From the Rear View Mirror and the Driver’s Seat

CAB ANNUAL TRANSPORTATION INSURANCE RESUMẺ

2011 to 2012

  

Together with most segments of the country, trucking continues to endure economic swings, while holding fast to the continued hope that leaner and meaner business operations will allow trucking to pick up speed and turn the corner on the economic downtown.  The slight uptrend that we saw at the start of 2011 has not changed, with slow and steady increases in some areas, while others remaining flat.  Overall, for the companies which have withstood the events and the elements there does seem to be a shift from the survival mode to increased growth; this welcome news to all.

Much of this is attributable to increased freight rates. Transport Capital Partners’ survey indicated that 63% of carriers increased rates this year, with 7% of those increasing rates by more than 15% and 17% implementing increases of at least 10%. The best news is that the majority of those carriers expect rates and volume to increase in the coming year. FTR Associates agrees and reports that industrial demand is high and with this tighter freight capacity there is likely to be further increase in shipping costs in 2012.  Coupled with equipment and driver shortages capacity is expected to reach a critical stage in the coming year.  The ATA reports that overall truck tonnage rose sharply in November, compared with year-ago levels and that the seasonally-adjusted tonnage index rose 6% on a year-to-year basis.   At year’s end the Bureau of Transportation Statistics (BTS) reported that the amount of freight carried by the for-hire transportation industry fell 0.2% in October which was the first monthly decrease after four consecutive increases. The BTS reported that at 109.4 the level of freight shipments, measured by the Freight TSI, declined slightly from the recent peak achieved in September, but still remained higher than any other month since July 2008. The overall trend was still good as shipments in October 2011 (109.4 on the index) were at the second highest level since July 2008 (109.9) after reaching the highest level in more than three years in September (109.6).  All of which are good signs pointing to a growing transportation industry.

On the job front the Bureau of Labor Statistics indicated that the for-hire trucking industry added 3,600 new payroll employees in November, 2010 a 2.7% increase from November last year, and added another 5,100 jobs in December.  The Department of Labor indicates that job growth in the transportation sector — including warehousing, airlines, railroads and courier businesses — was higher than virtually any other, accounting for 50,200 of the economy’s new jobs this year. In the warehouse area, 1,600 new workers were added in December, bringing total employees to 633,600 compared with 631,800 in December 2010. Trucking’ increased 40,100 overall from December 2010 — 1,296,000 jobs overall compared with 1,255,900 in the preceding year.   Overall it is up since hitting a low in March 2010, but still below peak employment in January 2007. These numbers reflect the total amount of new hires and do not consider replacements for existing positions.

25 of 29 freight companies that report their earnings have reported better results on a year-to-year basis, with a collective increase of about 40% overall, even though the Dow Jones Transportation Average was essentially flat, not having grown at all. The top publicly traded trucking companies continue to fair well, with expectations on increased profits in 2012 as volume continues to increase. Industry profits are reported to have risen for nine consecutive quarters, based on the results of the 29 publicly traded companies.

The trucking industry faired better in the bankruptcy arena then in earlier years.  The number of trucking bankruptcies fell to a record low in the third quarter.  A total of 85 companies with an average of 17 trucks filed bankruptcy in the third quarter which was a 90% drop from last year.  In the fourth quarter there were 180 carriers who sought the protection of the bankruptcies courts. The fourth-quarter bankruptcies reduced the overall fleet by 1,965 trucks, representing just 0.1% of the total truck population, far below the peak of 45,000-plus trucks removed in the second quarter of 2008. There were approximately 1,470 trucks which left the road I the third quarter.  According to Avondale Partners the sequential decline was sharp, as 240 companies and 3,955 trucks were removed from the industry in the second quarter of 2011.  Once again increased pricing during 2011 is pointed to as the main reason why more trucking companies have survived this year and not seen the inside of the bankruptcy court.

