So possibly a trucker could save money by railing the load and reducing his/her own liability along with the insurance carrier’s liability. (If the train has an incident it’s on the railroad, not the trucker.) This should lead to lower insurance costs for the trucker. And truckers are in dire need of lower costs.
Please don’t tell me about “Geedy” insurance companies. I’m retired from Allstate and I know how insurance prices are set. It’s a very competitive line of business and any company that gets “Greedy” will quickly loose its customers.
And, another thing.
On another site there was a picture of some Hub Group reefer containers. They were of the new high cube type made possible by a new Thermo King design. So Hub Group has joined the reefer parade. That’s a big change. Hub Group was founded Phill Yeager, who, I was told, “Hated” reefers. He’s with God now, and the acquisition of reefer containers by Hub is a good change. There’s a whole lot of business out there to be gained by the railroads, so don’t be all doom and gloom.
We’ve got to see opportunities as much as we see problems.
I have to wonder if today’s culture of “everyone is a winner” might also be contributing to the issue. After all, that accident had to be someone else’s fault, right? Especially if it was that big, bad truck (and it’s company, with the deep pockets).
I’m sure the cost issues in the medical side of things aren’t helping either. A “precautionary” trip to the hospital after a collision will definitely run four figures, and possibly five, as the docs make sure that they can’t be sued for missing something. People don’t take two aspirins and “call me in the morning” any more. They want to be fixed now…
Insurance may be competitive industry, however, I think the Allstate you worked for and the Allstate of today are totally different organizations. We are living in the age of the gouge and collusion. Jack up the rates and profit from it and your comptition will seek those same levels of profit and jack up their rates so no one is left out on a island.
The business world we worked in has changed and not for the better.
Agree, although I recall my father studied this provocative 1936 book in his UofC MBA program way back in the 40s: “Life Insurance, a Legalized Racket”
No amount of truck-insurance price increase will ‘price truck freight out of business’. The cost will be passed along to those consumers who have no alternative to truck freight – essentially including all last-mile delivery service or container drayage for railborne TOFC/COFC. For a model, see the way fuel price surcharges were imposed several years ago.
If you look carefully at what he actually said, there might be savings for that portion of an intermodal trip covered by the railroad’s, rather than a truck line’s, insurance, and this might be an incentive for increased use of intermodal moves. What is left unsaid and unimplied is whether railroad insurance cost for intermodal may not be increasing also, something I have not yet looked into.
Another problem not discussed is that many of the service and performance issues with part-rail moves are not strictly cost-associated, and merely increasing the insurance cost as passed to customers may not cause them to switch modes.
I would expect only a small percentage of overall ‘truck customers’ to switch to pure rail (e.g. from siding to siding with minimal drayage) although a section of the industry that might acquire an advantage would be cross-dock facilities like the one we were discussing on CRandIC last week.
What type of mechanism do you propose that would confirm to the truckers insurance company that the railroads insurance company has assumed the risk (per trip)?
I’m assuming that the trucker will pay annual or biannual premiums, yet there needs to be a way to accurately measure and confirm the conveyance of liability to the railroad in order to give the trucker’s insurance company the comfort it requires to make some form of rebate or credit.
Obviously the trucker is still going to have to maintain some form of coverage for his payload even during the time it is in transit with the railroad, to protect him from Geedy lawyers that might be working for his customers?
Suspect this would be handled via subrogation, where the trucker’s insurance company may pay a claim but immediately goes after the railroad’s insurer for compensation and costs. Presumably the railroad insurer would be consulted before any ‘settlement’ were reached, and given the right to participate in a suit rather than settlement on terms if they disagreed on fault or amount.
I agree with you completely there. The thought process I was going through at the time, however, was more along the lines that the fact that the truck was under the umbrella of the railroad (during their portion of the trip) would not excuse the truck from the need for coverage on his payload.
So, whatever formula was devised to determine how much the trucker is to save on his premium (by using a program such as is proposed), will be more complex than just a straight proportionate share calculation.
Still, and foremost,…I’m wondering how any such savings is to be determined and applied in such a way that the truckers insurance company feels good about making the credit?
Based upon my own experiences moving state to state that required me to terminate policies earlier than full term, I recall the Geedy insurance company wanted more than just a proportionate share of the premium for the time elapsed while under their coverage.
So (I’m playing my hand here) I doubt they would want to surrender a truly proportionate share as a savings to the poor trucker.
How does the trucker communicate "well, these 50 loads traveled 100% by highway, while these other 75 loads traveled 90% by train AND 10% by highway in such a way that the insurance company accepts it and feels good about issuing a credit?
On the other hand, if the “reason” for higher nominal rates includes risk from on-road operation (or driver responsibility) the recognition of different risk when the load is running intermodal may involve lower premium amounts, perhaps quite substantial for companies with ‘higher risk’ of having unskilled drivers, operating on-road in trouble areas, etc.
The real question is ‘how competitive the market will actually be’ for trucking companies. If via tacit collusion everyone’s “market” rate goes up substantially, how far can you gouge before the threat of re-regulation gets traction? (I suspect, given the reaction to fuel surcharges, the answer is in real terms ‘quite a bit’.)
In a perfect world, an insurer would look at a given company’s track record of claims. If indeed the intermodal operation results in a lower share of claims, or lower absolute claims, then a rate-adjustment program “might” be an option for business generation … the problem being that the first insurer through that door stampedes everyone into lower rates, which is a war no insurer probably wants.
If the subrogation process for railborne claims is immediate and positive, the same review process may apply even if the relative number of claims should be high for a given period, for any reason beyond the trucking company’s control. This might further lead to mandatory TOFC/COFC routings to avoid ‘problem’ carriers or areas, even if the overall tariff should be higher.
Success in business is much less about keeping costs down and more about one’s ability to pass those costs on to the customer. Insurance rates are going up for everyone… even if you’re a good operator the cost is going up. So we pass them along, and in three months from now Joe/Jane Consumer will be paying more at Walmart. Not a big deal.
“Please don’t tell me about “Geedy” insurance companies. I’m retired from Allstate and I know how insurance prices are set. It’s a very competitive line of business and any company that gets “Greedy” will quickly loose its customers.”
My experience with Allstate seems to indicate greed. I had Allstate auto insurance since I started to drive, over 50 years ago. Every year there were small increases which I accepted.When I bought two new cars a few years ago I thought the large increase was excessive and went to an insurance agent looking for new coverage. The agent looked at the rate that Allstate wanted and asked if I had multiple accidents or dui’s. None of that applied. She found better coverage with another company for less than half the cost.
The state of Pennsylvania claimed that Allstate was using a program to determine how much of a rate increase a customer would tolerate before changing insurance companies. Maybe they all do that. Their business is to make money. It’s been said that the best way for customers to hold their costs down is to switch insurers every few years. They all seem to offer better rates for new customers.
I was thinking the same thing, this would be an ideal topic for stco.
I don’t think the insurance companies are going to give squat for a credit to single owner-operators based upon a pass-off to rail…because the Trucker isn’t going to go home and sit idle once the load has been passed. He’s going to go out and find another load to haul and will need coverage for that.