Bouncing back proved easier said than done for most of the country in 2010. While things did not appear quite as bleak as they did throughout 2009, this year many continued the struggle for financial security, with unemployment remaining high. Consumer confidence ebbed and flowed, and for some 2010 ended no better than it started. Overall the trucking industry showed positive growth as more freight began to move and those remaining in the transportation industry picked up the business of those who had departed. As the trucking industry has often led the way, either up or down the economic hill, the increase in freight is a welcome sign that things are, indeed, getting better.
Ray LaHood continued strong as the leader of the DOT, pushing forward on his mission to protect the country’s road ways. Distracted driving has become a focal point of the DOT, with regulations and education on the use of cell phones and texting at the forefront of the news. Starting initially with a ban on texting with a cell phone, the prohibitions have now extended to any type of texting and any use of hand held phones by commercial drivers. The Inspector General’s annual report on the DOT applauds the DOT on its mission but recognizes that budgetary concerns will make it even more challenging to reach its goal. In addition, while lauding the implementation of CSA2010, the report points to the need for improvement in carrier census data so that the reporting is correct and safety is improved.
The anticipated political change and momentum of the Obama Administration slowed as midterm elections returned the power of the House back to the Republicans. The U.S. House Transportation and Infrastructure lost its leader, with the departure of Representative Oberstar at the end of 2010. Republican John Mica has taken over the leadership of this very influential committee and the coming year will see him place his mark on the transportation industry. Rep. Mica has indicated support for a National Strategic Transportation Plan that will allow the creation of a long-term strategic vision for the transportation system.
The U.S. Department of Labor’s Bureau of Labor Statistics most recent report indicates that the trucking industry has lost 89,000 jobs since the end of 2008. Seasonally adjusted trucking employment was at its highest in January 2007, with more than 1.45 million employed. 14% or 203,100 jobs have been lost since then. While it sounds ominous, the latest report shows a positive uptick as 1,400 jobs were gained by years end. Driver shortages will be a big concern in the coming years. FTR Associates reports that there will be a shortage of 150,000 drivers by the later part of 2011, and a potential 400,000 shortage by 2012, as CSA 2010 weeds out drivers, and citizenship and residency requirements further limit who can drive a truck.
Trucking bankruptcies fell by 18.5%, with only 330 carriers seeking bankruptcy protection in the third quarter of the year. The average truck size of companies seeking bankruptcy was 33. Avondale Partners reports that 10,650 trucks were removed from operation. Carriers appear to be holding back on increasing capacity, with statistics reflecting a 13% drop in overall capacity. If the hours of service rules reduce driving time, freight movement will slow even more, as those remaining trucks will not be moving freight as often. On the other hand, at least one company has reported an upswing in filings for corporate status in trucking operations as individuals from other business arenas look to move into what is perceived to be a more stable business.
There are not many publicly traded transportation companies however those that are generally posted higher revenues, freight rates and earnings in 2010. The loss of trucking companies from the business allowed the remaining companies to absorb those operations, increasing profits for the survivors. The Dow Jones Transportation Average finished the year substantially higher than the early months of 2010, again painting a rosier picture for 2011.
Overall moving freight is still a big part of our country’s business operation. The Bureau of Transportation Statistics released its Freight Transportation Global Highlights report and reported that U.S. freight gateways moved more than $3.4 trillion in international merchandise. From 2007 to 2008 exports rose 12% and imports rose 7%. Nearly all shipments require the use of more than one mode of transport. When it arrives by air or vessel it is almost always moved by rail or truck to point of destination. The report also reflects that third party logistics providers are probably here to stay as the gross receipts for that industry have continued to rise, with revenues in excess of $120 million in 2008. Transportation and warehousing are the most common activities for a company to outsource to a third party provider.
Each year we always report on the areas of the country that are considered hostile in the litigation arena. Insurers have to consider the impact of the jurisdiction which will hear the case when evaluating the verdict potential of any suit. The Judicial Hellholes were once again reported by the American Tort Reform Foundation. This year Philadelphia leads the way. California, West Virginia, South Florida and Illinois completed the top five places to avoid if possible.
