyne. “For instance, poor routing or expecting on-time delivery but not on-time departure may unintentionally push drivers to speed. We know that companies which use scheduled departure times have fewer crashes and lower crash costs than companies which do not, for example. Using planned routes also establishes performance expectations for drivers and can keep them out of high-risk areas and situations. Carriers we surveyed that used planned routes had 38% lower crash costs than those who did not.”

“I am very impressed with the growing discipline of trucking companies,” observes William L. Prester, president of HNI Truck Group. “Fleets are being more and more meticulous about who they hire and even how they add freight. I think that, as an industry, trucking is being very smart these days” he continues. “There is a renewed emphasis on integrity, core values and managing risk. That will encourage more insurance companies to want to do business with trucking and help to improve fleet profitability besides. It is a win-win situation.”

Private versus for-hire

Insurance companies generally consider private fleets a better risk than their for-hire counterparts. Savvy for-hire fleets are getting the message, too: If you want better insurance rates, act more like a private fleet.

“Private fleets are cheaper to insure than for-hire fleets because insurers tend not to see private fleets as trucking companies,” observes Alan Shetzer, executive vice-president in charge of the transportation division of Hilb, Rogal and Hobbs (HRH). “More companies are willing to underwrite a retail chain, or a manufacturer or a service supplier that has their own fleet of trucks than they are a ‘trucking company,’” he says.

“We really do view private fleets differently from for-hire carriers,” agrees Greg Golden, COO for the Aon Truck Group (ATG), a practice group within Aon Corp., which provides brokerage services to the trucking industry, including truck liability and physical damage, general liability, motor truck cargo, worker's compensation and other products. “Private fleets will have a large supporting insurance infrastructure-physical property, general liability and so on — while for-hire carriers really have to stand on their own,” he explains. “That is just the reality of it. They don't have a big umbrella of other insurance coverage.

“Private fleets also have other characteristics that tend to make their loss history better and, therefore, reduce their cost of insurance per power unit,” Golden adds. “For example, they tend to exclusively carry their own goods, have more regular routes and far fewer long, over-the-road trips, which means they are also apt to have a more stable driver work force.

“When for-hire carriers move toward this private fleet operating model, we typically see their risk levels drop and their profitability improve,” he says. “In other words, to the extent that for-hire carriers take on the characteristics of private fleets, they may also become eligible for lower insurance rates.”

Shopping for an insurance provider

Whether you want to work through a broker or directly with an insurance carrier, those within the insurance industry have some recommendations for fleets shopping for insurance coverage:

  • Look for a broker/insurance provider with a good track record in your industry, including solid experience on the claim and pre-accident side.

  • Choose insurance partner(s) that are financially strong themselves.

  • Work to gain an understanding of the insurance system and become an informed participant.

  • Even if you select a brokerage to transfer your risk to one or more underwriters, personally meet your primary underwriters.

  • Make sure you will have an opportunity to present all the pertinent data about your operation during the insurer's review process, especially if your fleet's SafeStat ratings are high or require some explanation.

  • Remember that the lowest priced option is not necessarily the best. Carefully review the terms and conditions of any insurance quote. Check for elements like increasing deductibles or capped limits (aggregated limits) that can have a big impact on the insurance coverage you actually receive for the premiums you pay.

  • Select insurance partners who will work with you to improve your fleet's safety performance over time and who have specific plans and programs in place to help you achieve that goal.

Sources: Liberly Mutual, Aon Truck Group, HRH

View more Fleet Owner news relating to trucking safety, trucking regulations and driver awareness.

About the Author

Wendy Leavitt

Wendy Leavitt joined Fleet Owner in 1998 after serving as editor-in-chief of Trucking Technology magazine for four years.

She began her career in the trucking industry at Kenworth Truck Company in Kirkland, WA where she spent 16 years—the first five years as safety and compliance manager in the engineering department and more than a decade as the company’s manager of advertising and public relations. She has also worked as a book editor, guided authors through the self-publishing process and operated her own marketing and public relations business.

Wendy has a Masters Degree in English and Art History from Western Washington University, where, as a graduate student, she also taught writing.  

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