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From the Rear View Mirror and the Driver’s Seat CAB ANNUAL TRANSPORTATION INSURANCE RESUMẺ 2012 to 2013

From the Rear View Mirror and the Driver’s Seat

CAB ANNUAL TRANSPORTATION INSURANCE RESUMẺ

2012 to 2013


There is no doubt that 2012 seemed like a long year.  The year began with a country focused on economics and politics, as we headed into what was expected to be a long and hard fought battle for the presidency.  In so many ways that feels like it occurred in a different year.  The events of the fourth quarter have clearly overshadowed the earlier part of the year.  Recovery efforts following Hurricane Sandy, the ramifications of the Newtown massacre and the fiscal cliff were foremost on everyone’s mind as the year ended and we moved into 2013.

With the reelection of President Barack Obama the fork in the road that the country would take was chosen.  As a second term President, he has announced his agenda and appears determined to see his mandates through Congress.  The Fourth Quarter Business Expectations Survey conducted by Transport Capital Partners (TIP) reports that 93% of surveyed trucking executives were not happy with the reelection and are concerned over how the second term of President Obama will impact the trucking industry.

President Obama’s new cabinet is in the process of being formed. At this time whether DOT Secretary Ray LaHood will remain at the helm of the DOT is unclear.  Mr. LaHood had indicated earlier in the year that he would be returning to private business after the election, although in the post election months it did appear that he was reconsidering this position.  As a generally well liked member of the cabinet he still may be back, depending on who is selected to fill other posts.

Once again, forces of nature played its part in the overall stability of the trucking industry. As much as economists and analysts try to anticipate the future, Mother Nature often throws a monkey wrench into the best laid plans of men.  Droughts in parts of the country curtailed the transport of agricultural commodities. Hurricane Sandy saw widespread devastation throughout the Northeast which resulted in a huge hiccup in transportation operations. Numerous trucking companies and distribution/warehousing facilities were damaged and millions of dollars in freight lost. However, post Sandy saw an upswing in freight movement as more freight and construction materials needed to be moved into the region to repair and replace. In addition, while most carriers/warehouseman bear no liability for this Act of God, tremendous pressure is placed on those businesses by customers who did not anticipate these losses and who are looking to the carrier/warehouseman to make good the damages, something generally not covered by the liability insurance carried by motor carriers/warehouseman.  Will these climatic events change the way the industry operates?  2013 may see substantial changes in business operations and insurance risks in these industries as carriers/warehouseman and customers look to realign the business risk for natural disasters.

For the first time in a long time, we have a multi-year federal highway bill in place. The Moving Ahead for Progress in the 21st Century Act (MAP-21) was signed into law, effective October 12, 2012, as a funding and authorization bill to govern United States federal surface transportation spending.  This is the first multi-year transportation legislation since 2005.  The law mandates required changes to truck and bus safety programs and requires 15 studies on transportation operations. Among the anticipated actions include a new EOBR rule, a proposed safety fitness determination rule that will explain how the Compliance, Safety, Accountability (CSA) program’s safety measurement system scores will be used to assign ratings to carriers, as well as a final unified registration system rule that will combine three databases to better identify reincarnated carriers, a proposed drug and alcohol clearinghouse rule, and a “patterns of safety violations” proposal aimed at increasing enforcement for truck and bus executives who turn a blind eye to unsafe business practices. The FMCSA has also indicated that they are in the process of implementing provisions which reduce the safety review of new-entrant trucking companies to 12 months from 18 months, increase enforcement penalties, improve standards for states seeking commercial vehicle safety grants, simplify steps for carriers to apply for waivers, exemptions and pilot programs by eliminating a formal requirement for a Federal Register announcement and granting additional authority to order the return of household goods held hostage by movers, as well as developing rules that will expand its authority over the operations of brokers and freight forwarders, and finally to require a new written proficiency exam for carriers seeking operating authority.