Litigation trends also appear to be changing. Fulbright’s Seventh Annual Litigation Survey revealed that there is more litigation now with the poor economy cited as a cause of the increase. Contract disputes, labor and employment and personal injuries led the categories in types of suits in the U.S. While litigation is increasing, there has been a slight decline in the percentage of U.S. based companies who spend $1 million or more on litigation. Control over litigation expenses and consideration of alternative dispute resolution procedures have contributed to this reduction. Towers Watson 2010 Tort Cost report indicates that U.S. tort costs decreased by 2.7% in 2009. That is $808 per person which was lower than the prior year average of $838. While there was an increase in personal tort costs there was enough of a decrease in commercial tort costs to result in an overall reduction. The U.S. tort system cost $248.1 billion in 2009. The Pacific Research Institute’s Tort Liability Index indicates that Alaska Hawaii, North Carolina, South and North Dakota are the 5 best in keeping tort costs down, while New Jersey, New York, Florida, Illinois and Pennsylvania are the worst. As the overall economic growth in 2009 was 1.3% the ratio of tort costs to gross domestic product (GDP) declined once again, making it the sixth year in a row.
While there will always be judicial hellholes and litigation expenses there are some positive moves in the tort reform arena which will benefit insurers and motor carriers alike. 25 states now have anti-indemnification laws, with 6 more states added this year – Louisiana, Florida, Alaska, Connecticut, Iowa and Washington. In most of those states it is now unlawful for a shipper or receiver to require the carrier to accept liability for acts of the shipper or receiver, a position applauded by carriers and insurers as a way to reduce carrier exposure.
To the great surprise of the trucking and insurance industry alike, and the dismay of shippers, the FMCSA actually removed a long stand regulation, doing away with the BMC-32 endorsement, the “cargo filing” effective March 21, 2011. Motor carriers of general commodities will no longer be required to have a filing to operate in interstate commerce, although household good carriers will continue to need the filing. We have received a large number of inquiries from insurers concerning the anticipated impact of the repeal of the filing requirement. The FMCSA has advised insurers that there is no immediate need to cancel existing filings, however there has been no definitive ruling that the BMC-34 or the attached BMC-32 endorsement is no longer applicable if it remains in place. In fact, the rulemaking indicates that the FMCSA would be seeking approval for new forms which will remove the reference to common carriers and amending other incorrect references. Whether this change relates only to household goods carriers or will still reference all carriage is unclear. There is also a concern in the insurance industry that motor carriers suffering from financial difficulties will no longer be concerned about maintaining cargo insurance as it will not impact the carrier’s operating authority. Delay or complete failure to make timely premium payments may be a greater problem and it is incumbent upon underwriters to make sure that a carrier has the financial ability to pay premiums and deductibles.
The Supreme Court of the United States also weighed in on motor carrier liability this year. Discussed in greater detail in “Recent Developments in Transportation and Insurance Law”, the Supreme Court held that the inland portion of an intermodal shipment would only be subject to the Interstate Commerce Act, specifically the Carmack Amendment, when the domestic carrier was the first carrier to receive the goods. This decision significantly impacts the amount recoverable against a domestic carrier, as international intermodal shipments often limit the carrier’s liability to $500 per package, while the Carmack Amendment requires a carrier to take additional steps to limit its liability below actual value. While this decision will alleviate some litigation in this arena, it still left open many areas of dispute on the extent of carrier liability.
As we have always done, we close out this section of the resume with the current status of NAFTA. The borders still remain closed. In response to the continued failure to open the Mexican borders, Mexico increased tariff penalties. This year they modified the list, increasing the tariff penalty to over 99 products exported to Mexico, effectively stopping or limiting the sale of those items in Mexico. Tariff penalties range from 5 to 25% of the product value. 2011 has at least brought with it a concept document introduced by Secretary LaHood. The proposal, which the Mexican government greeted positively, seeks to allow Mexican long-haul trucking operators to obtain a permit to operate in the United States so long as they agree to safety, insurance and other monitoring requirements. The proposal would not cover the movement of hazardous materials.
Motor Carrier Industry
What exactly makes up the motor carrier industry? It is difficult to quantify the industry as it includes interstate and intra-state carriers and there is no definitive database which quantifies all. Our analysis reveals that there are 1,181,668 active carriers registered with the DOT. Of those, 182,823 have current operating authority as a motor carrier – either common or contract - 3,431 have dual authority as a carrier and as a broker, and 16,979 are registered only as brokers. 1,770 are registered as freight forwarders. According to the Journal of Commerce only 4% of those registered carriers operate more than 20 trucks. It is a diverse and complex industry.