Ray LaHood, Secretary of the Department of Transportation has announced that he will likely retire from his position following the next election.  He has spent a considerable amount of his time pushing hard to insure the safety of the roadway, outlawing the use of handheld devices and texting and getting unsafe carriers off the road.

Litigation is always a concern in the transportation industry as judgments can be high when big rigs are involved.  The Judicial Hell Hole list was released once again and Philadelphia, Pa continues to lead the way as the worst jurisdiction, followed by West Virginia, California South Florida, Madison and St. Claire Counties, Illinois, New York City and Albany, New York, Clark County, Nevada and McLean County Illinois.  On a positive note, steps continue to advance in the movement to prohibit indemnification clauses. Wisconsin, Oregon and Utah joined the ranks of states to outlaw contract provisions that shift liability for accidents to a motor carrier when it is not at fault.

While last year Fulbright indicated that litigation was on the rise that is one trend that has reversed itself this year.  The surveyed businesses indicated that there was less slightly less litigation in 2011 than in 2010, but an increase in regulatory actions and internal investigations.  The vast majority of corporate counsel polled in the U.S. predicts litigation will either rise or remain the same in the next 12 months.  Stricter regulation and company growth topped the reasons cited for the anticipated increase in litigation, beating out the economy which was of the biggest concern last year.  The technology, retail and insurance sectors indicated that they still saw litigation increase with energy and manufacturing reporting a decrease.

In the coming year we expect to see the FMCSA begin efforts to implement the needed steps to complete the strategic plan which it released this year.  A key focus of the plan is expected to be additional regulations on shippers, receivers, brokers and freight forwarders so that they can influence safety on the roadway.  Predictive analytics, which seems to be the way all industry is headed, will be utilized to continue to allow the FMCSA to set priorities on enforcement.

While the BMC-32 endorsement met its demise this year, we see that insurers are continuing to provide that protection to motor carriers and continuing to make cargo filings. Whether this is intentional or not is unknown, and we remind underwriters that the endorsement is only required in for household goods carriers and freight forwarders.  Carriers who are only authorized to transport general commodities are exempt from the requirement, although there is a growing consensus that continuing to have a filing allows the shipping public to verify who is actually writing a motor carrier and is being sought by the shipping industry.

The use of the Accord 22 form has also become an issue in the transportation sector as various entities, including the UIIA, are beginning to mandate the use of this form. Careful attention should be paid as this form modifies the options for policy cancellation and may create additional insured status not otherwise intended by underwriters. Under the Accord 22 the noted policies can not be cancelled without 30 days notice to a certificate holder, even when the policy provides for a 10 day notice of cancellation for non-payment.

As we have for many years, we end this section of the resumẻ with an update on NAFTA.  The pilot program which was stopped by Congress a few years ago has started up again as Mexican carriers begin to cross the border and are permitted to deliver throughout the country. At year’s end only three Mexican carriers have passed safety audits with a dozen or so still in the process. Only three U.S. carriers have been approved to go into Mexico.  The pilot program, with its minimal participation, is still heavily criticized and its status is currently being attacked in the courts.  To the insult of some, the FMCSA is paying for electronic on-board recorders on the Mexican trucks.  The initiation of the program has, however, prevented the imposition of additional penalties and tariffs from Mexico and has at least started the process of opening the borders.

Motor Carrier Industry

The make-up of the motor carrier industry continues to change. Our analysis reveals that there are currently 1,583,835 active entities with DOT numbers.  Of that, 178,974 have authority as a common or contract motor carrier.  In addition 19,952 of those common or contract motor also have broker authority. There are 15,872 companies who operate only as transportation brokers.  There are 5,447 motor carriers who transport household goods and general commodities (and therefore require a cargo filing) and 664 who transport only household goods, leaving the rest as general commodity carriers.

In the freight forwarder category, there are 7,740 active freight forwarders, 963 of which work solely with household goods and 362 work with general commodities and household goods.  