Trucking has historically been a harbinger of the country’s economic stability and this remains true today.  In 2012 the trucking industry followed the same economic roller coaster ride as the nation.  While overall the increases in the housing and domestic manufacturing sectors, along with an increase in domestic energy production, helped keep trucking on a more positive note than many other industries, economic concerns remain.  With focus now turned to reducing the deficit, cutting spending and increasing taxes, every business and individual will be impacted one way or another this year, to say nothing of the fact that we still have an unemployment rate of 7.8 % and over 23 million out of work.  Trucking bankruptcies continue, although not at an alarming rate.  Carriers continue to enter and exit the market, just as insurers do.  The Bureau of Labor Statistics (BLS) indicates that trucking has a lower unemployment rate – only 6.9%.. In a projection report issued this year, the BLS puts trucking in the forefront of those industries which will help stem the tide of unemployment and restore jobs to the country. Truck sales remain slow, but firm. The newest tax bill extended the ability of truckers to deduct 50% of the costs of new trucks and other equipment in 2013, which should help spur sales.

On the plus side the “U.S. Freight Transportation Forecast to 2023” released by the ATA expects freight tonnage to increase 21% by 2023, with revenues up 59%.  Although 2013 may be a slow growth year, the long term forecast is good, with trucking expected to garner 69.6% of the freight tonnage by 2012 and 81.7% of the freight revenue. Even today, with a slow growing economy, trucking continues to dominate the transportation marketplace, hauling 67% of all freight in 2011. Trucking moved 9.2 billion tons of freight or $603.9 billion of the total freight bill. Trucking employs 6.8 million people, 3 million of which are drivers. The ATA trends report also concluded that 90% of carriers operate six or fewer trucks, and 97% of carriers operate fleets of 20 or fewer trucks. The ATA economists foresee freight volumes to be lower in 2013 than in 2012, with sluggish economic growth for much of this year although thankfully no backward movement is expected.  Truck freight will hopefully gain momentum later in the year, and increase into 2014 with the overall forecast more positive.

In the stock market trucking and transportation stocks appreciated at a lower rate that others, but generally outpaced the gross domestic product growth of 2%. The Dow Jones transportation average gained 2.7% with a Dow Jones trucking index growing by 2.5%.  Current reports indicate that 4th quarter reports, which are only now being released, will indicate that stocks in this venue are flat.

As liability insurers evaluate risks it is always important to consider the potential exposure and risk in litigating suits involving big rigs.  The verdicts can be high, with reports this year of a $36 million dollar verdict against a driver and his company when he was alleged to have improperly attempted to pass a vehicle, a number of verdicts well in excess of $20,000,000 and a $5.2 million verdict against a truck broker for failing to perform due diligence in selecting a carrier.

The NTHSA reports that truck-involved highway fatalities rose up 1.9% to 3,757 in 2011 from 3,686 the year before. The number of truck occupants killed in crashes last year increased 20% — to 635 from 530 — while injuries to truck occupants increased by 15%. Fatalities also increased by 19% to 21% in three other categories: truck occupants in single-vehicle crashes, truck occupants in multi-vehicle crashes and people who were not inside any vehicle, such as pedestrians or bikers. On the positive side, the number of people who died in a truck-involved crash while traveling in another vehicle dropped 3.6% to 2,695, from 2,797 in 2010.

We always report on the list of judicial hellholes – the places where verdicts often go bad leaving defendants and insurers scratching their heads over what transpired.  This year the list has changed a bit with Philadelphia falling off the top seat, a spot now taken by California, followed by West Virginia, Madison County, New York City and Albany, New York, Baltimore,  and Maryland. Six additional jurisdictions Philadelphia, Pennsylvania, South Florida, Cook County, Illinois, New Jersey, Nevada and Louisiana are on the watch list.  Many of these jurisdictions in fact saw some of the large truck verdicts.

Fortunately more states have been added to the growing list of jurisdictions which have enacted legislation prohibiting or limiting indemnity provisions in shipper’s contracts with motor carriers. Alabama, Hawaii, Minnesota, Massachusetts and South Dakota brought the total to 34 in 2012, with Michigan joining in early January, 2013.

Cargo theft remains a serious problem, with identity theft being added to the mix of general cargo theft. Food and drink, electronics and auto parts lead the list of target commodities.  California, Florida and Texas appear to lead the list of locations and unsecured parking was the location targeted most often by cargo thieves when a location was recorded. Efforts to get a stricter federal law in place have not gotten very far, but states, such as New Jersey, are attempting to implement their own.

