Comprehensive Safety Program

The existence of your operation doesn’t just depend on profitability

So, your insurance company is pressing you about the details and contacts of your safety program. Do you roll your eyes and think, “Safety Program!!!”, “How can I make this go away so I can just drive and earn a living”, or do you have a meaningful plan in place? A comprehensive safety program is a must for mitigating losses and goes a long way towards portraying you as a responsible carrier that over time reduces the operational risk and protects employees.

From the ever-increasing cost of equipment to sophisticated insurance fraud rings and nuclear jury awards, insurance companies are finding it harder than ever to reduce the financial volatility of a claim. Because of this, it is imperative that you as a motor carrier have controls in place for closely managing the safety of your operation.

Insurance companies are in the business of transferring risk from you to them. How much risk they take is the variable, but it is not a guessing game. Every insurance company has a set of standards that create their preferred risk. Any deviation from that criteria makes you a less common risk and often a less desirable risk which could mean higher premiums, declination or cancellation/non-renewal of your policy(ies). Each at-fault claim that a motor carrier incurs raises the percentage of money paid in premiums compared to money the insurance company pays to settle those claims. Once the insurance company pays out an amount on the carrier’s behalf that exceeds their level of tolerance for that risk, they become less desirable and will surely incur repercussions.

An alarming trend over the past number of years has been the way law firms have used the advertising of large awards to solicit new clients. Especially how those firms portray the trucking industry as reckless and irresponsible. The insurance industry is all too familiar with the trend and is continuously looking for ways to slow the onslaught. The result of those awards materialise as raised premiums, cancelled/non-renewed policies, risk reduction and tighter risk selection by ensuring the client is as risk-free as possible and has a safety program in place.

A recent study by the Transportation Research Institute (ATRI) attempts to make sense of out-of-control jury awards against the trucking industry. Interviewees from the ATRI study generally concurred that the more safety activities motor carriers engaged in to prevent crashes the lower the likelihood that a nuclear verdict would result. It was also commonly noted that motor carriers typically do not allocate enough resources toward safety and crash prevention.

There are many factors that play a role in determining fault and awarding large payouts – many of which are out of the control of trucking companies. Nevertheless, motor carriers need to focus on those areas that they can control such as: meeting/exceeding FMCSRs, equipment maintenance, inspections, citations/violations, cargo securement, driver training, and properly maintaining log books.

Plaintiff attorneys will frame FMCSRs as minimum standards and juries are less forgiving when plaintiffs can document that additional reasonable steps to prevent a crash could have been taken, regardless of compliance with FMCSRs. The ability of defense attorneys to have documented safety activities that exceed FMCSRs carries great weight with juries. This also makes you a better risk in the eyes of an insurance company. According to the ATRI, a key strategy among plaintiff attorneys is to emotionally charge a jury against a motor carrier by painting them as careless and unsafe. However, a motor carrier that has not only met FMCSRs but exceeded them, reduces the ability of the plaintiff attorney to stigmatize them. This is where a safety program can validate responsible safety efforts.

A reasonable and responsible safety program should have appropriate, documented disciplinary actions. Per the ATRI study, in situations where there was any history of alcohol or drug use by the truck driver, it became much easier to convince a jury that the truck driver was at fault for the crash – even when the crash causal factors were unclear or tenuous. So, a responsible action might be to have documentation
that meets or exceeds what is expected before hiring or returning a driver to active duty following a positive test – regardless of time between the test and return to duty.

To begin drafting a safety program, begin by answering some questions you might be asked following a crash such as:

What steps have you taken to ensure your drivers are roadworthy?

What operational, safety or training factors could have prevented the crash from happening?

What actions have you taken following previous crashes?

Do you have training sessions/driver meetings?

Do you have a vehicle maintenance schedule?

Are your pre- and post-trip inspection reports handled properly?

Do you audit logbooks?

Are your inspections clean or are there patterns in violations?

