Commercial truck fleets trying to get more favourable insurance rates by only reporting the trucks on the road, and not the ones on their lots, might find themselves outwitted by the industry’s scrutiny, sources tell Canadian Underwriter. Brokers need to be the front-line defenders for insurers covering commercial trucking. Here are some ways where accurate commercial truck fleet reporting is the insurance broker’s responsibility.
Reporting Irregularities with truck fleet reporting
Regardless of the cause, the insurance industry has ways to address the issue of reporting irregularities by fleet owners, sources tell CU. Some fleet owners may attempt to insure only the trucks in use, while not reporting those sitting on lots and not being driven. “Some guys will say, ‘No, I don’t have that many trucks,’ and they’ll incorrectly report their fleet size. That does [happen] for many reasons,” says Lee Sherback, Canadian transportation practice leader at Hub International.
Commercial transportation brokers need to verify fleet sizes because sometimes the numbers don’t add up. Possible reasons include:
- Intentional misrepresentation by truck fleets
- A simple miscount
- Pure misunderstanding by a truck fleet owner on their duty to report
Documentation is key when it comes to commercial truck reporting
Accurate commercial truck reporting is crucial to ensure proper coverage. When standard insurers need to verify fleet sizes, the task often falls to brokers. Brokers verify the numbers by obtaining documentation from clients. The information gathered is then cross-referenced to search for any discrepancies. Some of the information gathered includes:
- Make, model, year, and serial number of each rig
- Driver’s schedules
- Driver’s licenses
- Vehicle registrations
- Carrier profile
- IFTA (International Fuel Tax Agreement) reports
According to Sherback, “Between those items, you’re able to identify if there’s accurate information being relayed quickly.” And if the insurer discovers discrepancies in the fleet count, they rely on the ‘broker’s diplomacy—and some simple math’—to address the situation with their clients. In the end, understanding the documentation can reveal discrepancies to knowledgeable brokers. Remarked Sherback, “If anybody’s been in the trucking industry, you’ve got a pretty good understanding to look at [their IFTA reports] and go, ‘Hey, how are you doing 100,000 miles with 200 trucks?’”
Facility Association
An alternate approach the Facility Association takes is to ensure vehicles are based on their individual VINs. According to Saskia Matheson, FA president and CEO, it eliminates the chance of truckers skirting filing reports. “At FA we only write lists of individual trucks,” says Matheson. “You can’t just say, ‘I’m a fleet of 10 trucks.’ You’ve got to say, ‘It’s this one with this VIN,’ so all the lists are separate. And that’s an important way that we control that kind of behaviour.” For FA, insuring individually provides a built-in failsafe because it insures individual trucks and not fleets as a whole. A truck that’s not listed on the policy won’t be paid out for a claim.
Matheson also adds that insurers rely on clients to provide accurate information when they’re filling out policy applications. By FA refusing to accept the risk if commercial trucking companies didn’t list all the individual vehicles, “that trucking operation ends up carrying the liability, the damage, there’s no coverage,” she states. “So that’s why in the past few years, [we’ve] been focusing a lot on truckers’ disclosure on where they operate. That’s really been the big issue for us,” says Matheson.
Facility Association is also introducing new tactics for truck premiums. This includes a surcharge for companies that drive more than 50% outside of the Atlantic provinces and Quebec, and a telematics program in Alberta that collects geographic information on its participants to accurately reflect their risk. Reports from the publication, Today’s Trucking, found that some fleets may attempt to insure only the portion of their trucks that are in use. They do not report the vehicles sitting on their lots not being driven.
Avoiding uninsured losses
“For a customer’s fleet, a broker would provide us with accurate and up-to-date information such as a list of vehicles that [are] owned or leased by the customer and year, make, model, and serial number of each vehicle,” Nick Frattaroli, VP of commercial lines at Intact Insurance, Ontario, says in a statement. “Whether in a fleet or other risk, we trust brokers to tell us the customer’s story so that we can provide the most accurate quote for the risk.”
How can brokers accurately ascertain the number of trucks in a customer’s fleet, as many will be on the road at any given time? The answer can be found in software. Brokers can access software that can verify the number of units a fleet has operating cross-border. Telematics programs can be very useful to the insurance industry. Failing that, according to Sherback, brokers must resort to asking more direct questions. “‘Hey, your fleet and your mileage aren’t making sense here.’ Maybe they’re doing more pickup and delivery versus long-haul trucking, [or] they may have [several] units parked due to lack of drivers,” Sherback says.
Walking Away from the Account
If a broker suspects that a client is intentionally misrepresenting their fleet account, it’s their right to withdraw. “Insurance operates on utmost good faith. If they’re misleading the broker and the underwriter, it could [lead to] a situation where they have an uninsured claim.” It is a broker’s responsibility to obtain all necessary and accurate information. Or, at the very least, the broker should know when the account is not a good one. However, brokers are responsible for educating their clients about their insurance coverage options. If a commercial trucking fleet does not wish to spend the necessary funds for coverage, that is their choice. Accurate commercial truck fleet reporting is crucial for brokers. Contact isure today for all of your commercial vehicle insurance needs!
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