Commercial Motor Fleet Operators Under New Scrutiny

by Sterling Risk Advisors

Operators of commercial motor vehicle fleets should be aware that an initiative enacted a year-and-a-half ago is dramatically impacting the way insurance carriers and prospective customers size up a fleet operator’s safety program.

The initiative, called CSA 2010, mandates that fleet operators disclose – online and available to the public – a much more robust record of their safety history than was ever required before.

Today, less than two years later, such information is playing a significant role in the way insurance carriers develop rates for commercial motor fleet operators and the way potential customers determine whether to do business with such companies.

I believe it is vital that anyone with a commercial vehicle fleet do all the things necessary to understand CSA 2010 and its impact on their company.

The Federal Motor Carrier Safety Administration (FMCSA) rolled out CSA 2010 in December of 2010.  CSA stands for Compliance, Safety, Accountability.  The CSA 2010 initiative was established to provide a new national system to help make roads safer for commercial motor operators, drivers, and the general public.  The types of operators affected by CSA 2010 are fleets that have a DOT # such as for-hire, private, flatbed, van, utility, construction, etc.  Whether you are a manufacturer with one commercial motor vehicle, a construction company with five commercial motor vehicles, or a for-hire trucking company with 1,000 commercial motor vehicles, CSA 2010 will impact the way your company is seen publicly in its fleet safety program.

Prior to CSA, the FMCSA used a system called SafeStat to monitor the safety performance of commercial motor vehicle fleets.  Through the CSA 2010 Initiative, the FMCSA designed the new operating system called Safety Measurement System (SMS), which is publicly accessible via the Safety And Fitness Electronic Records System (SAFER) website www.safersys.org. SMS provides a more robust tool in measuring the on-road safety performance of commercial fleets and drivers by identifying data from roadside inspections, including all safety violations, state reported crashes, and the Federal motor carrier census.

The following categories called “Behavior Analysis and Safety Improvement Categories (BASICs)” provide a 24-month snapshot on the carrier: Unsafe Driving, Fatigued Driving (Hours of Service), Driver Fitness, Controlled Substances and Alcohol, Vehicle Maintenance, Cargo-Related, and Crash Indicator.  Under each BASIC, an intervention level has been established for a fleet operator to monitor its drivers’ roadside inspection data.  When an operator rises above its intervention level, they will be considered over threshold in the BASIC, given a warning letter by FMCSA, and/or receive a future investigation by FMCSA.

The greatest reasons why fleet operators are monitoring their SMS data and improving internal safety programs are to keep drivers and the public safe as well as make sure that they minimize fines and penalties to efficiently run their businesses.  However, due to the detail of SMS and its public accessibility, many groups such as insurance companies and current/prospective customers of each fleet operating company are using the SMS data as a resource to determine an operator’s safety program.

For instance, insurance companies are using SMS as a tool in determining their interest in doing business with a current or prospective insured and their ability in pricing an insured’s insurance program.  There have been many areas of conversation on whether the SMS data is accurately portraying every operator’s fleet safety program effectively and equally, but the reality is the system is publicly accessible and it’s a quick and easy way of determining fleet safety details on a commercial fleet.  I have seen companies that have one roadside inspection with one safety violation be over threshold in a BASIC.  On the other hand, I have seen companies with over 1,000 roadside inspections and over 100 safety violations be under threshold in a BASIC.  Likewise, it is very important to have a quality insurance advisor such as a broker or agent specialized in fleet safety that can dig into the details of the SMS data and explain the true story of your company’s SMS history to the insurance underwriting teams.

Furthermore, since the system is publicly accessible, any individual or business can type in a fleet operator’s DOT #, MC#, and/or company name and see the results of the company’s SMS performance.  Due to the detail of the system, numerous fleet operators are getting requirements by current and prospective customers to maintain and display favorable SMS results.   Common requirements that I have seen are customers requesting their fleet operators to have a rating of Satisfactory and no BASIC over threshold.  Do the customers mandating SMS requirements make exceptions to their prerequisites?  Sure, but the fleet operator usually has to explain to their customer, while being on close watch with them, how their safety program is improving and steps on how their SMS results will improve.  I have seen a fleet operator’s customers spearhead SMS requirements not to make commerce more difficult, but as a way for their own risk management department, safety management team, insurance company and legal counsel to protect their own liabilities.  The SMS results, whether they completely exemplify a company’s true fleet safety program, do provide lots of detail, and it is very important to make sure exceptions remain unserious in nature and exception frequency trends downward.

To conclude, it is very important to remember that the FMCSA, insurance companies, your customers, and the general public can quickly pull up your results online and form an opinion of your company’s safety performance in seconds.  It is recommended to actively check your company’s SMS results, proactively put systems in place to minimize exceptions, add CSA 2010 and SMS to your fleet safety and disciplinary programs, and have the goal to use SMS performance as a proactive sales tool showing your company’s topnotch safety program.

Garret Lazenby is a broker with Sterling Risk Advisors specializing in risk management and insurance for  transportation, logistics, and supply chain companies. 

He can be reached at: (678)  424-6505; glazenby@sterlingriskadvisors.com

Check out Garret’s bio and experience at http://www.sterlingriskadvisors.com/garret-lazenby.php

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