Simple survival was the main objective for most of the country in 2009. The trucking industry held on and hoped for the best. The events of 2009 were unprecedented as industry and individuals faced financial disaster. With so many industries affected by the dramatic drop in finances, there was little the trucking industry could do to minimize damage to its own operations. Overall the country saw over 1.4 million reported bankruptcy filings, both personal and corporate, to say nothing of the number of companies which simply closed up shop. The overall decline in truck tonnage pushed many carriers out of the industry and forced others to operate on an even smaller shoe string. Fleet size shrunk and profits dropped as carriers looked for new and innovative ways to stay in business. Even truck stops disappeared as more states were forced to close them in the face of budget constraints.
The inauguration of Barack Obama changed the political landscape. With a new administration we saw new leaders emerge in the different agencies, all with their own agenda. Ray LaHood took over the helm at the DOT, after serving for many years on the House Transportation and Infrastructure Committee and, after that, on the House Appropriations Committee.,Mr. LaHood has indicated that he will be leading a series of meetings throughout the country to assist in getting feedback on what is needed for the new highway bill. Anna Ferro now leads the FMCSA and has set forth her own agenda for the coming decade, with a primary focus on safer operations of the trucks on the road. The economic stimulus package moved monies into the country’s infrastructure. The American Recovery and Reinvestment Act included a decidedly ambitious undertaking to improve infrastructure, approving funding for over 11,300 projects which is anticipated to create tens of thousands of jobs.
The rate of trucking company failures, while still high, has leveled off from last year’s high numbers. Avondale Partner’s report on the third quarter in trucking indicates that less than 0.7 percent of trucking capacity was lost in the third quarter. Approximately 405 companies with an average fleet size of 35 trucks, which represents roughly 14,135 trucks, were lost. And on a year-over-year basis, Avondale said 785 companies with an average fleet size of 50, representing 39,030 trucks, left the playing field. The number of trucks pulled from road rose to 6,725 in the second quarter and 14,135 in the third quarter.
The trucking industry has lost slightly more than 90,000 jobs since the end of 2008 – a decline of 6.7 percent. Job cuts since July 2008 – just before the current decline – total 139,700. These numbers, gathered from the Bureau of Labor Statistics, reflect all payroll employment in for-hire trucking, but does include trucking-related jobs in other industries, such as a truck driver for a private fleet. Seasonally adjusted trucking employment peaked in January 2007 at more than 1.45 million, according to BLS figures. Since then, for-hire trucking companies have lost 203,100 jobs, or 14 percent.
The Bureau of Transportation Statistics' (BTS) Freight Transportation Services Index (TSI) showed a decline a full year and a half prior to the start of the current recession, and is now being touted as a useful economic indicator. According to BTS research over the past three decades the freight TSI led slowdowns in the economy by an average of 4-5 months. Leading economic indicators identify and anticipate emerging turns in the current business cycle by historically turning downward before a recession or a slowdown in the economy and upward before an expansion or acceleration. The state of the transportation industry has long been considered a mirror into the state of the rest of the economy and the freight TSI may be a useful glimpse into how the industry is operating.
While the year was tough, there is a glimmer of hope as we enter 2010. Although it remains difficult to get and maintain credit lines, stock values are beginning to rise again. While the stock market did close out 2009 with a loss as investors feared that stimulus money will slow if the market does well, overall stocks still has their best year since 2003. The Dow Jones Transportation Average, after a rocky start, ended the year up 16%. The average is based upon an analysis of 20 different transportation entities. At years end Dow Jones Index advised that YRC Worldwide Inc. (YRCW) would be deleted from the average and replaced by Delta Air Lines due to the current financial status of YRC. YRC had been considered as part of the average since 1995.
U.S. gross domestic product grew by 2.8% in the third quarter which is seen as a sign that there is an end to the recession in sight. Hopefully that growth will help reduce unemployment, which is at a 25 year high at 10% The ATA reports that truck tonnage was at its highest level in a year, hopefully reflecting good news in all sectors as more goods are moved and manufacturing starts a rebound. The ATA Chief Economist has indicated that he expects starts and stops in the coming year, with an overall trend toward moderate growth.