Overall 2010 appears to have been a better year for motor carriers as freight once again began moving throughout the country. This allowed many motors carriers to stabilize their risky economic position. The ATA truck tonnage indicates an overall increase over 2009, increasing for the 12th month, a welcome sign, but one that also raises its own problems as more tonnage leads to concerns over ability to fill capacity and find drivers. Trucking continues to represent approximately 68 percent of all domestic tonnage carried. Trucks hauled 8.8 billion tons of freight in 2009 and earned $544.4 billion or 81.9% of total freight revenue. ATA reports that it expects some growth during the first half of 2011 with a greater acceleration in the later half of the year. The ATA also reports that trucks moved 5.9% more freight in the first 11 months of the year then in 2009.
What is the transportation industry most concerned about? The ATRI report indicates that while the economy remains the number one concern of truckers, the percentage ranking it that high has lowered. While in 2009 more than 50% of those surveyed ranked the economy as their biggest concern, only 35% gave it that ranking this year. This mirrors more general reports which indicate that for many economic fears have eased slightly. As expected, the concerns over the new CSA 2010 program follow as a close second as carriers express concern over the validity of the program and how it will impact their business operations. Trucking companies are hiring security and safety experts to take all reasonable steps to get scores higher. Government regulation, hours of service rules, driver shortage, fuel costs, transportation funding, onboard recorders, environmental issues and truck size and weight round out the top ten list of concerns.
The Business Expectations Survey presented by Transport Capital Partners indicates that driver shortages and demand for wage hikes are a big concern for carriers. They report that 71% of carriers with $25 million in annual revenue expect minimal if any increase in capacity. Concerns over the ability to find and keep drivers may also be impacting decisions on whether to increase equipment levels.
All of the new regulations, discussed in greater detail in the next section, are expected to limit the entry of new carriers into the interstate arena and possibly result in the loss of other carriers. While that may ultimately work to the benefit of those remaining carriers, it may reduce the overall pool of motor carriers, driving freight charges up.
President Obama proposed that mileage standards for medium and heavy duty trucks be implemented and the DOT proposed rulemaking on the standards are still open for comments. Standards are expected to be issued next year. While new regulations will hopefully save on fuel costs, the increased cost to equipment will be a hardship for some carriers in the immediate future. There are expectations that the costs of Class 8 tractors, for example, could rise by tens of thousands.
Fuel costs are once again high, with fuel prices closing at $3.294 a gallon, the highest it has been since the fall of 2008. According to ACT Research Co., orders for heavy-duty Class 5-8 commercial trucks are up, indicating fleets are hopefully replacing aging equipment, if not increasing overall capacity. Trailer sales reached a 2 year high in November, with the sale of 21,314 units.
As historical trends have shown, cargo theft increases in a down economy and the holiday season continues to be a peak season for thefts. Cargo theft impacts carriers and insurers alike and efforts continue to increase criminal penalties. Large rings continue to operate throughout the country, making detection more difficult for law enforcement. Identity theft is also a problem for brokers and carriers with the relative ease that today’s technology allows criminals to prepare standard documents which carriers and brokers routinely produce.
On a positive note, deaths involving large trucks dropped 20% in 2009, which was a third straight drop. The Commercial Vehicle Safety Alliance’s (CVSA) Operation Safe Driver campaign report recently reported that the top three reasons for warnings and citations were speeding, failing to use a safety belt and failure to obey traffic control devices. Of the warnings issued to commercial drivers, 20.3 %t were for speeding; 4.2 % were for failure to obey traffic control devices and 2.6 % were for failing to use a seat belt while operating their vehicle. Citations issued to commercial drivers followed a similar trend, with 13.7 % for speeding, 4.6 % for failure to obey traffic control devices and 10% for failing to use a seat belt while operating their vehicle.
Although government regulation has always influenced the transportation industry, this year the new programs and regulations have the potential for seriously changing carrier operations and the way carriers are selected by shippers and brokers. 2010 saw the implementation of government programs which are expected to have a profound influence on motor carrier operations in the coming year. Although the last program to roll out in 2010 but by far and wide the one with the most notoriety, is the Comprehensive Safety Analysis (or Compliance * Safety * Accountability), better known as CSA 2010.
CSA 2010 is the cornerstone behind the FMCSA’s initiative to improve transportation safety and reduce commercial motor vehicle accidents. The FMCSA has determined the 7 categories which are most likely to reflect the safety of a motor carrier – the Behavioral Analysis and Safety Improvement Categories - BASICs: Unsafe driving, fatigued driving, driver fitness, controlled substances and alcohol, vehicle maintenance, cargo securement and crash history. Severity weights have been assigned to each regulation depending upon its relevance to crash risk. The last year saw many changes in the program, as motor carriers sought to modify or otherwise impact the calculations and weights to be used by the FMCSA. For example the FMCSA determined that it would include vehicle miles traveled as part of its analysis of crash risk, agreeing that a blended rate of miles and power units would result in a more definitive risk analysis. Cargo securement violations were given different weight scales. The severity weights will change as the system works the kinks out. The focus of the DOT is safety and enforcement, not underwriting, so CAB has reformatted the way the data is presented so that it can be properly evaluated by the insurance industry when underwriting a risk.