What concerns truckers most?  According to the ATRI survey, the economy continues to top the list for the third year in a row.  Hours of Service rules and driver shortage follow close behind.  The impact of CSA, fuel prices, congestion, infrastructure funding, tort reform, on-board truck technology and truck size and weight round out the top 10 concerns.  Ultimately each of these areas is impacted, positively or negatively, by events which occur in the other categories.

As you know, motor carriers generally operate on a thin profit margin.  The ATRI released its updated Analysis of the Operational Costs of Trucking this year and concluded that the operational cost per mile was $1.49 with the cost expected to rise in the coming year with increased fuel, salary and equipment costs. Fuel, oil and driver wages presently make up approximately 50% of the costs.  In addition there is a proposed change in accounting standards which may impact the financial strength f motor carriers.  The new rules, expected in 2012 may require carriers to indicate leases as debt rather than operating expenses on their balance sheet, which will impact their financial stability and loan ability. We remind you that CAB is here to assist you with understanding a motor carrier’s financial status and to provide our unique rating, based on years of experience.

After years of monitoring the industry we continue to see new schemes to defraud insurers, brokers and shippers.  The past year has seen a rise in the creation of fraudulent companies whose sole purpose is to create a trucking company designed to steal cargo. By establishing a company and then procuring insurance with reputable insurers they cloak themselves with legitimacy, running for a few months, stealing cargo, and later disappearing.  Identity theft is also a burgeoning concern as it has become relatively easy to produce credible paperwork on any particular motor carrier, which allows thieves to represent themselves as an agent of a motor carrier and pick up and steal cargo. Everyone needs to be vigilant in monitoring carriers by avoiding Chameleon Carriers™ and identity thieves.  Our Chameleon Carrier Detector™ will help you monitor and identify these carriers.

Cargo theft of all types continues to plague trucking. Cargo Net reports that California, Florida, New Jersey, Texas, Illinois and Georgia take the top spots for having the most reported cargo thefts. Freight Watch also reports similar numbers. The majority of thefts were from theft of trailers occurring at unsecured parking lots.  Food/drink, electronics and building/industrial materials are now the target commodities.

There has also been a big push by the DOT to get unsafe carriers off the road.  The FMCSA has ended the practice of giving extensions for carriers that file appeals after being ordered to cease operations following unsatisfactory safety ratings. The DOT has put well over 50 carriers out of service this year alone and is making every effort to publicize these out of service rulings to insure that motor carriers understand that the DOT means business and has the teeth to do something about unsafe motor carriers. Our Submission Report™ helps you to determine whether your insured has the flags which require further analysis on its operations.

Fuel economy standards have now been implemented in a first ever government regulation.  The standards become effective in 2014.  Trucks and buses built between 2014 and 2018 will be required to reduce oil consumption by a projected 530 million barrels and greenhouse gas (GHG) pollution by approximately 270 million metric tons. Truck capacity has not increased substantially and sales of vehicles have slowed as carriers have not purchased many new vehicles since the last round of regulations. This regulation bodes well for insurers as fleets replace older equipment with safer and more up to date models, and motor carriers may look to get up-to-date equipment before the anticipated increased costs associated with the new fuel standards. However one survey indicates that carriers will not increase capacity more than 5% this coming year.

The inability to screen individuals for criminal background concerns was discussed by the Government Accountability Office which concluded that Transportation Workers Identification Cards (TWIC) did not really represent a clean bill for a driver.  Apparently TSA officials, who issue the cards, are not permitted full access to FBI data criminal background databases, thereby potentially allowing drivers TWIC cards even with criminal convictions. Motor carriers now must be aware that the production of a TWIC does not insure that the driver what they are hiring is within their hiring standards.

Driver shortages are back in the news as the economy picks up.  The turnover rate for large fleets rose to 89% in the third quarter of 2011, the fourth such increase. This is the highest level since the first quarter of 2008.  The turnover rate has risen 50 percentage points and has averaged 81% so far this year. The turnover rate at small truckload fleets went to 57%, its highest level since 3rd quarter 2008.  Less-than-truckload turnover remains low at only 10%.