In other positive news, investor Warren Buffett, chairman of Berkshire Hathaway Inc., a man long seen as a harbinger of success in the insurance industry, indicated his willingness to buy into the U.S. transportation system. He is purchasing shares in BNSF Railway, showing his long term support for the continued viability of transportation. In a survey by the American Truck Business Services, owner operators report that the average number of miles driven was up 1.5% in the first half of the year, hopefully a sign of better times.
The Judicial Hellhole list for 2009 was released and revealed that once against South Florida, West Virginia and Cook County will remain in the top spots, just changing order from year to year. Atlantic County in New Jersey remained on the list, with the rest of the state also being considered for honors. The New Mexico Appellate Courts found themselves on the list as well as New York City, which apparently has the highest payments, having spent more settling slip and falls, medical malpractice, car accident and school-related claims than the next five largest American cities.
Once again we close out this section of the resume with a look at the current status of NAFTA in the trucking industry. The borders remained closed. Last year there was the limited project to see how cross border operations would work if the borders were opened. The program was suspended and Congress removed all funding for similar programs. However at the end of the year the funding prohibition was quietly removed from current legislation. Of course as there is no program there is nothing to fund. Canacar, a Mexican trade group has filed an arbitration petition seeking 6 billion in damages from the delay in opening the border. The Inspector General for the DOT has released a report on the status of the FMCSA cross-border operations. While recognizing the inroads which have been made by the FMCSA, the report indicates that there remain inconsistencies in reporting traffic convictions of Mexican drivers, and there are still questions about Mexican drivers holding multiple licenses in order to avoid the impact of an offense which would otherwise disqualify them from operating in the U.S. This type of information compels a further look at whether we are truly ready to open the border.
In other NAFTA news, the BTS reports that inter-country trade was down 31.5%. Surface transportation, or freight movements by truck, rail and pipeline, accounts for about 88 percent of U.S. trade with Canada and Mexico. The value of imported trucked goods from Canada was 34.8 percent lower, with the value of exported goods dropping 28.8 percent. In trade with Mexico the value of the imported goods dropped 18 percent and exported goods dropped 14.3 percent.
Motor Carrier Industry
The ATRI report on the critical issues in the trucking industry for 2009 listed, as you would expect, the economy as the most pressing issue facing the industry, ranked #1 by more than 51% of those surveyed. Government regulation was second, followed by fuel, congestion, hours of service, commercial driver issues, environmental issues, tolls/highway funding, truck size and weight and onboard technology. Of note was the fact that fuel costs were not one of the top ten concerns. In the preceding years it generally took one of the top three spots and now has disappeared from the list. While diesel fuel prices remain lower than the record highs in 2008 the price has been rising and it is unknown whether it will level off or continue to rise. It is likely to become a more significant factor in the coming year.
Carriers continue to complain that cash is at a premium, with outstanding account receivables on the rise. Transport Capital Partners' fourth quarter Business Expectation Survey indicates that carriers on the whole are indicating a higher amount of pending receivables as shippers pay at a slower rate. Interestingly the report also indicates that there is less use of brokers, with 59 percent of larger carriers transporting less broker freight, while 49 percent of small carriers are doing so.
The 2007 Commodity Flow Survey (CFS) released by the DOT Transportation's Research and Innovative Technology Administration, BTS and the U.S. Department of Commerce's Census Bureau, show that the nation's freight transportation system transported 12.5 billion tons of raw material and finished goods, valued at $11.7 trillion, accounting for nearly 3.3 trillion ton-miles during 2007. Trucking dominates, carrying 71 percent of the value, 70 percent of the tonnage, and 40 percent of the ton-miles of the nation's total freight shipment according to the 2007 CFS. Shipments by rail accounted for over 1.9 billion tons of goods, and 15 percent of the total 2007 CFS tonnage, valued at nearly $436.4 billion. The rail mode was used to move goods about 1.3 trillion ton-miles totaling 40 percent of all ton-miles. Water shipments of freight totaled about $115 billion in goods, 404 million tons, and nearly 157 billion ton-miles. Electronics and electrical and office equipment were the top categories of commodity measured by shipment value totaling $1 trillion worth of goods. Gravel and crushed stone were the top commodities by weight at 2 billion tons. Coal was the top commodity by ton-miles in 2007 accounting for 836 billion ton-miles. From the perspective of individual industries, shipments by manufacturing industries amounted to $5.2 trillion or 45 percent of the total value of goods and 4.8 billion tons or 35 percent of all tonnage. Wholesale industries accounted for 41 percent of the total value, $4.7 trillion, and 29
The BTS also released its data profile of the nation's leading international freight transportation gateways in 2008 and trends in movement of goods through these seaports, airports, and land border crossings since 1990, titled "America's Freight Transportation Gateways 2009". U.S. freight gateways handled more than $3.4 trillion of international merchandise trade in 2008, an increase of 9 percent from 2007. The top five gateways were The Port of Los Angeles was the leading gateway overall for international trade, with more than $244 billion in ocean cargo, The Port of New York and New Jersey ranked second in value, handling $185 billion in ocean cargo. New York's JFK International Airport ranked third in value, with $168 billion of air cargo, The Port of Houston ranked fourth in value, with $148 billion in ocean trade. The land border crossing of Detroit ranked fifth, with a total of $120 billion in surface freight.
