Failing to segment data can lead to incorrect conclusions that contribute to sky-high losses

If you are an insurance carrier, there is a good chance you’ve encountered challenges such as rising rates and historic losses.  You are not alone: the industry as a whole has been facing similar issues. 2019 alone saw a staggering $4 billion recorded in underwriting losses, a figure that even someone not familiar with the industry would agree is upsetting, to put things mildly. Unsurprisingly, the transportation industry has been negatively affected by this, especially since increases in insurance premiums have not been enough to make up for these losses.

What’s driving these astronomical figures?  As is often the case, there are a variety of factors coming into play.  These range from the typical, such as distracted driving, driver shortages, and litigation financing, to the singular, such as damaging nuclear verdicts.  There is another component to these high losses and unacceptable combined ratios, though: poor decision making due to a lack of segmentation when assessing motor carrier risk.

Data that only considers motor carriers as an aggregated group is still displayed on the FMCSA SAFER system and widely used in typical underwriting reports.

With segmenting, you can look at trucks that meet the specific criteria for each niche market, such as power unit ranges and cargo types.  Failing to segment data can lead to incorrect conclusions that contribute to the sort of sky-high losses that characterized 2019.

The insurance industry, for the most part, attempts to address this by allowing underwriters to choose from a selection of programs with premiums that can be tweaked depending on the type of motor carrier  and their insurance need.  However, this does not address the fundamental issue: data that only considers motor carriers as an aggregated group is stilldisplayed on the FMCSA SAFER system and widely used in typical underwriting reports.

Carrier Software has a better way: cohort-based analyses.  

A cohort approach is based on comparing motor carriers that have the same size fleet hauling the same cargo.  By comparing like-kind motor carriers, assessing whether a motor carrier is safer than their peers becomes easier and the data clearer.  

Our Carrier Underwriting Report is based on cohort analyses that segment risk data into similarly-sized and type truck companies.  Fleet size and cargo peer groups are just two examples of the type of segmenting you can use while conducting your underwriting analyses.  This way you can have the most accurate information results at your fingertips when it comes time to make those all-important underwriting decisions.

Did you know there are an estimated over half a million motor carriers in the United States today? Searching for prospective new clients can be an overwhelming task. That’s a lot of opportunity for writing policies, but also a lot of opportunity to waste time chasing leads that don’t fall within your markets’ guidelines.

We recommend 2 actions to take first before contacting your ideal truck insurance prospects.

First, dive into the community and learn the lingo and types of insurance. 

When you meet with truck company owners who have been in the business, you need to be able to “talk the talk”. Join groups like Motor Carrier Insurance Education Foundation (MCIEF), state and local truck associations, and surround yourself with experienced truck insurance specialists. Sign up for subscription lists for FMCSA updates, Commercial Carrier Journal, Transport Topics, and many others. Follow agents on LinkedIn who work for your company and other companies to find content that relates to your field so you can grow your breadth of knowledge.

Second, know your markets; the insurance carriers, Managing General Agents (MGAs), and underwriters.

To save time, know the specific underwriting criteria for those markets so that you can prequalify carriers for quote.  Ask underwriting what type of motor carriers you should submit to them, including specific questions about:

1. 1. Fleet size
   2. Commodities hauled
   3. BASIC Safety score parameters
   4. Radius of operation
   5. Many more…

Once you have the background knowledge in place and know your available markets, you will be ready to present yourself to sales leads. Running a simple search for insurers in your state or states of operation can yield hundreds or thousands of results, not all of which will be a good fit for your business.   How best to sort through them? Renewal date—of course! But that’s not enough.  So how can you combat this overabundance of prospects? The answer is surprisingly simple: filtering.

Using DOT Leads by Carrier Software, you can find pre-qualified truck leads by matching our filters to your geographical region and according to your markets’ underwriting criteria.  Most insurance carriers will expect you to scrub your submissions based on by OOS inspection counts, clean inspection ratio, commodities hauled, crash injuries and fatalities, and crash to power unit ratio. We provide all the filters you need, and many more that are market exclusives.

Then, run your search.

By crafting a search that specifies qualities you do or don’t want in a client, you will automatically you specified will automatically filter out those leads, presenting you with only the most relevant leads.  The opportunity cost of your time can be very valuable.  Eliminate those prospects that don’t match your insurance carrier’s appetite.  Focusing on the accounts “you can write” ultimately saves time and grows your book of business.

According to an article by the Tivoli Partners, “Customer loyalty, by definition, means commitment. A customer that is loyal to your brand continues to buy your product or service over and over again.” Insurance is an intangible product, so how do you build customer loyalty, rather than brand loyalty, to your business and why?

First, let’s tackle the why.

According to PWC, “32% of all customers would stop doing business with a brand they loved after one bad experience.” With that in mind, we know that we can’t rely simply on brand loyalty to keep generating renewals.  You must generate customer loyalty to you and your company.  In the truck insurance industry, retaining renewal business costs much less than finding new business. Cost factors for time, travel, and opportunity costs all need to be considered.  It takes a lot of money to find new business, persuade businesses to work with you, and figure out how to differentiate yourself against competition in that area.

Additionally, loyal customers will bring you referrals. If you can get a client that’s so loyal they’re willing to give you a referral, that’s the most effective way to get in the door at a new business.  You have someone on your side, in the same link of work as your perspective, that has the same goals in mind. Helping to create a positive impression through a shared contact is the easiest way to help generate new business. You can even get loyal customers to promote you on social media platforms. Get reviews and connections from your customers that are heavily active on social media.  Proudly boast to the digital world your loyal customers.

Now, let’s confront the how.

Loyalty is earned by going the extra mile to provide service that exceeds expectations. Never take your insureds for granted, and always make sure they feel appreciated, valued, and satisfied whenever possible. There are several ways to accomplish this.

As a retail agent, do not wait for a customer to call you with a problem. Reach out to them and touch base. Show your motor carrier clients that you know their employees by name. Ask them leading questions, such as:

“What can we do for you?”

“What can we improve on?”

“Do you have any suggestions?

“Is there anything we can do to make your job easier?”

“Are there any types of technology I can suggest to make your job easier?”

“Do you know what type of items you need to have prepared in case of audit by DOT?”

Intervene and help insureds with problems. Keep track of and notify them if anything goes wrong. Use Alert-VU to monitor your insureds in real-time.  Stay on top of all changes occurring with that customer in public transportation databases. Early knowledge can help quickly resolve problems for motor carriers that create liable situations. Here are some examples.

“I noticed you have a vehicle out here that’s not on your scheduled policy”

“Hey, I noticed that your MCS-150 is coming due shortly, do you want me to update it for you?”

“Your operating authority has been revoked. Is this correct? If not, we need to get this fixed immediately.”

“I see one of your BASICs in nearing Alert Status, should we brainstorm how we can avoid crossing the threshold?”

When you see the opportunity to help solve a client’s problem, do what you say you’re going to do. Trucking is a big industry, so building a positive reputation for your agency is critical.

Building customer loyalty is a key strategy for growing your business in today’s marketplace. Carrier Software has an entire suite of insurtech tools available to help assist you in growing your truck insurance business and expanding your customer offerings. Contact us today and we can help you find a unique solution to grow loyalty within your customer base.