By Edward O'Hare
Some habits are hard to break--like sleeping at night. But for Hank Chappis sleepless nights are a must. Chappis is a long haul trucker, one of the many thousands who drive by night. An owner-operator, who hauls out of central Ohio, Chappis has dodged and seen it all in 20 years on the road: from a pileup of circus vans ("It was a jungle out there") to John Madden's big gleaming bus.
He knows full well the dangers of nighttime--how it can turn truckers into drowsy drivers. "You grow up sleeping at night," says Chappis. "Then you get a job like mine and night becomes day and day becomes night and good habits (like sleeping) become bad habits."
So it comes as no surprise that a new federal highway safety study found that fatigue hits truckers the most between midnight and dawn. Even truckers who drive for longer clips during daytime don't become as fatigued as their fellow night drivers, according to the study which collected data from 80 U.S. and Canadian long haul drivers and their vehicles during real-life, revenue-generating trips, using among other devices, video monitors.
Conducted in conjunction with the American Trucking Association, the study sheds new light on factors contributing to large truck accidents, which included 4,453 fatal crashes in 1995. "This study clearly demonstrates the importance of educating all drivers about the warning signs and dangers of drowsy driving," says Thomas J. Donohue, president and CEO of the ATA. "It should encourage trucking companies to adopt fatigue management programs with innovative approaches to driver scheduling."
At the same time, the ATA points out that mile for mile, truck drivers have an accident rate less than half that of car drivers. For example, from 1994 to 1995, while overall highway fatalities increased 2.8%, truck-related fatalities went down 4.7%. And since 1979, truck-related fatalities have decreased 27%.
This improving accident picture and the recognition that trucking companies need to manage safety better should come as welcome news to commercial auto insurers who have hitched onto this specialty insurance line, seeing it as a sure ride to riches.
A spot-check across the industry found an abundance of markets. Among them: Liberty Mutual, USF&G, John Deere, Great West and Fireman's Fund, as well as more than 50 others eager to write this business on a national basis.
Producers who specialize in the long haul line paint this picture: The marketplace is as soft and the prices are as low as at any time since the late 1970s. So intense is the competition that long haul liability coverage is going for $2,000 to $3,500 per tractor-trailor. That's down from an average of $4,500 for the same coverage.
Trucking companies love it--with one New Jersey firm seeing its liability tab for 20 trucks cut in half. But industry analysts worry that the coverage is being sold "well below the burn level."
Why the rockbottom prices? The culprit, as usual, is excess surplus--with a strong leaning toward cash flow underwriting. And what better line to grab tons of premium than trucking. That's fine for the short term because long haul liability has a long tail. But there's trouble down the road. Industry experts say there is no way the premiums companies are collecting today will support the average losses that will come. They say that for every dollar coming in, $1.20 plus will be going out by 1998 or 1999--with the combined ratio climbing well above 100.
These prevailing conditions and fierce competition notwithstanding, long haul can be a lucrative line for agents and brokers willing to work at it. "There's a big learning curve in long haul," says Kirby Hill of Paul Hertel & Company, a regional agency in Philadelphia. "You've got to know the trucking business and its many risks as well as the stringent state and federal regulations to write this line."
Hill says that while some insurance companies will work with beginners, most companies prefer to deal with agents who can run with their programs and build positive results and market share from the getgo.
To carve a niche in long haul, agencies need to dedicate resources to it--to hire people with the background and expertise in this specialty, says Hall--adding that this demonstrates for insurers that the agency is committed to sticking with this line.
Hill also stresses the need for the agencies to develop top-flight claims-handling and loss control systems. "Truck accidents happen everyday, everywhere," says Hill. "You've got to have people who can handle claims quickly as well as help clients to manage safety programs that can reduce accidents."
A final note--on the North American Free Trade Agreement (NAFTA). Among other things, NAFTA was intended to permit U.S. and Mexican truckers to carry their loads into each other's country instead of dropping them at the border. Linda Bauer Darr, vice president of international affairs for ATA, says the border was to be opened on December 18, 1995; but the Clinton Administration threw up a roadblock, contending that more safety studies were needed--despite the fact that the governors of the border states and their enforcement officials were ready to go.
Darr says the real reason for the delay was pressure from the Teamsters Union--big contributors to the Clinton reelection campaign--which fears opening the border now would cost its members jobs. The Administration says that it is reviewing the issue but gives no indication when it will give truckers the green light to cross the border.
As far as insurers are concerned, however, the light is green for long haul trucking.
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