And where would we be without our annual report on the state of NAFTA as we close out this section of the resume.  In looking back at last year’s resume, we noted that 3 carriers had been approved and had passed safety requirements. At the end of 2012 only 9 carriers have been granted operating authority, 16 applications are currently under review, and 10 have been withdrawn or denied. The approved carriers have made only 193 border crossings.  Mid-year the Government Accountability Office (GOA) found that there was such a low participation in the pilot program that the FMCSA was at risk of not meeting its goals for providing an adequate and representative sample of Mexico–domiciled carriers and inspections necessary to assess the impact on motor carrier safety. There must be a minimum of 46 carriers receiving 4,100 roadside inspections to validate the safety of the Mexican trucking companies and drivers. Additionally, the GOA concluded that FMCSA’s oversight mechanisms did not ensure full compliance with pilot program requirements.  In early December oral arguments were heard on the suit seeking to shut down the program on the argument that it does not impose equal standards on truckers and because Mexico lacks a reliable system for tracking a driver’s safety and medical and substance history. The battle continues.

MOTOR CARRIER INDUSTRY

The make-up of the motor carrier industry continues to change. Our analysis reveals that there are currently 1,405,879 active entities with DOT numbers.  Of that, 200,898 have authority as a common or contract motor carrier.  In addition 3,505 of those common or contract motor also have broker authority. There are 19,288 companies who operate only as transportation brokers.  There are 7,241 motor carriers who transport household goods and general commodities (and therefore require a cargo filing) and 19,012 who transport only household goods, leaving the rest as carriers not requiring cargo filings.

In the freight forwarder category, there are 8,427 active freight forwarders, 1,092 of which work solely with household goods and 362 work with general commodities and household goods.

In 2012 30,517 carriers had operating authority revoked and 56,598 carriers had a DOT number placed out of service. Our records also indicate that there are 177,312 entities which operate at the same address of another active entity and 183,364 entities operating with the same phone number as someone else.

Brokerage operations are on the rise. Transport Capital Partners reports that more truckers are using brokers as a way to solicit freight. Approximately 33% of motor carriers used freight brokers in February, 2012 up from 11% at the same time last year. They also found that 34% of larger carriers, with at least $25 million in annual revenue, used brokers, compared with 28% of smaller carriers.

What concerns truckers most? According to the ATRI survey, the impact of CSA is now the number one concern in the industry.  Hours of Service rules came in second, followed by the economy, which was the number one concern last year.  Driver shortage also remains a high priority, as noted below, and 2013 is expected to see a potentially more serious shortage.  Fuel prices, congestion, infrastructure funding, tort reform, onboard truck technology and truck size and weigh complete the top list. Without question each of these concerns is impacted by events which occur in the other categories.

While CSA is the number one concern for the industry, and is routinely being used to increase jury verdicts, a recent ATA report indicates that CSA scores are not necessarily resulting in the dismissal of many drivers, perhaps because an employer has a better understanding of its own drivers and can account for certain problems with scores. It is, however, impacting new hires as carriers shy away from hiring drivers who may appear to have violations which would impact their overall scores or otherwise raise concerns over potential future losses.

Similarly the pre-screening program continues to impact the hiring of new drivers. OOIDA has filed suit, seeking to eliminate certain aspects of the program.  It seeks to compel the FMCSA to purge all driver data for which there has not been a judicial determination of guilt; including all reports where a court has dismissed or ruled the driver not guilty; all reports that are not “serious driver-related violation(s) and stop the FMCSA from distributing information without referencing the driver’s dispute of the report.

Both CSA and the pre-screening program have had their toll on the pool of available drivers.  In a study released this year, 90% of truckload carriers indicated a problem with finding drivers who meet the required standards.  ATA estimates the current shortage of drivers to be in the 20,000 to 25,000 range in the for-hire truckload market. The ATA estimates that at the current rate, the shortage could be 239,000 by 2022.  The risk is greater that there will be companies which will elect to allow their standards to slip in order to move freight.

