The insurance industry’s crackdown on insurability, and its aversity to risk, is making it all but impossible for new ventures to flourish. But unfortunately, a widespread lack of awareness about the changing dynamics in the trucking insurance industry is snuffing out the dreams of some prospective business owners.
Lisa Arseneau, with Staebler Insurance, recently explained to me that most insurance companies in Ontario will not insure new CVOR (commercial vehicle operator’s registration) holders with less than three to five years of experience. This makes it all-but-impossible for aspiring trucking business owners to form their own business in Ontario.
According to insurers, new ventures where the business has been operating for less than three years constitute “an ineligible risk.”
However, this quandary is not well understood. Experienced owner-operators continue to seek, and receive, their own CVORs. And there’s no shortage of consultants willing to help them obtain them, without being completely forthright about their likelihood of obtaining truck insurance afterwards. They’re being led down a garden path.
This drives Lisa nuts. Because she, and other insurance brokers like her, are the ones who have to burst these aspiring entrepreneurs’ bubbles and let them know they can’t be insured. The result is that those looking to start their own trucking company are forced to return to leasing their unit on with an established carrier, and obtaining insurance under their fleet policy.
I’m sure the vast majority of established fleet owners are perfectly happy with the current situation. It increases the pool of experienced owner-operators, while stifling competition from upstarts.
I’m not smart enough to figure out the solutions to the truck insurance industry’s problems. Insurers are for-profit enterprises that should not be forced to take on unprofitable and risky business.
Lisa’s advice to owner-operators looking to start their own venture under their own authority, is to not do it. To continue driving under a fleet, ensure you’re listed as a driver on their policy, and make sure your truck is listed on the policy while continuing to accumulate experience.
It’s not what aspiring trucking company owners want to hear, but it’s better than the alternative – Lisa taking your call when seeking insurance and crushing your dreams. She says she takes three to five of these calls each week, and she’s tired of it.
The dynamics in the trucking insurance industry that are creating this situation won’t change overnight, but what we can do is enhance the awareness about the current landscape and the fact newly-minted CVORs are likely, in the vast majority of cases, to become entirely useless to their holders.
Aspiring trucking company owners should not find out, only after they’ve invested the time, money and energy to obtain their own authority, that they won’t be able to get their business out of first gear. If you’re considering applying for a CVOR in Ontario, make sure your truck-specialist insurance broker is among the first people you call, to ensure your insurability. It could save you a lot of disappointment.
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