Unfortunately large truck fatalities reportedly increased 8.7% in 2010 after a 4 year decline, despite overall reductions in fatal roadway accidents. The National Highway Traffic Safety Administration reported that 3,675 people were killed in truck-related accidents in 2010, 295 more than 2009, with overall injuries on a 12% increase. Although this raises concerns, it is still substantially less then the high in 2000 when 5,282 people died in truck-related fatalities.

Government Regulation

Once again Government Regulations top the news in trucking.  The ATA has indicated that we are seeing the most significant changes in governmental oversight since deregulation in the 1980’s.  Whether that is good or bad remains to be seen as each new regulation increases costs, but creates a new industry to respond to the applicable regulation.

We have to start, of course, with the year end release of the newest edition of the hours of service rules. While the DOT maintained the 11 hour daily limit it did create more stringent rules for rest periods and total weekly time.  The rule now requires a 30-minute rest after eight consecutive hours of driving and cuts the weekly total hours down to 70, from the previous 82. The 34 hour restart rule was also changed. Once a driver reaches his 70 hour limit he will have to have two nights in which rest time includes the hours between 1 a.m. and 5 a.m., as a means to combat driver fatigue. Exceeding the limit by 3 or more hours can now result in a fine to a trucking company of $11,000 per offense with driver penalties up to $2,750 per offense. The new rules will not go into effect until July 1, 2013 to allow for a gradual retraining. One can only hope that this is the end of this rulemaking, which was cited by the Obama Administration as one of the most costly of all government regulations.

CSA, the Comprehensive Safety Analysis program, continues to evolve as it passes its first year in operation.  The scores are routinely looked at by shippers, motor carriers and plaintiff’s attorneys, to evaluate the safety of a motor carrier’s operations. The DOT did agree to modify warnings and provide disclaimers in an effort to remove the associated stigma commonly expected by warnings on carrier operations.  Unfortunately bad scoring has led to an increase in Chameleon Carriers™ as “bad carriers” seek to evade their alerts and poor operating history.  CAB is actively on the look-out to identify these types of carriers for you.  New FMCSA rules allow Out-Of-Service orders to be issued for entities which are determined to have reincarnated after prior violations however it is more difficult for the FMCSA to locate carriers who form multiple companies before one is placed out of service. With the Chameleon Detector™ CAB can help you find and close that loophole.

The CSA is now pushing all carriers to update the MCS-150 and insure that it is correct.  The Vehicle Miles Traveled (VMT) and Power Unit (PU) data from the MCS-150 is used to calculate the Unsafe Driving and Crash Indicator Behavior Analysis and Safety Improvement Category (BASIC) percentiles. Data over 2 years old will not be used and results may be skewed if the form is not updated.  The GOA issued its report on the current status of CSA, acknowledging that the FMCSA did implement many steps for enforcement interventions for at-risk carriers but others are delayed because of the delay in needed technology.  The report also indicated that the FMCSA is 2 years behind in issuing and completing the rulemaking needed to use the data and is expected to finalize the rulemaking in 2013. The FMCSA released its final review of its operational model and confirmed that it needed to make adjustments in two of the BASICs: the Cargo-Related and the Driver Fitness BASICs, indicating that they both showed a weaker relationship to crash risk than the other SMS BASICs.   They also confirmed that underreporting of crashes by states continues to be a significant problem and skews results. FMCSA expects to address these issues in a proposal to establish safety fitness determinations.  That proposal is scheduled to be published in February 2012.

As for the trucking industry’s take on CSA, an ATRI survey report indicates that carriers who self-reported having one or more BASICs above threshold were markedly more likely to experience negative changes to their shipper and broker utilization and insurance rates. Insurance costs are reported to have remained largely unchanged because of CSA scoring. Smaller carriers are apparently more closely watched then large carriers when they have BASICs above the accepted threshold. Overall, however, most carriers believed CSA represents an improvement over SafeStat, and that it will remove unsafe carriers and drivers from the industry and improve safety overall.

