National Underwriter - January 2019

TECH INVESTMENT

BY JOHN KEARNEY

INSURANCE PREMIUMS for long-haul trucks and trucking companies have increased dramatically in recent years, doubling from an average of $6,000 to $7,000 a decade ago to between $12,000 and $14,000 today.

There’s a paradox in this increase: Trucks are getting more expensive because of high-tech features. This, in turn, is causing insurance premiums for these trucks to increase. The paradox lies in the fact that new technologies are making trucks safer, which should lead to lower premiums.

According to the American Transportation Research Institute, rising insurance costs are the largest single increases in operating costs for trucking firms. Between 2013 and 2014, they rose 11% before jumping another 29% the following year. At the same time, equipment costs are climbing. The average cost of a new tractor-trailer now ranges from $140,000 to $175,000 — at a time when a growing shortage of drivers is pushing up industry salaries. That rise has been driven by the new, more advanced technology embedded into the trucks.

TECH IMPACT ADDS UP

Is this a means of profiteering on the
part of insurance carriers? Of course
not. Commercial auto insurance
has regularly been one of the worst-
performing segments of the insurance
industry, and for every $100 in com-
mercial auto premiums collected in
2016, U.S. insurers paid out $110.40,
leading to an exodus of carriers from
the truck insurance business and driv-
ing up costs. But these rising premiums
for trucks, simply because they cost
more, don’t take into account the
improved safety technology provides.
Consider new developments in
safety provided by LIDAR, or laser
radar. By scoping out the road
ahead and detecting the vehicle’s
surroundings, LIDAR provides the
same features and benefits that
many passenger vehicles offer,
such as forward collision warnings,
emergency braking and lane chang-
ing assistance. It’s traditionally been
too expensive for use in trucking. But
it’s now reasonably-affordable enough
to be a feasible option. When applied
to trucks, LIDAR technology can see
nearly 360 degrees and 1000 feet in
each direction. Considering a fully-
loaded big-rig’s size and very long
stopping distance, that could make all
the difference in an emergency.
Perhaps the largest impact that
technology can have on insurance
rates, however, is through better train-
ing and simulators. Accidents and loss
claims are a major factor behind insur-
ance rates. By making trucking safer
and reducing the number of accidents
and claims, you can keep rates low.

NEW BREED OF DRIVER

Drivers are now trained extensively in the classroom and behind the wheel, learning how to handle a tractor-trailer’s unique challenges. But there are certain things they can’t do in training, like manage a real tire blowout, negotiate black ice, descend mountains or avoid an oncoming collision. Attempting a situation like that for the sake of training is simply too dangerous.

That’s why many trucking schools and companies use driving simulators.

With the help of a simulator and
practice
drivers can
develop muscle memory
for handling dangerous
scenarios. And instead of a dan-
gerous accident, a ticket or an expen-
sive lawsuit, and the resulting larger
premiums, they walk away unscathed.
Accidents due to poor training are
a risk companies can’t afford to take.
Thanks to the use of training simula-
tors and the many new tools and tech-
nologies now integrated into trucks,
they don’t have to. Advanced training
with a simulator means safer drivers
and less accidents, and insurance pre-
miums can reflect these statistics with
lower rates.

Technology isn’t the only factor impacting trucking insurance premiums, but it can have a huge impact on them. If trucking companies keep investing in the development of technology that make trucks safer, there should be a way to keep insurance costs low.

John Kearney ( jeks@atstrainingsystems.com) is CEO of Advanced Training Systems, a high-tech simulator technology and engineering firm that provides cutting-edge adaptive training systems to improve training and create safer drivers.