Labor issues, both with driver shortages and union contracts, will be a focus in 2012. Unions representing workers for major less-than-truckload carriers and UPS, Inc., the nation’s largest parcel carrier, will be negotiating new contracts in 2013.  As unions throughout the country have fought tough battles to avoid losses in benefits and minimal salary increases we expect that this may be a tough negotiation.

The use of heavier trucks, sought by some trucking concerns, has been pushed back for more evaluation. MAP-21 did not include the provisions authorizing the use of these trucks and instead required that a 3 year study be undertaken.  The study would address crash rates, VMT, pavement performance, bridge reliability and other factors before anyone can move toward putting them on the road.

Investment in technology was big for those motor carriers who had the financial foundation to invest, including investments in fuel efficient equipment, testing LNG or hybrid equipment, driver screening and training. However because of the concerns over the fiscal cliff crises, more carriers have reported that they will slow up on capital investments as they wait to see how this will end.

GOVERNMENT REGULATION

In 2012 the government continued down the path of increased government oversight, with a focus on removing dangerous carriers from the road.  Perhaps the minimal release of new regulations stemmed from a government study that was released which revealed that the transportation industry had some of the most expensive regulations with the most red tape.

While there were not many new regulations, there were changes to existing programs.  CSA saw a number of significant changes in its evolution as a target source for problem carriers. It has become common place to hear about CSA scores over mainstream media sources anytime a trucker is involved in an accident.  As a result of heavy push back from the industry, the FMCSA focused on changing the program to reflect the concerns of the industry.  Earlier in the year various violations were added which addressed the push on distracted driving, with cell phone violations taking on a high severity weight.  At year’s end there were 11 substantive changes to CSA.  The changes include replacing the Cargo-Related BASIC with the Hazardous Materials (HM) Compliance BASIC, strengthening the Vehicle Maintenance BASIC by including cargo and load securement violations that were previously in the Cargo-Related BASIC, counting intermodal equipment violations found during drivers’ pre-trip inspections, aligning speeding violations to be consistent with current speedometer regulations that require speedometers to be accurate within 5 mph, changing the name of the Fatigued Driving BASIC to the Hours-of-Service (HOS) Compliance BASIC to more accurately reflect violations contained within the BASIC, and aligning the severity weight of paper and electronic logbook violations equally on the SMS for consistency purposes. The change applies to the prior 24 months of data used by the SMS and all SMS data moving forward.

In the coming year the FMCSA will report on its review of its steps for crash weighting.  The agency has reported that it will “analyze a process” for updating the state-reported crash records it receives to include a determination of a motor carrier’s role in a crash. Right now a carrier’s scores are impacted by any crash, whether the carrier was at fault or not.  In 2013, the DOT will likely look to adjust severity weights assigned to different violations, define the use of vehicle mileage as a utilization factors in the Crash Indicator and Unsafe Driver BASIC, as well as modifying the safety event peer groups used to compare carriers.

As long as we have been writing these yearly reports it seems that Hours of Service rules have been under attack.  The rules went into effect in February, 2012, with compliance dates for some of the provisions extended to July, 2013.  In March, 2013, the Federal Court will hear oral arguments on the validity of these new hours of service rules as industry groups target the restart provisions which they contend improperly require that a driver include two consecutive periods between 1 a.m. and 5 a.m.; limits the frequency with which a driver may use the restart and has a mandatory 30-minute break from driving which excludes all other on-duty activity; and narrows certain exceptions to drive-time regulations for local delivery drivers.

The Surface Transportation Bureau has issued revised rulings for valuation limitations for household goods carriers. The first change requires moving companies to provide certain information on the written estimate including (a) a disclosure statement explaining that customers may select either replacement value (full-value protection) for lost or damaged goods or, for a lower rate, a lesser level of protection; and (b) an estimate of the cost of a move under full-value protection. In addition, $6.00 will be the new per-pound value to be used to ascertain the value of a shipment when the consumer selects full-value protection and either does not write in a total value for the shipment or writes in a total value that is below the floor. The ultimate total value for the shipment will be deemed to be either $6.00 times the weight of the shipment in pounds or $6,000, whichever is higher.  In addition, household goods carriers are now required to retain documentation of an individual shipper’s waiver of receipt of printed copies of consumer protection materials.

