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Let’s Talk Insurance: How to Influence Your Insurance Rates

One of the most common insurance myths is that your rate is all about your losses. It's not.

One of the most common insurance myths is that your rate is all about your losses. It’s not.

Your losses have a smaller impact on your insurance price than you might think. The major part of your rate is based on your exposure, which is what and where you haul. But your exposure rate can be modified – up or down – depending on how well your company manages factors within your control, such as your safety and driver management practices.

This means that two carriers with the same exposure (i.e., each hauling the same goods to the same destinations) could have very different insurance rates – because of the way they each approach safety and driver management.

Good investments for your business: Quality safety and driver management programs are some of the best investments a carrier can make. A good program can have short-term benefits: reduced vehicle maintenance costs, better drivers, improved driver retention, lower recruiting costs and fewer accidents.

The longer term benefits can also have a significant impact on your bottom line. It can improve your risk significantly in the eyes of your insurer, which means lower relative insurance costs – providing you with a key advantage over competitors.

Components of a good program: Trying to capture the elements of a good safety and driver management program is like trying to list all of the qualities of a good son or daughter. The list is virtually endless.

However, from an insurer’s point of view, there are some important items:

Driver recruitment and selection: When it comes to safety, good driver recruitment and rigid selection criteria are key success factors. However, carriers are in a challenging position given the skyrocketing demand for qualified professional drivers. Establish job descriptions and detailed standard hiring procedures, so it’s easy to identify qualified candidates. Use standard screening questions and other assessments to determine the likelihood of turnover. Conduct standard skills tests, background checks, and a fully-documented road test before making an employment offer.

Driver training: Carriers should provide adequate orientation and training so that drivers have the right knowledge for the routes they travel and the cargos they haul. Using competent trainers (third-party, if need be) and recognized defensive driving programs show that you’re serious about safety.

Preventive maintenance: Keeping your vehicles in safe, roadworthy condition helps reduce the likelihood of unplanned trip interruptions, such as roadside breakdowns, detainments at inspection stations, and, most importantly, accidents. Observe your regular service interval rigidly, and maintain vehicles in your own shop or a third-party garage that follows your standards. All heavy commercial vehicles require daily driver inspection, so a written defect report system is important.

Accident and loss trend analysis: Report accidents immediately and directly to your insurer. Train your drivers to obtain the right information at the accident site and complete the requisite forms. Review accidents with the employees involved to identify all possible causes. This enables you to implement effective loss control measures.

Driver management and retention: From an insurer’s perspective, high driver turnover can often lead to costly accident frequency. This can also drive up operating costs through unnecessary recruitment and repetitive driver training expenses.

Senior management support: Your programs must have senior management support. You can have comprehensive safety practices, but if your management team doesn’t take safety seriously, your insurer won’t take your company seriously.

Although these will work for any size fleet, this is not an exhaustive list. Consider these ideas as a good starting point for designing or evaluating your company’s program. The best thing to do is consult your insurer’s safety and training advisor to develop a safety and driver management program that’s customized to your operations, fleet size, vehicle configurations, customer base and driver force.

Talk to your insurer: Proactive safety and driver management programs should have a positive impact on your insurance costs. For maximum benefit, talk to your insurer and insurance broker often. Let them know about your good efforts. If they don’t know, your insurer can’t apply positive changes to your rate in recognition of the good practices you maintain. The bottom line: You’re in greater control of your insurance rate than you realize.

– Mark J. Ram is president and CEO of Markel Insurance Company of Canada. Please send your questions, feedback and commentary about this column to For more information about Markel visit

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