A panel of expert insurance agents and carriers addressed rising insurance rates during a session at LCT-NLA Show East on Nov. 15. Panelists included, (L to R), Matt Mushorn, vice president and product manager, Lancer Insurance Limousine Division; Michelle Wiltgen, assistant vice president and national commercial marketing manager, National Interstate Insurance; Richard Ackerman, senior sales executive, P.A. Post Agency; and Michael Marroccoli, regional vice president, Capacity Coverage Company.
ATLANTIC CITY, N.J. — Across the limousine industry, insurance rates have soared during the last few years. Operators have reported annual increases from 10% to 20% — or more. Some have been flat-out turned down for vehicle coverage. Still, operators can tap proven strategies and safety procedures to keep their rate hikes as low as possible.
These issues were the key points from a panel of insurance industry experts during the “State of Insurance in the Ground Transportation Industry” session held Nov. 15, during the LCT-NLA Show East at Harrah’s Resort in Atlantic City.
Moderated by National Limousine Association board director Doug Schwartz (Executive Limousine, Long Island, N.Y.), the panel explained fewer insurance companies serve the limousine market while the commercial auto insurance industry has lost money in the past five years. Other drivers of higher rates include: An uptick in auto injuries and fatalities; higher medical and vehicle repair costs; and lawsuits by hack attorneys who target the ground transportation industry.
Further, the panel agreed the addition of larger capacity buses and motorcoaches throughout the limousine industry creates more of a risk factor for insurers. Operators who run party buses are a red flag for underwriters. Party buses in particular incur rate increases because of higher liability from the potential of multiple passenger injuries and large medical claims.
“Because some insurance companies have pulled out of this market, there is a smaller pool of insurers that can be more selective,” Mushorn added. As the economy improved from the Great Recession, “ride frequency and mileage are up and there are not as many qualified chauffeurs, and the ambulance chasers are out there,” he said. Regarding party buses, “it’s a hot button because you have people standing in a vehicle when it is in motion.”
Wiltgen said, “In the insurance industry we look at trends to determine rates, and many factors go into determining rates, such as what things will cost in the future.” She explained she has seen medical costs increase, and noted today’s vehicles are more expensive and cost more to repair due to the amount of electronics — all factors insurers consider when writing policies.
The panel agreed another risk factor centered on the chauffeur shortage and older drivers. For example, Mushorn pointed out drivers over age 70 have more accidents than the 25 to 29-year-old driver pool, and the high turnover rate of chauffeurs are factors in increasing accidents.
Running A Safe Company Pays Off
Operators who commit to consistently running a safe company will maintain their rates or see the smallest rate increases. That common sense logic shouldn’t be news to anyone in the limousine business. Here are some tips, strategies, and best practices that can help you run a safe operation, reduce your claims, and present your company to agents and insurers as a good bet to obtain an affordable policy:
“Your best defense is to be consistent and follow safety policies that will help you in the long run,” Wiltgen says.
The panel also suggested operators install vehicle cameras and tracking systems that can work to their advantage in a disputed claim.
“At the end of the day, it’s always been true good operators pay less then bad operators,” Ackerman said. Marroccoli mentioned that he had three clients he estimated saved more than $1 million in payouts because cameras recorded accidents where the driver was not at fault. He noted one accident where a bicycle messenger ran a stop sign, which the camera recorded, proving the chauffeur did not cause it.
Here are some additional strategies from the panel to keep insurance rates low:
- Don’t file a claim for every scratch, dent, or cracked glass. Ask yourself, Is it worth it to file a claim?
- Consider higher deductibles.
- Instill in chauffeurs a sense of ownership of the vehicles they drive so they are more prone to take care of them and drive more cautiously.
- Consistently go over safety manuals and procedures with chauffeurs, and implement an incentive program for safe driving.
- Make sure your affiliates and subcontractors are fully insured and their certificates are on file and up to date.
- Review your loss runs and fix problem areas or patterns.
- Review your hiring practices. Regularly check all drivers’ MVR (motor vehicle records). Establish and adhere to driver guidelines, and have a formal training program in place.
- Monitor vehicle maintenance
- Review DOT authority and safety records (www.safersys.org) as well as state and local authority records.
“If there is one point I want you to remember today,” Ackerman said, it is frequency of claims breeds severity, and that tells us a big event is coming. You need to control your operation and everyone has to be accountable for training and safety.”
Tip To Remember
To get the best rates, Marroccoli suggests operators need to be more vigilant in the renewal process. “Most people think about their policy 10 to 30 days before renewal, when they should be dealing with it 60 to 90 days out. You should talk to your broker and review your account and make sure it is up to date and accurate. If your account shows lots of losses, then something is wrong and needs to be corrected.”
— Tom@LCTmag.com
Company Culture Determines The Best Rates
Operator A
- Carries a larger deductible to help minimize claims frequency and overall cost of insurance.
- Comprehensive driver hiring criteria inclusive of accepting
MVR guidelines.
- Enhanced safety and loss control efforts inclusive of the latest technology web-based technology.
- Driver recognition program that helps to retain good drivers and reduce turnover.
- Consistently low loss ratio (loses divided by premium) and low claims frequency.
Operator B
- Purchases the lowest deductible available.
- Minimal consideration toward unacceptable MVRs.
- Outdated safety handouts, videos, or driver meetings with no accountability for learning. No recognition program with a high turnover rate.
- Higher loss ratio levels and frequency of claims (frequency breeds severity).
Keywords
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