How new truckers can get a better ‘insurance experience’

To reduce claims rates for Alberta-based trucking companies, and loss ratios for commercial trucking insurers, an Insurance Bureau of Canada (IBC) executive said training regimens aimed at improving the quality of drivers entering the sector needs to improve.

At 120 hours, Alberta’s Mandatory Entry-Level Training (MELT) program is shorter than those in other provinces – Quebec provides 1,000 training hours, said Aaron Sutherland, vice president of IBC’s Pacific region.

“[Better training is] how we can get a better insurance market,” he said. “We’ve got to do something about the loss ratios and the combined ratios. We’re looking at combined ratios well in excess of 100% for the long-haul trucking segment that simply isn’t sustainable.”

He added insurers don’t have confidence in the training provided by MELT, which is why new drivers in Alberta typically spend three years building their insurance experience through Facility Association (FA), which covers higher-risk drivers. After doing that, the drivers can normally obtain standard-market coverage.

“When discussing with the FA, we understand there seem to be significant challenges in their loss ratios, which I think further emphasizes the fact that these new drivers simply aren’t getting the training to ensure they’re able to operate safely on our roadways,” said Sutherland. “And that’s, at the end of the day, really doing these new drivers a disservice.”

In most cases, larger fleet operators in Alberta aren’t experiencing the same claims levels and loss ratios as smaller operators – those with five to 10 vehicles.

“Larger fleets typically have their own training programs, their own coaching style, to ensure the drivers on their fleets are more prepared than what MELT provides,” said Sutherland. “It’s clear that these larger fleets want to keep their claims numbers down. Unfortunately, [it’s] much more difficult for a smaller fleet to get that same level of training, and that’s where we’re hearing more of these concerns coming from.”

Plus, IBC is concerned about the cost of the MELT program.

“Limited as it may be, it’s also expensive. So, it’s sort of this double whammy. If you’re a new driver, you’re paying [up to] $10,000 to go through a training program only to have insurance challenges as soon as you come out of that,” he said. “That’s versus a situation like Quebec, where it’s $1,000 to get better training and you have a better insurance experience on the backend.”

IBC has been having conversations on this issue with the Alberta government for well over a year. “I think there’s an earnest appetite from the Alberta government to look at improvements,” he said.

Sutherland also stressed insurers covering the trucking sector have concerns beyond training.

“We also need to improve the underlying information that insurers have access to when they are rating drivers in this space,” he said. “There isn’t a central repository that insurers can access to see a driver’s training history, driving history, claims history, employment history. It just doesn’t exist in the commercial trucking space.”

IBC has called on governments across Canada to come together to create a national database for commercial drivers.

“Insurers have a really hard time verifying who this driver is, what kind of training they’ve received, what their experience [level is] because if you’re part of a fleet, the fleet holds that experience information,” said Sutherland. “If we had a central repository for a lot of this information, [it would] ensure we price risk more accurately [and that is] better for customers in this space.”

 

Feature image by iStock.com/Stefonlinton