Plaintiff attorneys are not paid by the hour but by the size of the award. Following a crash, you should expect that every aspect of your operation from maintenance to meal breaks will be scrutinized for the sole purpose of applying fault. Be proactive and have a comprehensive safety program in place. If you need help, contact your insurance agent or a loss prevention specialist.

California becomes first state to ban the sale of fossil-fuel burning cars and trucks

What first started in Europe in 2017 has now made its way to the U.S. In a move to accelerate the state’s efforts to combat global warming, California Governor Gavin Newsome announced through executive order that 100% of in-state sales of new passenger cars and trucks, off-road vehicles and equipment will be zero-emission by 2035. Additionally, 100% of medium- and heavy-duty vehicles in the state will be zero-emission by 2045 for all operations where feasible and by 2035 for drayage trucks. According to the International Council on Clean Transportation, seventeen countries including France, the U.K. and Germany have adopted goals to phase out internal combustion passenger cars.
Citing climate change as a crisis that is profoundly impacting California and affecting the health and safety of its residents, Newsome’s executive order requires the State to accelerate actions to mitigate and adapt to climate change. To slow down fossil-fuel production even more, Newsome has called on the state Legislature to ban the use of hydraulic fracturing.
California is not alone in its ambitions. Voicing solidarity with California, Oregon Gov. Kate Brown stated, “I will be following the California requirement and looking into policies here in Oregon to accelerate transportation electrification”. Brown is chair of the Western Governors’ Association which includes governors from Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, and Wyoming. Governors from the above-mentioned have collectively agreed on creating an Intermountain West electric vehicle corridor to make it possible to drive an electric vehicle across major transportation corridors in the West.
The challenge for the automotive industry is to produce highly functional electrified vehicles by 2035 that will support replacing fossil-fuel vehicles and be affordable to the public. However, the list of things needing to happen for that to become a reality is nothing short of daunting. Below are some
top-of-the-list tasks facing the endeavor and the possibility of success.
1) Increase charging stations throughout the State’s infrastructure and in neighboring states. In view of the Western Governors’ Association pledge, this appears to be well on its way to becoming a reality.
2) Incentivize people to afford/purchase electric vehicles. The ability and desire amongst western states to dish out money when needed or generate money from tax revenue, bonds and hidden coffers has never been a roadblock. For those that will be unable to afford these vehicles, Newsome’s executive order also seeks to increase public transportation options that negate the need for vehicle ownership.
3) Switch to an alternate tax to replace tax revenue from fossil-fuels. A Vehicle Miles Tax (VMT) has been a desire of lawmakers for years, but who never felt the public support to be able to push it through. With a sizeable lead in polls, a presidential win for Biden combined with a generation of environmentally-conscious youth would almost guarantee a VMT in place of a fuel tax in the very near future.
4) Deal with the affects to the oil industry i.e., loss of jobs, loss of business and tax revenues. This is a big hit to the state. California is the 3rd largest oil-producing state (7.1%) with roughly 50,000 people directly employed in the petroleum sector. Support from contributing industries is mixed. A frustrated statement from the Alliance for Automotive Innovation reads “neither mandates nor bans build successful markets”. Automobile makers such as Ford Motor Company, Scion, Honda, Volvo, BMW and Volkswagon are touted by Newsome as being on-board with his order.
5) Convince the remaining states to adopt similar standards and beef-up their carbon-free infrastructure. Considering that 10 western states have signed a memorandum of understanding that pledges to build a West Coast Electric Highway, additional support is surely welcomed but not critical for success. All eyes around the country will be watching and waiting to see if longer battery ranges can be achieved or possibly regional electric highways will need to be built.
6) Upgrade the state’s electrical grid to accommodate more demand. For years, California residents have dealt with rolling electrical blackouts due to increasing demand and utility shutdowns that aim to reduce the likelihood of sparking wildfires. Additionally, some gas-fired power plants have retired due to state and environmental policies – not because of a lack of need. California has not successfully replaced the power generated by power plant closures. Accommodating more demand for electricity will likely require significant changes in the way electricity is generated, used and delivered throughout the state.