Early in the year the DOT spend a considerable time and effort marketing its mission to minimize distracted driving, including creating a government run website to inform the public about legislation and rulemaking on distracted driving issues The U.S. Department of Transportation’s National Highway Traffic Safety Administration (NHTSA) introduced a new grant program that will provide approximately $17.5 million to states that have laws banning distracted driving in 2013. NHTSA estimates that at least 3,092 people were killed and an additional 416,000 others were injured in distraction-affected crashes in 2010, including crashes involving texting or other cell phone use. 39 states now have a ban on text messaging and 10 states have a ban on hand held phones and more are expected in order to permit those states to receive money under this grant program.

FMCSA has also looked to streamline its ability to shut down carriers.  This year it amended regulations to remove previous extensions permitted to be requested by carriers after receiving a proposed unsatisfactory safety rating, allowing the FMCSA to get those carriers off the road in a timely fashion.

Included in MAP-21 were some significant changes to the operations of carriers and brokers which are anticipated to address some of the issues which have arisen as a result of the overlapping operations of carriers and brokers and the desire of the DOT to target unsafe motor carriers and potential scam operations.

Title 49 has been amended to provide that every entity shall be issued a distinctive registration number and that the number given will include an indicator of the type of transportation service being authorized, either as a motor carrier, a broker or a freight forwarder.  This new requirement should assist parties to the transportation contract in understanding the nature of the services being provided by a particular provider. In addition, each entity is now required to specify, in writing, the authority under which the service is provided.   If an entity maintains multiple authorities it will have to specifically identify whether it is acting as a carrier, a broker or a forwarder, which should further clarify its relationship to the transport.  In addition, all registered motor carriers must now disclose any relationship involving common ownership, common management, common control, or common familial relationship between that person and any other motor carrier using self-propelled vehicles the motor carrier owns, rents, or leases, freight forwarder, or broker, or any other applicant for motor carrier using self-propelled vehicles the motor carrier owns, rents, or leases, freight forwarder, or broker registration, if the relationship occurred in the 3-year period preceding the date of the filing of the application for registration. This provision is designed to assist the DOT in ferreting out companies that change operation to avoid problems with harmful government scores or to otherwise evade prosecution, whether criminal or civil for losses. This information can also be used to analyze whether a broker has properly examined a motor carrier prior to engaging that carrier to perform transport services.  49 U.S.C. 13902 will now also spell out additional registration requirements, further providing that a motor carrier may not arrange transportation with other carriers unless it is has obtained separate registration as a broker or freight forwarder.  Similarly, freight forwarders and brokers cannot provide transportation as a motor carrier unless properly registered as such.  In addition, not later than 4 years after the date of enactment of the Commercial Motor Vehicle Safety Enhancement Act of 2012, the Secretary shall require a freight forwarder or broker to renew its registration issued under this chapter. The new registration will expire not less than 5 years after the date of renewal.

Under MAP-21 Freight brokers are now also required to have larger bonds in place.  Bonds are now required for $75,000, which will increase the cost of doing business for many brokers.  Whether it will result in a departure from the industry of smaller, less funded brokers remains to be seen.

In the transportation of hazardous materials MAP-21 now provides that motor carriers and shippers who are cited for hazardous materials violations face the potential of fines of up to $75,000 per day per violation. In cases of death, severe injury, serious illness or substantial property damage fines can increase to $175,000 per day per violation.

The container chassis rules were changed slightly this year.  Drayage drivers no longer have to submit inspection reports if no defects or maintenance issues are found on a container chassis. The change specifically eliminated the reporting requirement for Driver-Vehicle Inspection Reports for intermodal equipment if the driver has neither found nor has been made aware of any defects in the chassis. The rule also eliminates the recordkeeping requirement for intermodal equipment providers to retain the reports that do not indicate chassis defects. The FMCSA estimates that eliminating this requirement will save $54 million dollars.

