Placing Risk for Trucking Companies and Owner Ops

[kostya]

Would anyone have any tips on this topic? looking for friendly advice.

Something along the lines of "make sure to check this....." or " dont forget to do this....." in the process of placing risk for trucking companies.

Perhaps something to watch out for, or maybe some red flags that would warrant to stay away or change approach.


I understand that insurance for trucking companies is not an easy venture, but i do want to learn and i'm fortunate enough to have a few willing to give me a shot and bare with me.

 

[fed up]

Never trust naked truckers and I would not trust a naked insurance agent

 

[kostya]

Hahahaha i meant " bear with me" but i see what you mean.... lol

 

[MichaelRS]

They may be willing to give you a shot because they have exhausted their other options or burned bridges. Trucking insurance, particularly with smaller companies sporting a few trucks, can be one of the most aggravating niches possible. It's a tremendous amount of stress to run a small trucking company especially due to current inflated costs and the #1 reason - getting dependable, responsible drivers with reasonable driving records. The best accounts, according to my experience, are going to be a guy with one truck who regularly works for one client. He's essentially an employee but is 1099d because he has his own equipment and simply has to get the product from point A to B within a window on his bill of lading (BOL). He has a newer or new truck that is rarely in the shop, doesn't need to be rushing to get paid or make more, and therefore does not run his truck hard.

To make money in trucking, you need a unit that is reliable (preferably five years old or newer with a warranty) and regular cash flow, not piecemeal work from job boards or brokers. Without those two things, it's tough to keep it going as there are a lot of expenses.

Many owner operators tell all their friends how much money they can make and how awesome/easy it is to be in the business. A guy goes and buys a late 90s or early 2000s tractor for under 40k, insures it for ~20k in insurance annually, has an accident, and closes up shop. Or, his truck breaks down and it's going to be 15k to get it going again and he just doesn't have the money to get it fixed. Same outcome, business closes. I've seen it time and time again. Trucking is a business and it has to be run just like that. Many [small owner operator] truckers have no idea what they need to just cover their costs. The multi-thousand loads for a couple hundred miles sound so enticing to them when they don't even know if they can make money on the load.

Another reason this is a tough insurance niche is because of the ongoing carrier concerns. Depending on your state, it can be very difficult to place business competitively. Here in NJ, there are limited carriers who will write the smaller truckers. Most agents use Progressive because it's direct bill. That solves two problems: 1) you aren't going to get stuck on payments and 2) you don't have the hassle of handling account billed endorsements. Additionally, there is often competition from direct writers on the best accounts, so it can be harder to keep those when they are paying a salesperson's salary/bonus instead of a full commission.

The smaller guys [often] don't understand that if you have a truck, you have to insure it. Your registration requires insurance whether it's out on the road or sitting in your driveway. So does your authority (if you have one). They figure they can let it sit when they buy another to replace it, because it constantly breaks down. Most carriers won't let you do that, or will have limitations (like only 30 days, etc).

I'm not saying you can't make money in the niche, you can, but you will be EARNING that money. Those who do well, focus specifically in the industry and have ways to manage the fallout of the aforementioned issues.

If you are interested in pursuing, you need to first understand the trucking industry and how it works. It wouldn't hurt to take a ride with a trucker for a day or two (don't tell their agent). Pay him $100 and tell him you just want to follow him for the day and for him to tell you what he is doing. You can also talk to another agent (local, but out of your competitive region) to discuss what is important and what they have been successful with. Most are willing to share. They will not TEACH you, but they can share some of their experience.

Honestly, the best way to learn is to first know a little (reading, asking questions of others) followed by getting burnt (experience). You won't make the mistake again. If you get any inclination that you are being yanked, walk away. It's not worth the commission.

I'll give one story. Had a client who bought insurance for a time and then it cancelled for non-payment. Found out he was issuing his own certificates (white out and typing over). Reached out to him and told him that was illegal and to stop. More than a year went by and I found out he started doing it again. I called him and told him that if I heard he issued one more cert, I was sending the police to his house. There are a lot of fools out there trying to get something for nothing. If you handle trucking insurance, you will bump into them. Just be prepared.

If you made it here, it's like any other insurance. Put together a list so you address everything the same way every time. Add to the list as you go. It will become a process. Here's one: always look up their SAFER SAFER Web - Company Snapshot before you do anything. If the Safety metrics are bad, you are going to have a difficult time placing the coverage. No sense going nuts for less than a 20% chance of writing. There will be more to review, you have to wait for the right/best accounts or your service people will get very mad at you when the accounts are always in cancellation. Here's another: always make sure that the number of units and drivers match their Safer, unless they have a [reasonable] reason. Smaller accounts really should match 90%+ of the time. They can always electronically update their info by filing a BMC-150 quickly and easily online. Underwriters look at stuff like that, so not having their ducks in a row is a warning sign. Here's the last one: always tell them up-front that their phone number will be checked by underwriters to make sure it's not on any other Safer profiles. If it is, that is a red flag that is usually difficult to overcome. If they know they've had another trucking company, they'll usually volunteer that info so you can address with the underwriter. It's better to tell an underwriter than for them to tell you. As mentioned previously, many of these guys close up pretty fast after a claim and then try to open a new authority with a different address to get insurance ["cheap"] again (or to get it at all). The more things you can tell them up front, the sooner the jokers will [hopefully] bow out. They are often looking for less experienced agents who don't know their history and will not ask them about it. Bonus: always have them sign off on their list of drivers. Never ceases to amaze me when you get a claim and it's with a driver you had no idea about. You don't like being surprised, the carriers like it even less. Some of them don't pay the claim, which means you may be backup with your E&O if there is bodily injury.

The last suggestion I'll make is, determine how much of a market there is for this in your area. I know it can seem like you can build a decent book of business quickly when folks are paying upwards of 20k per truck, but trucking business is not dependable like other insurance business. Those who evaluate books of business will pay far less for it due to it's volatility. My suggestion is to work hard for the good business - it will serve you far better over time. No problem writing some trucking accounts, but it really should only be the ones that you want to work with, not because you need the commission.

 

[kostya]

@MichaelRS wow thank you, that is a lot of info to process. I will definitely use this advice. i know the trucking industry is volatile but this has been a big part of my life i know the business i know the people locally, but i did not have the opportunity until now to see the trucking industry from the insurance side of things, especially when i started trying to place risk i quickly realized very few want to touch it.

i appreciate the advice. this was helpful.

 

[MichaelRS]

@MichaelRS wow thank you, that is a lot of info to process. i appreciate the advice. this was helpful.

All good. Go in with eyes wide open and you'll not be disappointed. There's always opportunity, it's just a matter of whether or not it's worth it to you. For some it may be, others it's not. I used to write fuel transportation companies. Transportation gets old. I write very little of the owners operators now because of the aforementioned issues. I want business that I'll have for at least 10 years and trucking doesn't tend to yield those length of relationships, at least in my area.

End of day, if it's what you want, go out there and get it done. There are plenty of agencies that are successful in trucking. The biggest decision is usually if you are going to write accounts with over or under ~10 units. Once you decide that, you move forward.