A Poll: Should commercial carriers be allowed access to Facility Insurance?

Should commercial carriers be allowed access to Facility Insurance on a time-limited basis?

  • Yes, commercial carriers should be allowed access to Facility Insurance on a time-limited basis.

    Votes: 9 52.9%

  • No, commercial carriers should not be allowed access to Facility Insurance at all.

    Votes: 8 47.1%
  • Total voters
    17
Michael Ludwig

Michael Ludwig

Well-Known Member
Jul 6, 2009
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Simcoe, ON
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The OTA accepts that commercial carriers should have access to Facility Insurance in principle and wants to make the stay short, expensive, and conditional.

I reject this premise. I believe that a carrier the voluntary market has refused has been correctly judged unfit, and time-limited access to Facility Insurance just defers that verdict while still leaving the public at risk, and legitimate carriers paying for their mistakes.

To be fair, open, and honest, this opinion is a double edged sword. What if you, or your company, screws up so bad that your insurance carrier drops you, or the market turns and your insurance carrier gets out of the truck insurance business? You, or your company, could, possibly through no fault of your own, be temporarily left with nowhere to go for insurance other than Facility Insurance.

With this in mind I would like everyone to consider the above and respond to the following poll;
 
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I would like to have a hard definition of 'time-limited'. I might be persuaded if it were 3 months, while a carrier is getting quotes and solidifying the relationship with a new insurer, but then the administrative work is a nightmare.
I think that if they got rid of commercial facility, other players may enter the field of insurance. For the time being, a newcomer would be stuck with an open-ended facility bill that they have to participate in.
If facility was toasted, the good carriers would thrive and poor carriers would be forced to change their ways or get cut loose.

Whatever happens, facility, in its current form, has to change.
 
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This is just going to turn into a carriers who subsidize it vs. brokers who don't, right?
 
It's not much relevant now as there are other insurance companies offering policies for new and questionable carriers.
 
**cracks knuckles**

I love that the OTA and “Facility Task Force” is discussing this without truly understand the insurance landscape within transportation.

On face value, Facility is not where you want to end up. Usually for those carriers who lack compliance understanding or frankly, caring.

Or due to a carrier’s bad loss history, some which are bad luck and some who truly don’t care about what carnage they cause. Keep in mind, those types of operators (compliance and bad losses) have friends in the industry and are constantly playing games, moving from “Plan A” to “ Plan B” without a hiccup. Moreso the former than the latter.

Then you have the 3rd category; no market appetite.

Is it fair to put a single unit car carrier into this group because there is truly no appetite for car carriers in ON? Or how about boat haulers, or scrap metal haulers (just to name a few).

I think the answer to this is complex and I don’t fully know what it is. But to brain storm;

Facility should look to rerate operators who have bad crash values. Currently, they only surcharge (only 5%) after the 2nd accident on a PER VEHICLE basis. Vs the rest of the market who surcharges the entire fleet, based on the value of the loss to ensure profitability.

Facility should create a subset market for those who are in the third group, no market appetite. It’s not fair some of these guys are put into Facility because no market likes that type of business.

Those who have compliance issues should have access to only a 6 month policy and only renewed or moved into the standard market if intervening steps are taken to lower scores.

I’ve also suggested that Facility eliminate the use of the OPFC 49 which allows insured to opt out of DCPD (Ontarios no fault coverage for NAF accidents). They’ve told me, because they are a licensed insurer in ON, they Must offer that form (which saves insureds approx 40% of their Facility rates).

This isn’t an exhaustive list, just to generate some ideas and understanding. Facility should also be tied somehow into the MTO so records can be shared to help eliminate these chameleon carriers and mandatory fines for those brothers, uncles and cousins who help support them with their plan B’s and C’s.

I’d love to hear some feedback or additional ideas on how to stop the growing problem with Facility.
 
Last edited:
Michael Ludwig said:
End Facility.
... and if there are trucking models for which insurers truly do not have an appetite, then maybe there is a very good reason for that.
Click to expand...
Playing devils advocate, if I run a company with a fleet of trucks hauling scrap or autos or boats then in my golden years I decide that I only want to run 1-2 trucks, the insurers look at the risk differently. Often running into “filed rules” issues, where the insurer can no longer offer coverage.

So that carrier who has been operating safely and profitably (for the insurer) for a dozen or so years would no longer have an option for insurance?

These are the nuances of the insurance market in trucking. Facility does have a place in the market, but it shouldn’t be a backstop for shitty carriers who don’t want to follow the rules.
 
Then the "filed rules" is the area where the market itself needs to change, and in your golden years you need to understand that you cannot have the same insurance rates for 1 or 2 trucks that you had with an entire fleet.
Facility does not have a place in the market where commercial entities are concerned.
The only argument that would convince me otherwise would be the argument that a major insurer suddenly gets out of the market and leaves dozens, if not hundreds, of carriers stranded.
Furthermore, there is no place for public insurance at all for commercial entities. i.e. ICBC, Manitoba, etc.
For aeons the private insurance industry has been the backstop protecting the general motoring public from shitty carriers. We need to get back to that. The only way to do that is to eliminate Facility and Public Insurance altogether.
Maybe, down the road a bit, we can get back to it, but for now Facility and Public Insurance has to go the way of the dinosaur. Extinct.
 
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TRKINSURE said:
Is it fair to put a single unit car carrier into this group because there is truly no appetite for car carriers in ON? Or how about boat haulers, or scrap metal haulers (just to name a few).
Click to expand...

The majority of premium rate is the liability risk. The commodity that you are hauling doesn't really change that part of the premium.
The industry, rightfully so, charges a premium on car and boat haulers because of the miniscule amount of 'damage' that gets sent to the insurance policy. A little scratch on a new car or a strap mark on a boat, needs to get sent to a body repair shop costing way too much to resolve the claim. For those carriers wanting to manage that better, they can get a better cost for their cargo insurance. Maybe they need to up their deductible to offset the costs.
Scrap metal haulers have the reputation of not managing their risks well. They haul their weird sized goods on improper equipment and fail to properly secure the freight. The insurance industry does not like them because when scrap metal comes off the trailer and hits a 3rd party, the optics just look bad. Flat bed haulers have the same challenge.

The reality is that there is no appetite for those types of cargos because of the historical claims. Actuaries use whatever information they can get their hands on. If it is 20 years old, then so be it. Car haulers were all over the place in the 80's - they made tons of money and didn't care about the claims. Then the auto makers started moving everything by rail (because of the damage) and the number of cars being moved by truck diminished. I'm sure some of that old historical data is still utilized because there is no new information to lean on.

I'm sure a broker can find a market insurer. There is always someone who will do it for a price - the carrier just won't like the price. Facility should not help with that issue. That is why we are having this discussion. Carriers do not like the price they're being offered and somehow, FACILITY OFFERS a lower price point.
 
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