The FMCSA will also no longer issue vehicle registrant numbers.  With a growing concern that the number were being used to avoid the negative impact of problematic inspections on regulated carriers the FMCSA decided it would no longer offer this option.  In addition to eliminating the option to register as a Registrant, the FMCSA has set all Registrant USDOT numbers to inactive. Any Registrant that operates under its own authority as a motor carrier will need to fill out a Form MCS-150 updating its designation to motor carrier.

The FMCSA also withdrew its proposed final rule eliminating the quarterly financial reporting requirements for certain for-hire motor carriers of property and for-hire motor carriers of passengers.  Additional rule making will be coming in 2013 and we will continue to monitor its impact on the financial analysis of motor carriers.

The FMCSA also clarified its expanded definition of “tank vehicle” confirming that it includes vehicles hauling an aggregate of 1,000 gallons in containers of 119 gallons or larger and requiring all states to adopt the change by 2014  The definition is intended to cover (1) a vehicle transporting an IBC or other tank used for any liquid or gaseous materials, with an individual rated capacity of 1,000 gallons or more that is either permanently or temporarily attached to the vehicle or chassis; or (2) a vehicle used to transport multiple IBCs or other tanks having an individual rated capacity of more than 119 gallons and an aggregate rated capacity of 1,000 gallons or more that are permanently or temporarily attached to the vehicle or the chassis, but not the transportation of empty storage tanks that are not designed for transportation and have a rated capacity of 1,000 gallons or more.

We have not seen much in the way of food transport regulations this year. The FDA has focused primarily on the registration process for manufacturing and holding facilities as it looks to meet its deadline to have hazard controls in place.  Similar to the mission of the DOT, with the use of targeted enforcement, the FDA looks to target potentially hazardous locations where food is manufactured, packed or stored. The FDA concluded that truck terminals and other stationary facilities that serve merely to assist transportation vehicles in the process of transporting food are not required to be registered with FDA.  It revised its initial guidance and concluded that members of the transportation network that have possession, custody, or control of food for the sole purpose of facilitating its transport will not, at this point, be subject to these new controls.

As we expected last year, the National Registry for Medical Examiners was created by the DOT.   It requires all medical examiners who wish to perform physical examinations for interstate commercial motor vehicle drivers to be trained and certified in FMCSA physical qualification standards. Of course, as with any new regulation, it spawned a new business opportunity as the FMCSA allows training facilities to teach medical examiners how to undertake these exams and obtain certifications.

Coming down the pike we expect regulations on Electronic Onboard Recorders this year.  MAP-21 mandates the use of EOBR in commercial vehicles.  The DOT has one year to set basic performance standards for the records, including steps to ensure necessary measures are taken to protect the privacy and confidentiality of the data recorded by the devices.

INSURANCE INDUSTRY

It is interesting to see how items which were at the forefront of the public concern fade away as time goes on.  In 2010, following the concerns over problems in the industry, the Federal Insurance Office (FIO) was created. It took the year of 2011 to set up and appoint the various members and experts. The FIO was under a mandate to release, in January, 2012, a report on the ways to improve and modernize the insurance industry.  A year later we still await release of that report. In September, 2012, the FIO was to also release a report on the breadth and scope of the global reinsurance market and the critical role it plays in supporting the U.S. insurance industry.  We have not seen that report either.  Some reports indicate that the reports were slowed due to the political race and should be expected in the early part of 2013.

The Towers Watson Survey of Property Casualty Claims Officers annual report reveals that predictive analytics and data-driven analytics are moving and spreading from underwriting to claims, assisting insurers in measuring performance and improving operational and bottom-line results. Sixty-three percent of respondents indicated that they at least starting to explore the use of predictive analytics in their claim operations (75% of large carriers, and 58% of small and midsize carriers). There is an expectation that it will held reduce fraud. Data-driven analytics are having an immediate impact on insurers’ ability to monitor the effectiveness of claim best practice techniques.  CAB is at the forefront of providing the data needed to allow you to drive your results in the right direction.

Could it be true?  Reports have come in that commercial insurance prices are on the rise, with an overall 6% increase in the third quarter of 2012.  Towers Watson, which released this report, compared prices levels on policies written in 2011. Within the industries, midmarket and large accounts saw the largest increases. They report better loss ratios with a general 3% reduction in loss ratios.  We continue to hear that trucking will see a rise in premiums in the coming year.  The NIP Group’s Transportation Pricing Survey indicates that the market is hardening, however the same is not true in Motor Truck Cargo and Warehousemen’s Legal which have seen marginal increases.