Sleep apnea has also been a focus of government regulations.  After initial review and analysis the FMCSA has received recommendations is to issue new guidance to medical examiners that CDL drivers with a Body Mass Index (BMI) of 35 or greater be evaluated for apnea.  Even more importantly is the recommendation that commercial drivers be immediately disqualified from driving if they have reported excessive sleepiness while driving, have experienced a crash associated with falling asleep, have an Apnea-Hypopnea Index (AHI) scores of 20 or greater (until they’re treated with a CPAP), after apnea surgery until cleared with a post-operative evaluation or being found effectively non-compliant with CPAP treatment. Additional recommendations will be issued in March and the next step will be formal rulemaking proposed by the FMCSA.

The brakes were put on the electronic on board recorder regulation this year after successful court challenges by divisions of the transportation industry.  The existing rule required carriers designated with certain levels of violations to install the recorders.  Rather than undertake efforts to correct perceived errors in the existing rules, the FMCSA has elected to withdraw the current proposed rule and head back to the drawing board for more comprehensive rule-making. The EOBR rules were cited by President Obama as another of the most costly regulations in the country, with this rule carrying a price tag of $2 billion.  We expect that we will see a new rule sometime in 2012 as the FMCSA has indicated that it is a priority.

Cell phones were completely banned for commercial vehicle operators. Although they may continue to use hands free devices, drivers found texting and using hand held phones will now face stiff penalties.

The Safe Roads Act of 2011 was introduced into Congress which seeks to establish a drug testing database that employers would have to check during the hiring process. All test results and refusals would have to be submitted to the clearinghouse and motor carriers would be required to clear any driver through the database. Employers would pay a use fee and be required to make sure that all driver applicants have been drug tested in the past three years. If a test comes back positive, the driver would have to complete a return to duty process. The employer would also have to check if the driver has refused any drug tests. After the driver is hired, the employer would be required to check that driver’s record once a year. It is expected that lobbying on both sides of this legislation will be strong as owner/operators oppose such a clearinghouse.

The FMCSA has also proposed to streamline its registration process to help it identify problem carriers.  The new proposed rule would combine the DOT system, the single state registration stem and filing system into a single online system. This would also cut out the MC number.  Apparently as part of this process the FMCSA has begun issuing DOT numbers to transportation brokers.

The Surface Transportation Board was supposed to have issued its decision on two proposed changes for household goods carriers, including the method in which notice of valuation options would be given and whether the standard .60 cents a pound would be increased to $6.00 per pound.  Although they delayed the decision mid-year –advising that it would be issued by year’s end, to date we have not seen the decision; we expect this shortly.

The safe transport of food continues to be of a concern as more and more shippers incorporate contractual provisions which render a motor carrier liable for damages to food products under a myriad of circumstances to avoid any issues or salvage and inspection even when there is no evidence of actual damage.  At the end of 2010 the Food Safety Modernization Act was signed into law and the FDA has slowly begun issuing regulations to enhance their ability to product the nation’s food supply.  The FDA can now administratively detain food the agency believes has been produced under insanitary or unsafe conditions.  The FDA will be able to detain food products that it has reason to believe are adulterated or misbranded for up to 30 days, if needed, to ensure they are kept out of the marketplace. An additional rule requires anyone importing food into the United States to inform the FDA if any country has refused entry to the same product, including food for animals. The FDA has indicated that it is gearing up to issue regulations in the near future which will impact the transportation of food products.

Hazardous materials carriers are also seeing changes in how they are classified. The FMCSA has advised that it will no longer simply use a motor carrier’s MCS-150 to determine whether a carrier should be considered a hazardous materials carrier.  Roadside inspections, which are more direct evidence of what the carrier is actually hauling, will be used to determine carrier status.  Of note is that the fact that carriers classified as haz-mat haulers are subjected to lower CSA thresholds, pushing them into the red faster.