The FMCSA extended until June 30, 2011, implementation of its final rule concerning the inspection, repair, and maintenance of intermodal equipment. Specifically the requirement for drivers and motor carriers to prepare a driver-vehicle inspection report (DVIR) on equipment even if no damage, defects, or deficiencies are discovered by or reported to the driver has been extended. The requirements for intermodal equipment providers to have in place inspection, repair and maintenance programs, and a process for receiving and taking appropriate action in response to DVIRs on which damage, defects, or deficiencies are reported, remain in effect. As of a result of these many new safety rules many of the large steamship lines have elected not to provide chassis for interchange, which will compel truckers to supply the chassis and maintain the records, as well as bear liability for loss, all increasing the overall cost of the truck operations.
The FMCSA has also now rolled out the newest proposed version of the Hours of Service rules. It was an ongoing battle during the year, with the American Trucking Association eventually filing suit to compel the new rules to be proposed. In response to concerns that driver fatigue was not properly considered in the last version of the rules, the FMCSA has proposed changing the rules so that all drivers will be limited to 13 hours on duty, with an additional hour allowed for off-duty or done within a 14-hour work window. In addition the “34-hour restart” allowance will require 2 consecutive off-duty periods from midnight to 6:00 a.m. and drivers will only be permitted to exercise the restart option once in any 7 day period. While the earlier rules permitted drivers to drive for 11 hours, the rulemaking indicates the DOT is considering a 10 hour drive schedule. It will likely be sometime next year before the next rulemaking is issued, after evaluation of all of the expected comments. Based upon the prior history it does not appear that any rule will make everyone happy so whether this new proposal will be the final hours of service remains to be seen. The trucking industry has already begun its fight against the new rules.
The Pre-employment Screening Program (PSP) was another start-up this year. This program, which is not open to insurers of motor carriers, permits motor carriers to obtain access to the FMCSA crash and inspection history for a particular driver. The FMCSA will release five years of crash data and three years of inspection data, provided that the motor carrier first obtains the written authorization of the driver. While this information is not directly available to insurers, it can be considered as part of the underwriting process and insurers would be wise to determine whether their insured is utilizing the program and implementing standards to ensure the employment of strong candidates.
In a further effort to monitor carriers, the FMCSA has also implemented rulemaking which permits it to compel carriers and bus companies that have serious safety or hours of service violations to install on-board recorders in their vehicles. If a carrier has 10% or more violations during a compliance review, that carrier will have to be monitored for two years with the on-board recorders. The FMCSA has begun enforcing this standard, ordering at least one large carrier to install the recorders. It is expected that more carriers will voluntarily begin utilizing the recorders as the FMCSA has advised that carriers will not be required to comply with all of the paper trail regulations currently in place if the recorders are in operation.
FDA Food Safety Modernization Act of 2010 has been signed into law by President Obama. The Act gives the FDA greater ability to inspect food production records, to register food facilities, set standards for performance, produce safety, protection against intentional adulteration of foods and implement regulations for the sanitary transportation of food. In fact, earlier in the year, the FDA issued an advanced notice of proposed rulemaking to request data and information on the food transportation industry and its practices. Their ultimate agenda is to issue regulations setting forth sanitary practices to be followed by shippers, carriers by motor vehicle or rail, and others in the industry. Underwriters should be aware that any product transported in violation of any FDA regulation will be considered adulterated. As new regulations are implemented for sanitary transportation of food it is imperative that underwriters determine whether their insured is operating in compliance with these regulations or it will risk rejection of goods at destination for adulteration and cargo claims will come in under the policy.
In 2011 we expect more regulations coming down the pipe as the FMCSA looks to get to the backlog on other proposed regulations now that CSA 2010 has begun operation. They were granted a short reprieve on the rulemaking needed to outline the information carriers need to maintain in driver’s logs. That proposed regulation should come out at the end of January. Final rules are expected shortly on the training required for new drivers. The FMCSA has proposed requiring 76 hours of class room training and 44 hours of behind the wheel training for all new drivers.