Numbers, at this point will not properly reflect the hit the insurance industry will take from Hurricane Sandy, which may take months to determine.  However, prior to Hurricane Sandy, U.S. property/casualty insurers’ net income after taxes grew to $27 billion in the first nine-months of 2012 from $8.4 billion in the first nine-months of 2011. The combined ratio improved to 100.9 percent for nine-months 2012 from 109.8 percent for nine-months 2011, according to ISO and Property Casualty Insurers Association of America. Net written premiums rose slight to $348,977 billion for nine-months 2012. Net earned premiums rose to $335,307 from $323.8 billion.  Until Sandy, it was a good year.

Before heading into our section dealing with the year in review for CAB, we make a special point to remind you of the specialized nature of underwriting and claims handling in this niche market, whether you are focused on cargo, auto or general liability.  You are to be commended on your ability to make your way through the maze on regulations and laws in this arena.  This book of business requires a deeper understanding of your insured’s business in order to provide the best service and the best return on your investment.  Knowledge remains power.  We stress the importance of continued training and education. Even those of us here, who are immersed in this business every day, are amazed at how much we learn each year.  It is also important to remember that training those following behind is critical to keeping the business at the highest professional standards.  Stay involved in the industry – knowing what everyone else is doing carries its own benefit. Mentor those who need your experience.  Continuing to maintain quality standards high and educating the members of the industry better serves the industry as a whole.  As always we are here to help you to train those coming up the ladder or to provide you with a needed refresher.  We remind you that the knowledge available through CAB can help all of your departments make this a successful book of business.

CENTRAL ANALYSIS BUREAU

2012 was an exciting year for us.  We started by moving our headquarters from Manhattan to Lakewood, NJ, by the Jersey Shore, obviously not anticipating that we would be visited by Sandy later in the year. We continue to maintain personnel and operations in New York City and South Carolina. We also welcomed Rob Haupt to our team as our newest Account Executive to help us continue to provide all our subscribers with immediate and personalized attention.

During the year, we successfully upgraded our data infrastructure to provide faster speed and greater reliability across all of our services. This enhanced infrastructure and the tireless, around-the-clock efforts of our entire tech team allowed us to withstand Sandy with 100% uptime, despite having our main operations located in areas that sustained substantial damage from the storm.

We are so proud of the fact that the number of new users increases on a daily basis.  It is exciting to see that the primary point of entry for many of our clients, when beginning to research or review an account, is CAB.  Our tools and reports have become the mark of excellence and standard research for underwriters and claims department in the transportation insurance industry.  While always ensuring that our reports reflect the latest changes to the industry, whether adapting to changes to CSA or the improvements to our Chameleon Carrier Detector™ algorithms, we focused in 2012 on building various customization tools and new features to help make CAB work for you. Recognizing that no two insurance companies manage their book of business the same these new features allows each subscribers to tailor the data to his or her individual needs.

As discussed earlier CSA has caused particular consternation in the trucking and insurance industry. As the program gains greater recognition, insurers are focusing on the SMS scores, many factoring these scores into raters.  In addition, we have discovered that many motor carriers with poor scores continue to take advantage of the relative ease in which they can resurface as a ‘new’ unrated carrier. While the FMCSA is making an effort to identify and stop Chameleon Carriers™, problem motor carriers continue to find more creative ways to stay one step ahead of the FMCSA.  CAB offers, exclusively to its Premium Subscribers, access to its advanced, proprietary system with which subscribers are able to flag potential Chameleon Carriers™.  During 2012 CAB continued to refine and develop its algorithms in order to adapt to the new methods carriers are employing to attempt to evade detection.