What other government regulations do we expect in 2012? We will likely see the creation of a National Registry of Certified Medical Examiners who can conduct CDL exams and regulations for minimum driver training which will require hands on and classroom training.  We expect the proposal of a rule by the NHTSA to require limiters in heavy trucks built after 1992, as well as a proposal to require electronic stability control in vehicles. Also, regulations that would require tank haulers to make sure there is no gasoline in the loading lines of their tanks rule. Under the rule, any trailer built two years after the rule goes into effect could carry no more than 0.26 gallons in its wetlines, or have structural protection. Existing tanks would have to be equipped with purging systems.

Insurance Industry

Last year the Federal Insurance Office was created amidst much stir. Its mandate was, among other things, to monitor all aspects of the insurance industry, identify gaps in the regulation of insurers that could contribute to a systematic crisis in the industry or the U.S. financial system as a whole, coordinate federal efforts and develop federal policy on aspects of international insurance matters and consult with the states and state insurance regulators regarding insurance matters of national importance and prudential insurance matters of international importance.   Former Illinois Insurance Director Michael McRaith was tapped as first Director of the Federal Insurance Office. By year’s end the Federal Advisory Committee on Insurance had been established, with the appointment of 15 insurance experts, approximately half of whom are state insurance regulators, to serve as its first members.  January 2012 will see the first report to Congress on how to improve and modernize the United States’ system of insurance regulation. It will be interesting to hear what the Federal Insurance Office has to say.

Towers Watson Survey of Property Casualty Claims Officers reflects what we all recognize to be the main concerns of claims adjusters.  Profit and growth are the top overall business objectives.  The greatest claim challenge is workplace management, followed by technology and financial results  As we know to be so critical in this very specialized area of insurance, attracting and developing critical skill employees is difficult.  The survey indicates that the trend in claims departments is to place greater emphasis on expense management, workload adjustment and increased productivity with an eye on the centralization of claims operations for greater efficiency.  In evaluating operational metrics it was interesting to see where various groups placed their focus.  Physical damage insurers ranked salvage and subrogation as most important, while bodily injury insurers look to litigation results and general property carriers look to case cycle time and recoveries.  Predictive analytics, which has become a core focus in underwriting, is also reported as moving into the claims arena.

U.S. property/casualty insurers’ net income dropped substantially this year.  Income fell to $8 billion in a nine-month period in 2011, which is well below the $27.1 billion in the same period in 2010. Overall profitability dropped from 6.8% to 1.9%.  The overall combined ratio, which measures losses and other underwriting expenses per dollar of premium, was at 109.9% well above last year’s 101.2% according to ISO and the Property Casualty Insurers Association of America (PCI). The serious drop was caused by a large increase in net losses and loss adjustment expenses from catastrophes. ISO estimates that insurers’ net expenses from catastrophes rose to $33.2 billion in the nine-month period.  On the positive side net investment income and net realized capital gains (or losses) on investments grew to $42 billion in the nine-month period in 2011. While the numbers are quite scary, insurers are reported to be well placed and with substantial reserves to offset losses.

Net written premiums rose $10.1 billion, or 3.1%, to $334.5 billion for nine-months 2011 from $324.5 billion for nine-months 2010. Net earned premiums rose $8.1 billion, or 2.6%, to $323.8 billion from $315.7 billion. Hopefully that increased premium will carry over to the trucking insurance segment of the industry. NIP Group, Inc.’s Transportation Insurance Pricing Survey (TIPS™) for the third quarter of 2011 indicates that the majority of those surveyed believe that the rates are increasing with visible acceleration and that fewer non-specialty carriers are in the transportation book. The trend for increased rates is more pronounced in small and medium sized accounts. The survey also measures premium changes in Trucking Operations, Intermodal Carriers, Messenger/Courier Services, Ambulance/Paratransit, School Bus Contractors, Bulk Transportation, Airport Ground Transportation, Charter/Tour Bus Operators, Specialized Carriers & Riggers and Limousine Services. Rates for motor truck cargo, warehousemen’s legal and owner/operator lines unfortunately are reported flat.   With auto liability and workers compensation rates in the transportation industry on the rise it is hoped that the other inland marine lines will also begin to see an increase in rates.