More than four years after the trucking industry asked the federal government to mandate speed limiters on new heavy-duty trucks, the National Highway Traffic Safety Administration announced it will launch a rulemaking on the issue in 2012. The NHTSA is granting two separate petitions which seek rulemaking on installation of speed governors. The petitions seek rulemaking to allow for installation of devices on new trucks that would limit top speed to 68 mph on trucks with gross vehicle weight ratings (GVWR) greater than 26,000 pounds. While it has granted the petition the NHTSA has advised that rulemaking will not be forthcoming until 2012.
Before the departure of the existing Democratic Congress, the Shipping Act of 2010 was introduced which seeks to end the Antitrust Immunity of Ocean Carriers. The shipping industry has long argued that ocean carriers should not be permitted to dictate charges and unilaterally impose surcharges. With the change in congressional control it is unknown whether this legislation will move forward in the road to implantation.
In 2010 the FREIGHT act was introduced in Congress. The Act seeks to establish an Office of Freight Planning with the DOT and to set forth a national strategy for freight transportation. The Act would also create a permanent, competitive discretionary grant program to fund port, intermodal, rail and highway projects. The Act is opposed by the ATA, which believes that it will move focus to multi modal transportation and ignore the great problems with the current infrastructure. Congress has still not reauthorized a highway act, with the existing act just extended until March, 2011.
The Federal Insurance Act of 2010 was passed this year. The Act establishes an office within the U.S. Department of the Treasury which is to be known as the Federal Insurance Office (FIO), which will be focused solely on the insurance industry. There will also be a nine-member Financial Stability Oversight Council, headed by the Secretary of the Treasury. At this point it will simply monitor, collect and report on the industry.
Premium continues to go downhill. The 3rd quarter survey report released by NIP Group, the Transportation Insurance Pricing Survey noted that it remains a buyer’s market, although there is some movement to stop this downward trend. Bulk transportation, specialized carriers and riggers, ambulance and airport ground transportation underwriters have reported that they are holding fast on pricing, which will hopefully transfer over to other lines, allowing the market to begin to harden. Right now, Towers Watson Commercial Lines Insurance Pricing Survey, which last year showed flat premium, has gone back to reporting falling prices, with a 1% reduction from last year’s numbers.
While premium goes down, ISO and PCIAA report that net income after taxes rose to $26.7 billion through the third quarter of 2010, up from $16.4 billion last year. Contributing to the increases in the insurance industry’s net income, overall rate of return, and surplus, insurers’ net investment gains — the sum of net investment income and realized capital gains (or losses) on investments — grew $13.1 billion to $39.5 billion in nine-months 2010 from $26.3 billion in nine-months 2009. It must be noted that the investment results were offset in underwriting losses, which grew to $6.2 billion from the $3.2 billion for the same nine-months in 2009. The combined ratio was 101.2 % for the first nine-months of 2010 changed from the 100.7 percent for the same nine-months of 2009.
We would like to take a moment in this section of the resume to bid a fond farewell to Ron Thorton of the IMUA as he heads off into retirement. Ron has worked tirelessly for the inland marine organization and has provided a wealth of information and knowledge. He has long been a friend to us all here at CAB and we wish him a wonderfully long and productive retirement. He will be sorely missed.
Underwriting transportation insurance, whether cargo, auto or general liability, requires a specialized skill which is unlike that required in most other underwriting books. It requires a deeper understanding of your insured’s business in order to provide the best service and the best return on your investment. Knowledge remains power and we applaud your efforts to understand this business and keep abreast of developments by reading these reports. It is also important to remember that training those following behind is critical to keeping the business at the highest professional standards. As always we are here to help you and to train those coming up the ladder. We remind you that the knowledge available through CAB can help all of your departments make this a successful book of business.
Central Analysis Bureau
2010 has been an exciting year for CAB. We are now the most sophisticated online source for all financial, safety and operational information on the motor carrier industry. We have redesigned and enhanced our many services to meet the your needs..
With so many core changes and enhancements to our services and online tools, including the 21st century facelift of our website, the new Carrier Search page with a built in Chameleon TRACker, the new and improved Financial Analysis report, and our brand new CSA 2010 module which parallels the FMCSA’s SMS, even we can’t chose any one item as the highlight of the year. After initially introducing our “Know Your Insured“ program over 5 years ago, and responding to your need for information, the new CAB has earned its recognition as the most sophisticated industry source for critical motor carrier information.