In 2012, we introduced Design your own Submission Report™: When we launched our Submission Report™ 5 years ago, it was a 2 page, PDF report, providing basic concise information on a motor carrier.  Today, there are up to 7 separate categories and over 25 sub-sections available for your evaluation, not to mention the drill-down and analytics reports that are available from within the Submission Report ™. While we believe all the information included in the report is relevant to the entity’s operation, we recognize that all of the data may not be relevant to everyone at a particular point in the analysis of an account. To help users process the information most critical to them as efficiently as possible, users are now able to customize which tabs and sections will be included in their default view of the Submission Report™, with the ability to see everything, if needed, at the click of a mouse.

Other features that were added to our subscriber website this past year include:

  • Scheduled Reports – Users can now set themselves up to receive updated Submission Reports™  in a designated format on a specified frequency.
  • Custom Reports – This section was added to our site to provide subscribers with real-time access to customized data reports that can be downloaded on-demand.
  • New Submission Report™ features:
  • Radius Buckets™ section: A new section was added to the Radius of Operations tab that will break down and display a motor carrier’s inspections in Radius Buckets™ designated by the subscriber.
  • Inspections and out-of-service trends spanning 5 years.
  • Hot Zone alerts: Subscribers can now designate specific states and / or counties that will be flagged in the Alerts section of the report if the motor carrier traveled through that area.
  • Radius alerts: Subscribers can be alerted if any inspections took place beyond a specific radius from the motor carrier’s principal location.
  • …and more Reports!: For all you data junkies out there, we’ve added the ability to download more of our data directly to Excel for your own entertainment. Clicking on the Microsoft Excel icon anywhere within our site will provide you with access to many data elements that can be used for powerful analyses.

This list highlights only some of the new features that were added to our report. A full User’s Guide to all of the features that are available can be downloaded from the About CAB menu in our site.

As we closed out 2012 we rolled out a number of new features that many of you have undoubtedly already discovered. Look for a full update of all the new features in this month’s coming CAB’s Lab section of the Bits ‘n Pieces.

As a part of our service and valued partnership with our Premium Subscribers, we are always available to help educate and train in the use of our tools – how to access, research and understand the available data and its significance. We also offer general training sessions on a variety of topics and issues pertaining to the motor carrier industry and routinely speak at industry events on these topics.  To find out more, or to set up a training session please contact Tiana.

CAB Financial Analysis: From its inception CAB has focused on supplying the insurance industry with in-depth financial analysis of motor carriers, recognizing that strong financials is a key underwriting factor. We are proud to be your source for financial analysis. Our staff of Financial Analysts have earned your respect for their experience and expertise and we thank you for the recognition in our recent customer survey. We are committed to providing excellent customer service and prompt turn around on reports. We offer unlimited Financial Analysis Reports to all of our Premium Subscribers. It is easy to send us the necessary financial information; you can e-mail it to ratings@cabadvantage.com or you can upload the information through our website www.cabadvantage.com. A chart and graph of our rating breakdown and the changes in that breakdown over time is available here. The ratings breakdown for 2012 shows that the financial condition of the carrier industry overall is improving and is approaching, but has not yet quite reached, levels last seen before the financial crisis.

In 1939, when CAB was started, index cards were an advanced database management tool. Today we have rooms full of servers and state-of-the-art data warehouses and data mining tools and very little paper. At our core, our mission is the same as that established by Kal Schindel and Hy Cooper – bringing to insurers the critical information to underwrite and manage the transportation industry.  In the coming year we will continue to develop our products and tools.  We remain dedicated to offering products and tools that are unmatched, while always being available to assist you with questions and concerns on motor carriers, regulatory issues and the vast array of issues and concerns that affect the industry. Education is key to informed decision making and we here at CAB will continue our mission of providing that education through our training services, both directly to our premium subscribers and through our affiliation with industry organizations.  Please do not hesitate to contact us if there is anything we can do to help.  Once again, thank you for an amazing 2012 and we look forward to what 2013 will bring.

In February 2013, we are going to be e-mailing a Customer Satisfaction survey. We ask that you complete this survey because your feedback is very important to us as it enables us to address any concerns and continue to perfect the tools we offer. We take great pride in our customer service and encourage anyone to contact us anytime with any questions, comments, concerns, or simply to discuss the industry, our services, what we can do to provide additional help to give you the tools to make more informed decisions, or any other area where we can be of assistance.

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