Historically cargo theft increases when there is an economic downturn and this year appears to be no different. There are reports that the average loss per incident of a major cargo theft was $2.1 million, up from the previous year where the average was $1.1 million. The FBI estimates that cargo theft here in the United States is approximately $10 billion a year. Cargo theft is also reported to be more high tech, as thieves take the time to target high value cargo. Identity theft is also a big concern to carriers and shippers alike as more and more claims are presented stemming from imposters taking possession of cargo.
Motor carriers also continue efforts to enact legislation which limit their exposure for accidents as the push for more anti-indemnification legislation continues. This year Illinois passed an anti-indemnification bill which protects motor carriers against shipper contracts that hold carriers accountable for the shipper's negligence. Illinois joins 15 other states in precluding this burden on carriers.
Driver turnover rates continue to drop with fewer job opportunities available and more drivers concerned about making any move to a new and unknown company. The 3rd quarter of 2009 showed the lowest turnover rate since data began being collected in 2009. Turnover at large carriers was down 9 percent from the second quarter to 43 percent, the same as small truckload fleets. In other driver news the Bureau of Labor Statistics reported that heavy and tractor-trailer truck drivers needed 17 median days off work to recuperate from injuries and illnesses in 2008, up 2 days from the preceding year.
The trucking industry can expect positive growth in year-over-year volumes in the first quarter of 2010, according to Fitch Ratings. The downside, Fitch says, is that the recovery in freight will be slow with overall freight demand not expected to return to pre-recession levels until 2011 at the earliest.
The greening of the trucking industry continues as various states and port implement regulations which compel carriers to minimize emissions. New federal regulations for vehicles emissions have also gone into effect, further reducing the expected impact of trucking on the environment.
Looking to the coming year, trucking on the whole anticipates a better year. There will be modest improvements in freight tonnage as it moves into a positive upswing. Fitch Ratings report projects that volume will grow slightly in 2010 as U.S. economic conditions improve and the industry's retail and industrial customers rebuild inventories. Fitch also expects pricing to remain low in the LTL category as over capacity continues to allow shippers to avoid freight increases. Truckload pricing may fair better as more truckload carriers left the industry which then equalizes the rate of freight versus capacity. While carriers were less likely to spend money on capital improvements last year, a better market will hopefully provide carriers with a greater cash flow and allow monies to be allotted to capital improvements, including new vehicles.
Comprehensive Safety Analysis 2010, CSA 2010, the FMCSA initiative to improve large truck and bus safety and ultimately reduce commercial motor vehicle (CMV)-related crashes, injuries and fatalities is the hot topic in government regulations. It is to introduce a new enforcement and compliance model that allows the FMCSA and the various state agencies to address safety problems with carriers before crashes occur. The Behavioral Analysis and Safety Improvement Categories, or BASICs, are seven categories of data that represent behavior categories that have been determined to lead to crashes: unsafe driving, fatigued driving, driver fitness, controlled substances and alcohol, vehicle maintenance, improper loading/cargo securement, and crash history. These data are weighted differently based on crash causation, but will be part of the CSA 2010 Operational Model’s Safety Measurement System (SMS). The data is to be collected from on-road safety performance activities including roadside inspections, traffic enforcement, the intervention process, and crashes. Both driver and carrier safety performance will be monitored. FMCSA has designed two Safety Measurement Systems – one for carriers, the Carrier Safety Measurement System (CSMS) and one for drivers, the Driver Safety Measurement System (DSMS). Carriers which are deficient in one or more of the BASICs, have a high crash indicator, or a complaint or fatal crash, will be subject to intervention. Interventions, which will increase in severity, can be warning letter, targeted roadside inspection, off-site investigation, on-site investigation-focused, cooperative safety plan, notice of violation, on-site investigation-comprehensive, notice of claim/settlement agreement, and unfit– suspension. This program is anticipated to be a major focus on the industry this year. The ATA has sought to convince the FMCSA to change the methodology used to judge carrier safety as it believes it will not provide a correct analysis.