Back in 1939 when CAB was started by Kal Schindel and Hy Cooper, CAB’s mission was to gather the financial data of motor carriers and provide underwriters a financial analysis of an insured and a rating on whether that carrier had sufficient assets to operate successfully. Now, over 70 years later, the newly redesigned financial analysis report provides greater information on the overall operations, drawing an underwriter’s attention not just to a rating, but also to the critical data gleaned from the financial report which allows the underwriter to better understand the operations which will be covered. Now this extensive financial report is only one of the many products offered by CAB. No longer simply an underwriting tool, CAB’s valuable data and analysis tools and reports are used by all departments including actuaries, loss control, claims, marketing, BI and management.
As addressed in the earlier sections of this resume, CSA 2010, while operating for most of the year in pilot mode, was released mid December. CSA2010 was the phrase most heard from anyone associated with the motor carrier industry. Throughout the year CAB received numerous inquires regarding the expected impact of this system of scoring and interventions. While obviously it is designed to help remove unsafe carriers from the road, it also brings with it its own potential problems. Many marginal motor carriers, with average scores under the FMCSA’s old SEA / SafeStat scoring system, are anticipated to have negative scores under the new methodology. It is expected that there will be a rise in the number of “Chameleon Operators“. Chameleon Operators are those who shut down their poorly rated operations, opening up as new entrants with a clean slate, often using the same address and phone number in order to maintain client contacts. CSA 2010 will not alert an insurer to this potentially bad insured nor will it make any reference to the history this new entity left behind when it changed names. To help underwriters target those operations CAB developed a Carrier Search tool which allows insurers to identify motor carriers which may fall within this category, now giving you the information to show entities, old and new, at an existing address or utilizing the same phone number and to track the transfer of vehicles from one company to another. In addition, we recognized the importance of considering the new BASIC scores in the underwriting process. Within one week of the SMS launch, CAB incorporated the new SMS data into its popular Submission Report in a format designed to help the insurance industry better navigate the overwhelming amount of new data available. While all inspection data is important, CAB, with your assistance, has highlighted those reports inside the CSA 2010 system which the insurance industry has determined to be critical in the underwriting process. While decisions often need to be made quickly, they must be done with full knowledge of the relevant information. CAB’s own proprietary system was designed to merge all the relevant, and often misleading or confusing government and privately gathered data into one location, and then isolate and identify anomalies in, and create a means of cross referencing and cross checking this data. Issues that might otherwise have been overlooked or forgotten are now caught by CAB’s systems and highlighted for review. Whether an underwriter, a claims adjuster or investigator, CAB’s array of tools creates a more efficient research and review environment for all. In addition, CAB can customize any specific tool to ensure its subscribers get exactly the information they need.
Recognizing the need for education of the most efficient use of our system, CAB provides full training services along with its products. Our trained analysts are available to help users understand the reports and ratings provided by CAB. Web based demonstrations are available upon request and can be performed on a one-to-one basis, or through simultaneous broadcast to different locations around the world.
The number of insurance companies who recognize the value of our enhanced services is reflected in the growing number of Premium Subscribers. Many new companies have joined CAB and current subscribers have upgraded to the Premium level and are now reaping the benefits of full access to all of our products. We continue to actively solicit feedback from you as we continue to fine tune and enhance our lineup of tools to better reflect, focus and highlight the information that is most relevant to you.
For those of you not familiar with all of our products, space only allows a short introduction of each product below so we encourage you to contact Shuie Yankelewitz at 212-244-6575 x225 or by clicking here for more in-depth information and a demonstration of our services.
TRAC: We reached out to the readers of the Bits and Pieces to help us come up with a catchy name for CAB’s new website since we recognized that Carrier Research & Analysis Portal just wouldn’t cut it in today’s marketing environment. With a $100 bounty on the line, we received many suggestions for a clever acronym with a catchy ring. After a vote of the top selections by you we are pleased to introduce TRAC, our new Trucking (and bus!) Research & Analysis Center. Special thanks to Christopher Alexander of Acuity for this winning phrase. Honorable mention to the following for their highly voted suggestions - Nick Kunstman of Acuity for START, John Ngai of Lancer for CAVIAR and Fran Walsh of Lancer for SIMON. Since we appreciate all of your submissions we have decided that all of these individuals will be receiving a $100 gift card. TRAC represents the culmination of many long hours of work and analysis creating our new online system. This system seamlessly integrates the various Search and Analysis tools available to our subscribers and offers a customizable platform by which to access this data.
