Property Casualty

Measuring the Impact

Freddie Johnston
Freddie Johnston
Vice President, Property Casualty

It goes without saying the topic I’m about to address can be confusing, time consuming, and quite honestly, hard to digest. And if you feel like the rules are being changed each time we turn around…you’re in the majority. Nonetheless, if you have a fleet of drivers, you’ll want to ensure you take a look at this blog as it most certainly impacts your insurance.

So, let me start with this. Yes, this is another blog about Compliance, Safety, and Accountability (CSA), but I can promise you it’s worth it. The main focus this time is instead of implementing driver safety scores by trying to predict future crashes, what the CSA is hoping to do is look at a company’s safety culture. Basically, CSA wants to measure the impact rather than analyze the process.

Here’s where we get into the nitty gritty. Hang with me! The National Academy of Sciences (NAS) generated a lengthy report on the effectiveness of CSA’s analysis of the underlying data. Based on those findings, one of the more significant changes will be to use Item Response Theory (IRT) to analyze the data. Also, the emphasis will be on evaluating safety culture, not trying to predict future crash probability, which has been controversial.

Having said that, there has been evidence, cited in the NAS report, that motor carriers who are at intervention status in at least one of the BASICs do tend to have higher crash rates. There is one exception, the Driver Fitness BASIC. The most compelling statistic is that a motor carrier at intervention status in the Unsafe Driving BASIC has a crash rate 93 percent higher than the national average.

Even if you’re not sure the CSA scores have relevance, that statistic is verified by other studies that have found a direct link to unsafe driving habits and crash rates. It’s not hard to believe that motor carriers who employ drivers who have higher rates of moving violations will also have a higher crash rate. Other studies have documented the relationship between distracted driving, texting, and cell phone use, and the increased likelihood of being involved in a crash.

CSA provides plenty of data as well as an analysis and scoring model to compare motor carriers. Since the information was made public, shippers, brokers, insurance companies, and plaintiff’s attorneys have all been looking at the data and coming up with their interpretation and reaction to what they see. Shippers and brokers may use the information to select motor carriers, insurance companies may use the information to make risk assessments, and plaintiff’s attorneys will use the information to seek damages after a crash.

One easily quantifiable measurement would be an increase in insurance rates based on CSA data. However, motor carriers without any BASICs in alert status may also have significant rate increases. In recent years, the industry of plaintiff’s attorneys has become more knowledgeable in crafting their cases and seeking sympathy from juries. Many times, they use the data readily available on the CSA website to illustrate the motor carrier is negligent.

Unfortunately, this has resulted in generally increasing settlements and even some nuclear jury verdicts which have had a profound effect on the insurance rate structure.

Based on this, have we just made the case that nothing can be done so we should simply continue with business as usual? Not at all! All costs can be controlled, or at least mitigated. However, in this situation the cost is the effect, not the cause. To make a difference, we need to develop a strong safety culture that relies on choices, behaviors, and outcomes.

  • Choices — A strong safety culture begins with choices. It’s important not to look upon violations as inevitable, but rather as an indicator of bad choices that can be influenced to change the outcome. Intervention in this area can include revised hiring guidelines, increased coaching, and retraining, as well as a progressive disciplinary program.
  • Behaviors — The main focus of a strong safety culture is to change behavior. This replaces excuses and complacency with a sense that each individual can have positive outcomes. This change then drives the final phase. You may consider using employee award and recognition programs to provide positive reinforcement.
  • Outcomes — The final result of a strong safety culture is a change in outcomes. This is the result of defining positive choices and embracing responsible behaviors. You may find that some business metrics other than CSA may improve such as fuel mileage and vehicle maintenance costs.

It would be nice at this point to report that your insurance costs would simply decrease. Unfortunately, the market forces we talked about earlier in the article are still at work and still driving costs in general. However, you can use your improved statistics to demonstrate to the underwriters that your company has a lower risk. Along with that, you should be able to point to a decreased loss history. Finally, in the event of a crash, regardless of fault, a good safety history makes it harder for the plaintiff’s attorney to make their case.

Again, I know I’ve thrown a lot of information at you…and some of it may have you scratching your head. But, know that you’re not alone. We have experts here at Holmes Murphy who can talk with you about this subject and how it could impact your bottom line. Just reach out!

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