Hours of Service rules have still not been laid to rest. The FMCSA has agreed to consider modifications to the hours of service after continued pressure from safety groups and labor unions who insisted that the current rule increased the risk of accidents. The existing review will be done within the next seven months, with proposed rulemaking within 21 months thereafter. The current rule allows long haul truckers to drive for 11 consecutive hours at a stretch, extended from the previous ten. FMCSA head Ferro stated most recently at the 89th Annual Meeting of the Transportation Research Board that this administration would get it right. We can only wait and see.
Safe operation of vehicles has been placed at the forefront of many of the DOT Agencies. Distracted drivers have become a problem for all. The DOT has advised that anti-texting legislation will be introduced soon. At a TRB meeting the FMCSA reported that 60% of all safety critical events involved some form of tertiary task which was distracting the driver,
As we know from so many aspects of our own personal lives, fraud is on the rise, The FMCSA has begun the introduction of the CSTIMS system which is designed to combat fraud in obtaining and maintaining CDL licenses. The new system is expected to be in place by April, 2010.
In their continuing effort to get more poor operators off the road the FMCSA also reports that the wireless roadside inspection program piloted in a few states is working well and its use will be expanded. It is hoped to allow 30 times more inspections with smarter, targeted inspections of those carriers showing increased operating concerns. CAB premium subscribers will have access to the results of all of these new inspections.
The DOT has released its new action plan to address Motorcoach Safety Issues. The action plan addresses major safety issues such as driver fatigue and inattention, vehicle rollover, occupant ejections and oversight of unsafe carriers. 750 million passengers are carried annually, with an average of 19 motorcoach occupants killed in crashes, with additional fatalities result among pedestrians, and occupants of other vehicles involved in these crashes. The plan includes enhanced regulatory oversight of new and high risk motorcoach operators, proposed rulemaking to prohibit texting and limit the use of cellular telephones and other devices by motorcoach drivers. In addition, the action plan considers the possibility that there should be seat belts on the coaches along with additional measures such as the establishment of performance requirements for enhanced roof strength, fire safety, and emergency egress. It also calls for safety improvements using technologies such as electronic stability control to prevent rollovers.
The Food Safety Enhancement Act of 2009 has been passed by the House. The bill, if passed by the Senate, will require producers, packers, manufacturers and other in the food chain to register with the FDA and adopt standards to prevent contamination of food products. Further regulations are expected.
Carbon emission regulations was promulgated and implemented by the EPA. Manufacturers were compelled to reformulate equipment to meet EPA tailpipe standards mandated for 2010.
Responsibility and liability for the operation of intermodal chassis has finally changed. At year end enforcement of the new Intermodal Chassis rule that requires intermodal equipment providers, motor carriers and drivers to share responsibility for the safety of intermodal equipment used on our highways had begun. Providers must implement systematic inspection, repair and maintenance programs for intermodal chassis, and repair or replace defective equipment.
The New Entrant Safety Assurance Process also went into effect in December. These rules require newly registered truck and bus companies to meet stricter safety requirements. The new regulations raise the standard of compliance for passing the new entrant safety audit and focuses on 16 regulations that have been determined by the FMCSA to be essential elements of basic safety management controls necessary to operate in interstate commerce, including controlled substances and alcohol testing, hours-of-service rules, driver qualifications, vehicle condition and carrier insurance responsibility. Failure to meet any of the requirements will prevent the carrier from operating. The FMCSA now will also check compliance with the Americans with Disabilities Act and certain household goods-related requirements in the new entrant safety audit, if they apply to the new entrant's operation. Failure to comply with either of these requirements will not affect the outcome of the safety audit
The National Highway Traffic Safety Administration has determined that there will be stringent new braking standards which will improve large truck stopping distances by 30%. The new standard requires that a tractor-trailer traveling at 60 miles per hour come to a complete stop in 250 feet. The old standard required a complete stop within 355 feet. NHTSA estimates that the new braking requirement will save 227 lives annually, and will also prevent 300 serious injuries. It is estimated to reduce property damage costs by over $169 million annually.
