Underwriters at NAFC Say They Struggle to Decipher CSA’s Insurance Implications

TAMPA, Fla. — Insurance underwriters for trucking are concerned about the federal Compliance, Safety, Accountability program but are not sure about how to deal with it, an insurance agent told trucking executives meeting here.

In a June 12 session at the National Accounting & Finance Council meeting here, a CSA analyst and industry vendor said he worries the Federal Motor Carrier Safety Administration is using CSA to move toward direct intervention with company drivers, perhaps even lifting their licenses while bypassing the drivers’ motor-carrier employers.

“Underwriters worry that when carriers are desperate for drivers, their standards will be lowered, and that means more risk for them,” said Thomas Dickmeyer, CEO of the Cline Wood Agency, Leawood, Kan.

Dickmeyer said CSA has been a contributing factor to the tightening of the driver market. He also said insurance companies see problems in “the constant adjustment to compliance requirements and inconsistent enforcement around the nation.”

Cline Wood is a broker serving as an intermediary between trucking companies and underwriters. NAFC is a part of American Trucking Associations.

Premium prices are going up, Dickmeyer said, with workers’ compensation policies leading the spiral. Liability policies are rising more moderately, he said.

Underwriters are still trying to figure out CSA, Dickmeyer said.

“Their understanding of the program is still in its infancy, but they do know that trial lawyers will use it,” Dickmeyer said. He added that underwriters want carriers to demonstrate they have plans to address CSA demands.

“They want to see carriers using the pre-employment screening program for drivers and that you’re looking at the CSA BASICs [Behavioral Analysis and Safety Improvement Categories] and maintaining standards,” he said.

As for the general relationship between underwriters and trucking, Dickmeyer said the insurers are not really looking for larger volumes of business but rather to increase rates on the current volume.

In looking at all commercial insurance rates, risk and financial management firm Towers Watson said June 11 that prices rose by 5% in the first quarter, the fifth consecutive quarterly increase in its survey of large U.S. underwriters.

Ronald Inberg, another insurance broker at the NAFC meeting, said underwriters have the capacity to write more policies, but they have to be careful now. Returns on premiums invested are running at low levels, Inberg said, meaning the underwriters must be at least mildly profitable on their core work in order to make money overall.

Inberg is executive vice president of McGriff, Seibels & Williams, Portland, Ore.

As for CSA in the future, Steve Bryan of Vigillo LLC said he is concerned that, “FMCSA is establishing a tool kit for direct intervention with drivers and ignoring their employers, although they previously said they wouldn’t do that.”

Bryan’s company, also in Portland, analyzes CSA data for motor carrier customers.

Bryan said there has been no direct statement of such a plan, but that his concerns are based on four events.

He said that CSA established a list of 12 violations in July 2011 that it calls “red flags.”

“They elevated 12 violations, and if a driver accrues a couple of these, in the door comes FMCSA,” he said, listing operating an out-of-service vehicle and possessing multiple CDLs as examples of red flags.

Next was a Sept. 29, 2011, report from the Government Accountability Office that recommended the secretary of transportation instruct the FMCSA administrator to “develop a plan for implementing driver fitness ratings that prioritizes steps that need to be completed and includes a reasonable timeframe for completing them. The plan should also address the safety implications of delayed implementation of driver fitness ratings.”

That was followed by the Dec. 7 introduction of a bill by three Democratic members of the Senate Commerce, Science and Transportation Committee, including chairman Jay Rockefeller of West Virginia.

“The [U.S. Transportation] Secretary may maintain by regulation a procedure for determining the safety fitness of a commercial motor vehicle driver and for prohibiting the driver from operating in interstate commerce,” the legislation states.

Bryan asked, “In what other industry can the regulator take employees out of their jobs?” While the Constitution allows Congress to regulate interstate commerce, all current license programs, including CDLs, are regulated and administered by state motor vehicle administrations.

Bryan also said he has heard that FMCSA is working on a field guide on how to intervene with drivers directly, but he could not substantiate that.