Underwriting transportation insurance, whether cargo, auto or general liability, requires a specialized skill which is unlike that required in most other underwriting books.  It 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 and we applaud your efforts to understand this business and keep abreast of developments by reading these reports.  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.  While insurers are all competitors, after all it is a business, keeping quality standards high and educating the members of the industry better serves everyone.  As always we are here to help you and to train those coming up the ladder.  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

2011 has been a busy and exciting year for CAB. There have been so many changes in the motor carrier industry this year. As always, CAB has been there to help you navigate the changes – leading the way by enhancing our products to provide you the most advanced tools for in-depth motor carrier research and analysis.

Tiana Cain joined the CAB team as our AVP of Business Development this year. Tiana brings years of underwriting experience with her. Her unique insight into your everyday operations had allowed CAB to more carefully tailor our services to your needs. Many of you have no doubt met or spoken to her over the past year and will agree she brings an exciting new presence to CAB.

In 2010 we introduced our TRAC system – which remains the only system in the industry to provide you with this uniquely structured data.  Whether you are an underwriter, a claims adjuster, an SIU investigator or anyone of the other representatives of the multitude of regulatory and actuarial departments within an insurance company, CAB provides you with the data and tools you need.  In 2011 we worked diligently to implement additional features and analytics to enhance our services.

The big news in 2010 was CSA2010 (which has since been renamed CSA) and its anticipated impact on the insurance and trucking industry. Along with CSA the DOT replaced its SafeStat system with the SMS system – a system designed by the DOT to focus on enforcement of regulations. One year into the program we all have a better grasp of the true nature of CSA and SMS and their impact on the insurance and trucking industry.  In the fast paced world of insurance where failure to quickly quote an account can result in the loss of the business, underwriters are under pressure to be able to review and process the relevant data in a quick and efficient manner.  As we have all learned, that can be difficult with the setup of the government’s systems. In addition, key pieces of information relevant to underwriting such as the shipper names, inspection locations and crash and severe violations that were cited more than 24 months ago are unavailable through SMS. Unlike the government systems the CAB system was built to focus on your needs. Our reports include the information provided on the government websites as well as the additional data which is critical to your analysis and is user friendly – designed to allow you to process the data quickly and efficiently. For the true power user, the data that drives our reports can be downloaded and analyzed in Microsoft Excel, a feature that is no longer available from the government sites.

As we anticipated and predicted in the 2010 resume, the implementation of CSA has coincided with a spike in the number of Chameleon Carriers™. Chameleon Carriers™ are entities that elude DOT enforcement, and disassociate themselves from past operating history with name changes or new DOT numbers.  You have all seen the reports in the “Bits and Pieces” on the stories that continue to surface about Chameleon Carriers™ and the havoc they can wreak.  In response, we have enhanced our integrated Chameleon Carrier Tracker™ and Chameleon Carrier Detector™ features to help you indentify possible concerns and have focused on providing training to help you identify and monitor Chameleon Carriers™. Providing you with the information you need to protect your book from Chameleon Carriers™ is a top priority at CAB.

As a part of our service and valued partnership with our Premium Subscribers, we are always available to help educate and train individuals or groups 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.

The Carrier Search Page: Last year we were excited to launch our enhanced Carrier Search Page, which is the only available source for you to simultaneously search the SAFER, SMS and Licensing & Insurance databases.  This unique page allows you to search for motor carriers or brokers by utilizing different fields, including the carrier’s name, address or phone number.  In 2011, we continued to fine tune our search algorithms to maximize the engine’s ability to help you locate the carrier or entity you are searching for. In addition, we added the Carrier Preview and Chameleon Carrier™ indicators into your search results.  Our multi-point matching algorithm looks for similarities and patterns and alerts you if further research is necessary.  The search features we offer are critical to identifying the issues raised by affiliated brokerage operations, Chameleon Carriers™ or other entities that might be somehow associated with the motor carrier. In 2011 we also built a search history feature directly into the Carrier Search page for the convenience of our Premium Subscribers to be able to instantly pull up past search results.

