Commercial auto insurance underwriters routinely use information from the Federal Motor Carrier Safety Administration (FMCSA) to assess insurability and the level of risk a motor carrier poses.
Many underwriters also subscribe to the proprietary Central Analysis Bureau (CAB) report for detailed information about a motor carrier’s experience, which is a key indicator in predicting future performance.
The CAB report pulls data from many sources, including the FMCSA’s Safety Measurement System (SMS). The SMS results use Behavior Analysis and Safety Improvement Categories (BASICS) to determine a motor carrier’s performance and compliance relative to unsafe driving, hours of service, crash status, driver fitness, hazardous materials, vehicle maintenance, controlled substances/alcohol.
Roadside inspection violations and driver citations for not complying with FMCSA regulations go on the CAB report and remain there for a rolling 24-month period. This is used to determine the overall safety performance of the motor carrier. If enough violations occur in a particular category, it will trigger an alert for more scrutiny from commercial vehicle inspectors and FMCSA.
The ISS (Inspection Selection System) score is an important aspect of the CAB report that is derived from all compliance activity. The ISS provides commercial vehicle enforcement officers with a quick way to determine if a vehicle should be inspected. If the ISS score is above 75, it places a motor carrier in a red category, meaning an inspection is warranted. An ISS score below 50 places a motor carrier in a much lower inspection category and may even eliminate some inspections.
In addition to the ISS, having alerts in any of the BASIC categories indicates that the motor carrier is not complying with minimum standards, creating a significantly higher risk. This suggests that an insurer could expect to pay more frequent and larger claims. What does higher risk mean to the motor carrier? Higher insurance premiums or, worst case, a denial of coverage.
So how do motor carriers avoid a poor CAB profile and company image from occurring?
It is important to monitor SMS results as this information will impact the information an underwriter evaluates in the CAB report. Partnering with an insurance broker with the resources to help implement best practices and develop a favorable narrative for the underwriter is critical. Lowering scores may seem daunting, but it is possible to change the trend and see scores drop over time. Implementing solid hiring practices is a crucial first step in controlling future scores. Once a company has hired quality drivers, establishing an ongoing training program and ensuring drivers conduct proper pre-and post-trip inspections fosters success.
A well-maintained fleet will have fewer violations resulting from roadside inspections. To achieve this, educating drivers on the importance of proper inspections and having a system to ensure deficiencies are communicated to the appropriate vehicle maintenance department is important.
Knowing and understanding the information contained in the CAB report can be overwhelming, but making small adjustments to operations can greatly improve CAB scores and enhance insurance underwriters’ perception.
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