Carrier Search: For the first time anywhere, and exclusively on our site, you can perform a search by any combination of name or partial name, address or partial address, city, state, zip and even by phone number or area code. How would you like to know how many other operations are currently or were once registered at that address? Which other entities utilize the same phone number? Is there a broker operation associated with this carrier? What other operations are located in a particular region or zip code where I can market my product? Questions like these can be answered in moments with our new search page. Our built in Chameleon TRACker feature highlights phone numbers and addresses that are used across multiple registered entities, and a simple click on a phone number or address will instantly display all the associated entities, whether active operations or not. For Premium Subscribers, our search page also offers QuickLinks which allow you immediate access to view, download or email our Premium Submission Report.
Unlike the limited search capabilities offered on the various government sites our new Carrier Search feature gives you the power to search all the government records and various databases simultaneously, and the search results will include all records including data not available anywhere else but here. At the click of a button you can locate critical information about any registered entity, active or otherwise.
CAB Financial Analysis: CAB maintains detailed financial information on more than 50,000 motor carriers throughout the country, both interstate and intrastate. Financial information is obtained from federal and state regulatory agencies, from motor carriers and from insurance companies. For those of you who have been around as long as some of us have, you know that the CAB Financial Report has long been a critical part of any underwriters risk evaluation. For over 70 years that CAB has been providing this information to the motor carrier insurance industry, with every single rating manually assigned to the carrier after an exhaustive review by our experienced financial analysts. The report is prepared after a comprehensive financial analysis is completed, applying those criteria and ratios which CAB has determined over the past seventy years to be the best indicators of a motor carrier’s financial condition for underwriting purposes. New information is also compared with historical data in our files in order to establish trends and verify the validity of the new information. Prior reports are also available to the underwriters to evaluate the changes in the carrier’s operations over the years.
2010 marks a major change in the Financial Analysis Report! While the six CAB ratings, a CAB staple since its founding, remain the same, we have added a new financial indicator to indicate the trend in a carrier’s financial condition. Our new report now contains easy to read graphs and charts which allow you, at a glance to understand the overall financial picture including the source of revenue and how revenue is dispersed. As an added feature we now provide you with the underlying analysis performed by our superb staff and allow you to see, first hand, the factors which support the CAB Rating and alert you to the financial concerns of the analyst. We’ve also added in a ‘Contact the Analyst’ button which will allow you to directly contact the analyst with any questions you may have regarding the report or rating. Our analysis reports usually include revenue, profit or loss, equipment (both owned and leased), cost of hire, insurance costs, commodities carried, states served, number of employees, payroll cost and affiliated companies. In the new format, revenues and expenses are summarized in pie charts, and historical rating and profit/loss timelines are drawn out, bringing new perspective to the way the data can be analyzed. 2010 also marks the year that the CAB Financial Analysis Report, while still available as a standalone report, was fully integrated into the CAB Submission Report with its own tab.
The breakdown of the percentage of carriers in each rating, and the change over time can be viewed here.
CAB Submission Report: The undisputed leader in motor carrier analysis reports, the CAB Submission Report has easily worked its way to the top of our lineup of products. In response to the industry’s need for a detailed analysis of the operations of a motor carrier, whether for underwriting or claims handling, CAB created the first Submission Report as a PDF report 4 years ago. Over these last 4 years, the report has evolved into an online interactive report. In 2010, the report received a complete facelift as well as some brand new tabs and features including the CAB Financial Analysis, a customizable, interactive radius map and a new CSA 2010 module, to help create a more intuitive environment for analyzing the vast amount of data contained within. The information contained within the report is aggregated from various government and proprietary data sources including all of the relevant information from the CAB, SAFER, SMS and the Licensing & Insurance databases. The latest available data is analyzed by our advanced computer systems and a full report of the analysis including alerts, charts, maps, summaries and details is provided on demand. The mix of data from the various sources, which may be confusing when viewed alone, is organized and corrected to provide you with accurate, useable information. As a value added bonus, information unavailable anywhere else is provided, including shipper information, reported power unit verification, Mexican border zone inspections, as well as CAB‘s proprietary Radius of Operation and Historical Trend graphs. CAB has also worked directly with you to develop a format that is both comprehensive and intuitive. Integration of the Submission Report into the workflow allows an insurance company to streamline its underwriting and claims processes and allows managers to rest assured that their staff now has easy access to the critical information needed to begin as a detailed analysis of an account or a claim. As part of our commitment to help streamline the available data, the Submission Report is available for download as a single PDF report, so that users no longer need to print multiple pages from multiple sites – a task which can be overly time consuming in a fast paced market. In addition, for the daring user, all the inspection, violation and crash data, including the new BASIC severity weights and categories, is available for download as an Excel spreadsheet directly from the report for advanced analysis and pivoting. With over 500 reports accessed each day, the CAB Submission Report is the recognized industry standard for data control. These reports have become a VITAL part of both the underwriting and claims process.