In a move designed to keep truck drivers with poor safety records off our roads and thereby decrease truck accidents, the FMCSA will soon enable commercial motor carrier companies to electronically access the inspection and crash records of prospective driver employees. The program is expected to be ready to roll in the first quarter of 2010. The DOT advised that it will also permit motor carriers to obtain driver information as part of a pre-screening program. Prior to the new program, driver inspection and crash records were available only to federal and state law enforcement personnel. Motor carriers will have access to driver safety records regardless of state or jurisdiction, provided that the driver has authorized its release. The data will be provided by FMCSA’s Motor Carrier Management Information System and it will contain driver history such as roadside inspection and compliance review results, enforcement data, and motor carrier census data. Participation in this program will be voluntary and a motor carrier will be required to obtain permission from a driver before receiving this information.
There is some expectation that electronic on board recorders will be mandated in the coming year, although a recent amendment to safety legislation addressing the recorders was withdrawn. While the FMCSA has a final rule which would require the recorders in less then 1,000 carriers there are reports that a broader rule will be issued in the coming year requiring more carriers to have the recorders in place.
The insurance industry remained in the news as the country grappled with the pros and cons of the bailout and whether financial oversight of the insurance industry would be instituted. Overall the general consensus seems to be that 2009 was not quite as bad as it was forecast to be earlier in the year.
ISO and PCIAA released their report, indicating that over all the net income of private property-casualty insurers, after taxes, rose to $16.2 billion industry wide in the first three quarters, substantially higher then the $4.4 billion for last year. There were few catastrophe losses from hurricanes and other natural disasters, with the number only 10.9 billion for the first nine months of the year, quite a drop from the $21.1 billion last year. Underwriting results improved in the first nine months of 2009 even though premiums continued declining. Net written premiums dropped $15.1 billion, or 4.5 percent, to $321.2 billion for nine-months 2009 from $336.3 billion for nine-months 2008. Net earned premiums declined $12.8 billion, or 3.9 percent, to $317.8 billion for nine-months 2009 from $330.6 billion for nine-months 2008. Overall net loss and loss adjustment expenses dropped to $231.7 billion which greatly assisted in raising the underwriting results. Combined loss ratios are at 100.5%
In December the House Financial Services Committee passed a bill to create a Federal Insurance Office (FIO), but that bill provides that the FIO would have no regulatory authority over insurance companies, and could not override state insurance laws so its overall impact is unknown. With health care reform a predominant issue with this Administration, greater insurance regulation is expected to follow.
In the commercial property sector the premium market is flat. Towers Perrin released its quarterly survey on pricing titled the Commercial Lines Insurance Pricing Survey. Pricing, overall was flat, which is actually better than the falling prices experienced early in the year. NIP Group, Inc. released its Transportation Insurance Pricing Survey (TIPS™) for the third quarter of 2009. The survey revealed that most respondents were seeing rate reductions and very few rate increases. The soft market is reflected in these numbers. The report measures ten different transportation segments, including, Trucking Operations, Intermodal Carriers, Messenger/Courier Services, Ambulance/Paratransit, School Bus Contractors, Bulk Transportation, Airport Ground Transportation, Charter/Tour Bus Operators, Specialized Carriers & Riggers and Limousine Services.
While the numbers are lower then before there is some anticipation that the insurance industry will weather this storm and that the strong will survive. Strong underwriting plays a critical role in maintaining an insurer’s overall financial security. It is important to take the time to understand the risk that is being written and to be fully informed as to your insured’s operations and the laws and regulations that impact its operation. We remind you to utilize the unique knowledge available through CAB to make your book of business the best it can be. Knowledge is Vital.
Central Analysis Bureau, Inc.
