Fleets Say Insurance Standards Make Hiring New Drivers Hard

This story appears in the Nov. 10 print edition of Transport Topics.

Truck-driver training schools are the obvious place for fleets to look for new drivers, but the recruiting challenge for small trucking companies is being made more difficult by underwriter standards, insurance and fleet executives said.

Underwriters have long preferred motor carriers to hire experienced drivers over rookies because veterans usually have fewer accidents that would need to be covered. However, executives say the underwriting standard is starting to change because trucking is in such profound need of new drivers.

“It’s a lot easier for a larger guy to get the blessing of an underwriter,” said Thomas Dickmeyer, CEO of Three Points Insurance. His Glen Carbon, Illinois, company is a brokerage that finds policies for small- and medium-size carriers.

Dickmeyer said he has seen fleets approach this issue in two ways: either do it, don’t tell the underwriter and see if the insurer catches on at renewal, or try to work with insurers.

“It’s better to work this out as a partner with the underwriter,” he said. “Trucking companies and underwriters need each other, so they should get together and try to make things work.”

“There’s a paradigm shift going on. The driver shortage is an issue everywhere. There is more and more of a need in trucking for available drivers,” said Ronald Chipman, vice president of risk management for Atlanta-based Watkins Associated Industries.

Watkins’ two trucking companies provide refrigerated, dry van and tank truck services. Chipman said the carriers blend in new drivers on an incremental basis as part of a training program.

A lead, seasoned driver is paired with a new recruit, and the experienced driver serves as a mentor.

“You can’t just put new drivers out there by themselves,” said Chipman, who is incoming chairman of the Insurance Task Force of American Trucking Associations. He spends much of his time talking to insurers and said he never wants to ambush them.

“When I have meetings with underwriters, I tell all to them. They’ll be aware up front,” Chipman said.

The insurance-driver shortage linkage received attention in October at ATA’s Management Conference & Exhibition, when the trucking federation’s Philip Byrd Sr. mentioned it at a press conference.

Byrd, ATA’s immediate past chairman, said smaller carriers are hemmed in because of underwriting standards that make hiring rookies straight out of driving schools extremely difficult.

“We deal with this daily, trying to get 22-year-olds insured,” said Brett McGinnis, executive vice president for transportation at insurance broker McGriff, Seibels & Williams.

Larger carriers that manage a sizable portion of their own risk have an easier time hiring new driving graduates, “but small carriers don’t have that luxury,” McGinnis said. Underwriters don’t want to insure drivers with less than two years’ experience, he said.

“It’s very true [what Byrd said]. It’s a major challenge for the industry,” McGinnis said.

As is often the case, the problem can be overcome with money. McGinnis said some underwriters have collected new-driver surcharges of $1,000 to $1,500 a year per driver.

Base rates for insurance vary widely by many factors, McGinnis said, but insuring a truck and driver for a year often ranges from $8,000 to $12,000 for a small company, or $6,000 to $8,000 for a medium-size fleet.

In Arkansas, there has been a truck-driver training pilot initiative running on and off since 2008. Home to some of the nation’s largest trucking companies, as well as many small ones, the Arkansas industry has been eager to increase the total pool of drivers, said Shannon Newton, president of the Arkansas Trucking Association.

Newton said Arkansas trucking executives have been working with underwriters to develop driver training and finishing programs that will pass muster with insurers, allowing carriers to hire rookies.

“They were able to get some inroads. It can be done, but it’s taken work and resources,” said Newton, who added that changing the underwriting standards is imperative.

“It’s a critical issue to get people into trucking by the time they turn 23,” she said. “Otherwise, we’ll never be anything more than an employer of second choice if people can’t join by 23.”

People cannot drive in interstate commerce until turning 21, according to federal law. Newton and Three Points’ Dickmeyer said in separate interviews that drivers younger than that often can get experience in intrastate commerce.

Dickmeyer used Illinois as an example, saying a 20-year-old driver could make an intrastate run from East St. Louis up to Chicago’s northern suburbs, a distance of more than 300 miles. However, from East St. Louis across the Mississippi to St. Louis in Missouri, or Chicago to nearby Gary, Indiana, would be prohibited interstate moves.