Vehicle Inspection TRACker & Locator (VITAL): There is a wealth of information that can be gleaned from the more than 20 million inspection records, 30 million inspected units and 2 million crash records which are currently maintained by CAB. With VITAL, full access to these records is in your hands. Our unique search portal is unparalleled in the industry and empowers the users to track information on inspected vehicles or vehicles involved in accidents, an option which was virtually impossible to find before. You can search with complete or partial VINs or Vehicle License numbers, or by the carrier’s DOT, Docket or state ID number. Any or all of the above search parameters can be specified to create as broad or as specific a search as you need. Additional filters can be applied to further refine the results, such as a date range, licensing state or vehicle type (power unit vs. trailer). Detailed inspection and crash results are preceded by a full summary, can be grouped either by VIN or License number and can identify the history of what carrier previously operated that vehicle. Any operating authority identified with that vehicle will be accompanied by a link to connect to the CAB Submission Report for that carrier creating a complete integration of these two systems. New in 2010 is an automatic VIN decoder which will identify the vehicle make, model, year and configuration of any valid VIN. VITAL was designed to service all of your departments from the underwriter researching the history of a vehicle to be scheduled on a new policy, to the claims adjuster researching a claim on the particular unit, to SIU which can track and locate vehicles for leads in finding the vehicle, the driver or the owner of the vehicle or subrogation looking for carrier information to pursue recovery on a claim. In an industry so heavily reliant on available data, knowledge is vital. Now, thanks to CAB, VITAL is knowledge.
CAB Safety Monitoring Program: In most cases an underwriter has an opportunity to review an account at the initial application and then annually at renewal. During the course of the policy period the underwriter is often in the dark as to significant changes in the motor carrier’s safety performance or operation, until a loss occurs. To keep you in the know throughout the year, CAB’s Safety Monitoring program provides you with near real-time alerts on the carrier’s safety status, and identifies the specific problems that must be proactively addressed by underwriting. Weekly update reports are provided that warn of any significant changes in any of the alert categories our system tracks including carriers with under par safety ratings, excessive Out-of-Service percentage, new hazmat violations, inadequate insurance, and dual authority as well as any changes to a carrier’s name or address. In addition to these weekly reports, CAB provides monthly custom monitoring reports which can track the different issues which impact your exposure, including Mexican border inspections, alcohol, drug, or any other violation you determine is relevant to your exposure, arming you with the information necessary to make informed decisions and take pro-active steps to reduce your risk.
Insurance Filing Monitoring Program: Insurers are routinely faced with unanticipated exposures because DOT filings have not been cancelled, filings are made with greater limits than required or filings are made for carriers that did not even require filings. Improper filings are a ticking time bomb for any insurer. Every day that any incorrect filing remains in place, you increase your risk and potentially affect your bottom line. CAB is the only company to offer the management tools that would allow for a company to eliminate problematic filings, as well as real-time tracking of all new filings the month they are issued. On a monthly basis, we scan through all the outstanding filings that an insurance company has registered with the FMCSA. Each individual filings is analyzed to determine whether or not it falls under any of the following categories: Filings with effective dates 5 years old or older; filings on behalf of carriers whose authority has either been revoked or never granted; filings utilizing a form that results in an effective filings with no dollar limit; filings for amounts in excess of the FMCSA required limit; unnecessary cargo filings on behalf of contract carriers; filings for brokers (a broker does not require a filing); filings on behalf of Mexican carriers (filings not required for Mexican carriers). With the anticipated demise of the BMC 32 on March 21, 2011 this report will also identify incorrect cargo filings for carriers not registered to haul household goods. We notify subscribers with a report which lists all of these potentially problematic filings, and a spreadsheet with all outstanding filings for the subscriber’s insurance companies. This report also has a special section dedicated to a “real time“ analysis of all new filings, allowing an insurance company to fix errors quickly and to trace how these mistakes occurred. Since an insurance company’s liability under a filing can range from $10,000 per accident for a cargo filing to as much as $5,000,000 for a BIPD filing, avoiding even one payout from an unnecessary filing or limit will pay for the cost of this program for many years.
The entire staff of CAB wishes you the best for the coming year. Please do not hesitate to contact us with any questions regarding specific motor carriers, the industry in general, regulatory issues or coverage questions. There is always someone here to help you.
Schindel, Farman, Lipsius, Gardner & Rabinovich LLP - 2010 Recent Developments In Transportation and Insurance Law