For over 70 years CAB has been the underwriter’s source for financial data. In its early days, with all the work done almost exclusively by Kal Schindel and Hy Cooper, CAB’s mission was to gather the data needed to give you a detailed financial analysis of the operations of your insured. Seventy years later our core mission remains the same – giving you what information you need in today’s market to write profitable accounts. CAB listened to you and has responded by providing you with what you need on financial and safety data. No longer simply an underwriting tool for financial analysis, our warehouse of information, our unique analysis and the knowledge and experience we bring to the table, provides valuable support for all departments within an insurance company, including actuaries, underwriting, loss prevention, claims, marketing and management. CAB now is the industry source for providing critical financial and safety information on the motor carrier industry.
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. We continue to actively solicit feedback from all of those subscribers 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.
As addressed in the earlier sections of this resume, the unstable nature of the 2009 economy severely impacted the financial status of motor carriers and the overall insurance market shrunk as motor carriers disappeared, filed bankruptcy or reduced capacity. The quest to get and keep a quality book of motor carrier insurance business became a top focus for the insurance industry as you reported an overall drop in premium. Time, as is always the case today, became even more critical. 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, CAB provides full service 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 a maximum of 15 different locations.
Many insurance companies are already reaping the benefits of subscribing to all of our products. 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 Laib Roberts at 212-244-6575 x227 or by clicking here for more in-depth information and a demonstration of our services.
CAB Submission Report: 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 its Submission Report. 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, SAFETSTAT and the Licensing and Insurance databases. The latest available data is analyzed by our advanced computer systems and a full report of the analysis including alerts, charts, summaries and details is provided. The mix of data from the various sources, which may be confusing when viewed alone, is clarified and corrected to provide you with accurate, useable information. As a value added bonus, information which can not be gathered from any other source is supplied, 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, the end user, 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. What started out as a static report that was emailed to an individual upon request is now a complete interactive Web based report available on demand to our entire Premium Subscriber user base. Over 1,000 reports are accessed each week and have become a vital part of both the underwriting and claims process.
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. 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 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. Based upon our analysis, a rating is assigned to each motor carrier expressing CAB's opinion of the motor carrier's financial strength. 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. Our analysis reports are furnished on an annual basis, with quarterly or periodic updates issued if sufficient information is available. Changing our financial report into an interactive web based report is high on the agenda this year so keep a look out for the new format in the coming months.
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). We then send subscribers 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.
Vehicle Inspection Tracker & Locator (VITAL): The latest tool to enter CAB's lineup of products is our online VITAL search engine. There is a wealth of information that can be gleaned from the more than 19 million inspection records and 2 million crash records which are currently maintained by CAB. With the release of VITAL, full access to these records is in your hands. Our unique search portal is unparalleled in the industry and fully 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. VITAL was designed to service all segments of the motor carrier insurance industry, 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 either the vehicle, the driver or owner of the vehicle. In an industry so heavily reliant on available data, knowledge is vital. Now, thanks to CAB, VITAL is knowledge.
We continue to be gratified by all the positive comments we receive about our monthly e-mail newsletter, "Bits & Pieces". We all get way too many e-mails in our inbox but this is one that we have been told many await every month and find to be a "must read". This newsletter, which is sent free of charge to all subscribers, keeps you abreast of the news of the month in transportation and insurance, provides a heads-up on regulatory activities and provides information on the latest court battles over issues which affect your exposure. As the government issues or changes rules and as the various courts of the land opine this newsletter gives underwriters the information to keep policies up to date. Over the last year subscribers have begun submitting information they want the industry to be aware of. We invite you all to submit any news or cases you may come across which you believe would be of interest. You can submit that information to Jean Gardner. If you do not currently receive this newsletter, but would like to, please register for free on our site or e-mail Mark Schweber.
Our breakdown of financial ratings by category shows another large increase in the percentage of carriers rated UNSATISFACTORY during the year 2009. The full breakdown is available here.
In 2010 we will continue to seek out new information to help underwriters and claims to know their insured and work to provide this information in the most effective manner possible. We will also continue to solicit feedback and to incorporate that feedback into our products. Knowledge is vital to a successful operation and we are pleased to be able to give you that knowledge with the click of a mouse.
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's "Recent Developments in Transportation and Insurance Law"