Submission Report: The Submission Report™ continues to be the industry’s leading motor carrier analysis report. Unmatched in content, analytics and functionality, evaluation of the Submission Report™ has become a required step for many in the underwriting process.  We are very proud of the recognition the Submission Report™ has earned, and pledge that it will continue to evolve as new data become available. We welcome your suggestions and requests for features and enhancements and work diligently to implement them into the report.  In 2011 we added new customization options to the report. Insurers can now elect the data which it wants its underwriters and agents to focus on.  We also added a history tab for trend analysis, a shipper report itemizing the shippers for whom the carrier provides services, as well as new alerts and a built in VIN decoder previously available only through VITAL™.  The enhancement of the CSA section of Submission Report™ now allows you to drill-down into the various categories to evaluate violations.  The design of the CSA information in the Submission Report™ was intended to display the information in the most comprehensive and user-friendly manner possible. We also merged our radius maps into a single, interactive map which reveals inspections locations and allows you to evaluate the radius for multiple locations, critical for those motor carriers with different terminal locations. These enhancements demonstrate our commitment to offering products specifically designed for the analysis and research of motor carriers; we can’t wait to show you the exciting new features 2012 will bring to the Submission Report™.

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.comor you can upload the information through our website www.cabadvantage.com.  While our financial rating system has remained true to its core, we continually seek to find better ways of providing and displaying the information available and to draw your focus not only to the CAB rating, but also the data within the financial reports and rating history which allows you to “Know Your Insured”.  A chart and graph of our rating breakdown and the changes in that breakdown over time is available here. The ratings breakdown for 2011 was mostly stable with the prior year, with some increase in the percentage of carriers rated POOR and slight decreases with the percentages in the other main rating categories.

Data Services: CAB’s data services provide the critical information necessary to monitor your book of business.  In addition to our standardized monitoring reports, which include Filing Monitoring, Baseline, and Update Reports, we also provide an array of customized monitoring reports and data services that are tailored to your needs.  It has been exciting to see how many of our Premium Subscribers have tapped into the power of the data by integrating their systems with our data via web services, enhancing their marketing tactics through targeted market analysis reports and details, improving their loss control through specialized monitoring reports and fine tuning their pricing through historical analysis.  At CAB we are committed to ensuring that our clients maximize the benefit of a Premium Subscription. Taking full advantage of the data services aspect of your Premium Subscription is important and we are here to work with you to facilitate that process.

VITAL: Our VITAL™ system speaks for itself, and the many ways you have found to utilize its search capabilities continue to amaze us. Whether using VITAL™ to search by VIN, license number, DOT number, MC number, or other parameters the benefits continue to be discovered.  One of the many uses for VITAL™ is tracking Chameleon Carriers™ through the common use of equipment by multiple carriers.  VITAL™ is also regularly used by claims adjusters to review and analyze claims.  The VITAL™ database, which grows daily, contains over 20,000,000 inspection records, 40,000,000 inspected units and 2,000,000 crash records.  VITAL™ remains the only searchable database of its kind, and is the only place to track units by VIN or license or to view the complete history of a motor carrier or a vehicle.  Search results are provided in an intuitive, timeline structured set and can be downloaded directly from the website to a Microsoft Excel file.  Look forward to new enhancements being added to VITAL™ in 2012.

Kal Schindel and Hy Cooper might not recognize the CAB that they started in 1939 but we take great pride in knowing that we have continued to follow their mission- bringing to insurers the critical information to underwrite and manage the transportation industry.  We look to the coming year to provide us with time and opportunity to 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.  We will always recognize that education is key to informed decision making and will continue 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 2011 and we look forward to what 2012 will bring.