Don鈥檛 let your company be perceived as something it is not. It will cost you potential competitors for your business as well as additional premium dollars. Be proactive and designate an individual or team of folks to make SAFER data accurate and up to date.
Nathan Brainard
We live in an era of unprecedented technological growth for better or for worse. While in many cases the expansion of technology enables us to work faster, smarter and from pretty much anywhere in the world, it also means data that was once hard to obtain is now readily available.聽 This could not be more evident than how underwriters are accessing and using a company鈥檚 the Federal Motor Carrier Safety Administration鈥檚 (FMCSA) SMS/SAFER score in their due diligence.
Each time a company is stopped by DOT (Department of Transportation) there is a report filed. These reports include items such as the company鈥檚 name, DOT number, vehicle identification, etc. It also indicates any issues for items such as Out of Service, Crashes, Number of Inspections to date over a 24-month period and Carrier Safety Rating (all located in the SAFER Company Snapshot at ). Additional information listed in this snapshot includes the Company Name, Address, Operating Status, US DOT Number, Motor Carrier Number, anticipated mileage for the company, number of drivers and number of power units. There are sections for Operation Classification (for hire, private etc.), Carrier Operation (Interstate or Intrastate) and the types of cargo carried/ hauled. All of this info is available to anyone. It should be noted almost every insurance carrier has access to this as well as more detailed information that requires a bit more digging, but with proper training is easily found. This gives them access to information on violations for expired driver medical cards, driver fitness and safety, which includes items such as wearing a seatbelt, using a cell phone while driving and so on.聽 In short, this one tool allows underwriters to measure you against other companies with similar fleet size and driver count to see how you stack up.
So, Why is this Important?
Underwriters are looking at a submission when it hits their desk and this is the first place they go. It is a 鈥渇irst hurdle鈥� of sorts. Should the company they are investigating have a very high Out of Service rate or there are indications of exceeding FMCSA thresholds they could decline the submission without going any further. Out of Service violations indicate a potential maintenance issue as well as corporate mentality towards safety in general and encompass items such as non-functioning tail lights, missing mud flaps, broken tarping systems, etc.
They check to see if there were any reported crashes as this helps them determine corporate safety training and implementation. The crash data also encompasses whether or not drugs or alcohol were involved. The driver is supposed to submit to a drug and alcohol screen within two hours of the accident, but has up to eight hours to get it done (the company must start documenting any delays in completing the test past the two-hour mark up to the eight-hour limit).
They are also checking to see if a vehicle is showing as being registered by more than one company (this can also be done by checking on the phone number, fax number or physical address) to make sure all operations have been disclosed.
This is a one-stop information mecca for the underwriter to get an initial impression of your company. Spikes in any one or more of these can result in a declination by the underwriter. Even worse, underwriters are not required to call or e-mail the agent for discussion or clarification. It should be noted this doesn鈥檛 always happen but it can, especially around heavy renewal dates such as January 1 or April 1. Like everyone else, they have a mountain of items on their desk or in their in box and they are looking for the accounts that have the least amount of resistance possible.
Unfortunately, many companies are not making sure their data is up to date and correct. Like everything else in life there are metrics to determine if something falls within an acceptable range or not. For example, if your company had 25 power units in 2014 but at the beginning of 2015 you did an acquisition of a competitor and the fleet has expanded to 55 power units someone within your company needs to go to this site and amend the MCS-150 filing. If you are running 55 power units and suddenly find yourself on the wrong side of the DOT inspector over the course of a few weeks and they find Out of Service issues this will skew your actual rating.聽 Information regarding the number of power units, miles, etc. can be updated at the following address: . This information should be reviewed and updated at least two times per year, or as needed based on additions or deletions to the total fleet count for your company.
It is paramount that companies understand this is one of those items that is a big deal, however most companies shrug it off. We have seen many times where a lead mechanic was responsible for maintaining this information and then suddenly retires. As this isn鈥檛 the main part of their job for the company, it is not conveyed to their replacement and is ultimately left unattended. It isn鈥檛 until there are issues reported and an underwriter begins asking questions that senior management or owners are made aware of it; by then the renewal process has started and it is difficult to make corrections prior to the renewal date which then have a negative impact on the renewal terms and premiums.聽 This is not a circumstance you want to find yourself in.
How Else Is This Data Used?
Underwriters will take the data they pull and use it to develop questions they want answers to.聽 For example, if your company has been hit with a number of Out of Service issues they are going to ask about your pre- and post-trip inspections. They will want to know if they are required, who is doing them, how long you retain the files, etc. Were there any critical violations that would have been caught if the company were truly doing these inspections daily?
It is not just insurance underwriters who are using this information. Plaintiff attorneys also use it to help make their case for settlements and in court proceedings. Imagine if your company is involved a fatality and your fleet count data is incorrect in the database. This could give you an Out of Service rate well above what it should actually be, but it helps them make their case to a jury as they will claim you all are knowingly running an unsafe operation, have been cited for it, but have done nothing to correct the situation even if it isn鈥檛 true. None of us want to put inaccurate information out there about our companies, especially if the inaccuracy puts us in a bad light. A savvy plaintiff attorney will use this information against you in every way possible and then fall back on the fact that it is captured via DOT knowing a jury will consider them a reputable source.
What Needs to Be Done?
Companies should designate an individual to be responsible for the maintenance of the SAFER data.聽 Larger companies are well aware of this and have one if not more folks routinely monitoring it to make sure nothing inaccurate is being displayed. It tends to be the mid-size to smaller companies who let this information slip by unnoticed until it is brought to their attention, which is the wrong way to find out there is an error. Once an error is identified it can take a several weeks or more to have it corrected. If the data is inaccurate and your insurance renewal comes in higher because of it and then several months later the correction goes through, the odds of your carrier issuing a credit mid-term are unlikely.
Make sure you have the correct categories of service selected on the site. This is one of the factors used in the benchmarking process. Some of the others include miles driven per year and fleet count as well as some other lesser weight bearing criteria.
You want your scores to be low with zero being the optimum score. The lower your score, the more attractive you are in the world of insurance. It tells the underwriters you are serious about safety and maintenance issues as well as driver training. It will convey that you have efficient route structures making you less of a liability to the general public.
We all know perception is reality whether or not that perception is accurate. Don鈥檛 let your company be perceived as something it is not. It will cost you potential competitors for your business as well as additional premium dollars. Be proactive and designate an individual or team of folks to make this the data reflected in this site is accurate and up to date.
Nathan Brainard is Vice President, Environmental Division, at Insurance Office of America (IOA) (Longwood, FL) and a member of the NW&RA Safety Committee and ANSI Standard Committee. Nathan has been with IOA for 10 years and specializes in Environmental Insurance with an emphasis on insurance for the Waste, Recycling, Remediation and Demolition industries. He can be reached at (407) 998-5287 or via e-mail at [email protected].