A new government system monitoring motor-carrier safety willachieve a long-term goal of reducing crashes, experts agree, but itmay have a short-term impact of driving up loss severity forinattentive insurance carriers, some warn.

Transportation insurers are going to have more items to check asthe Federal Motor Carrier Safety Administration (FMCSA), a divisionof the U.S. Department of Transportation, rolls out itsComprehensive Safety Analysis initiative–a new process formonitoring and enforcing compliance with more than 900 existinggovernment safety regulations, according to Tommy Ruke, presidentof Insurance Business Consultants in Fort Myer, Fla.

Mr. Ruke, an instructor of introductory and advanced courses ontrucking insurance for specialty agents and insurance carriers,referred specifically to the need to check for "warning letters"and evidence of other types of interventions that the FMCSA willuse to respond to deficient safety practices as part of CSA (morecommonly known as CSA 2010, because of its initially proposed 2010full-launch date).

What if an insured trucking firm gets such a warning and doesnothing about correcting problems identified by the FMCSA, Mr. Rukeasked–going on to envision what might happen if that trucker windsup in court a few months down the road because of an accidentcaused by the same conditions.

"How are you going to defend those suits?" he asked. "That'spunitive damages. It's big dollars," he said, highlighting apotential negative consequence for insurers.

Referring to a new set of safety measures known as safetyfitness determinations, or SFDs, which will be assigned under CSA,Joe Hutelmyer, president of AmWINS Transportation Underwriters inBurlington, N.C., expressed a similar concern.

"How would you like to defend an insured that the federalgovernment says is 'unfit,'" he asked, referring to the lowest ofthe three SFDs, which are "continue to operate," "marginal" or"unfit."

"Almost in our upfront underwriting, we're going to have tostipulate that our trucking clients maintain a rating of 'continueto operate' or 'marginal'–and if the rating is 'unfit,' then we'regoing to have to be able to get off," Mr. Hutelmyer said.

While FMCSA did not respond to an NU query before presstime about whether the operations of "unfit" motor carriers wouldbe immediately suspended, Mr. Hutelmyer and other insurance expertsbelieve that they will still be allowed to operate in advance of acomplete evaluation by authorities.

"Probably every time they pass a weigh station, they'll beinspected," Mr. Hutelmyer said, raising concerns from shippers thattheir goods may be sitting out in inspection stations rather thanbeing delivered. "We're seeing shippers already taking a proactiveapproach and requiring that anybody hauling for them maintain'continue to operate' or 'marginal' ratings," he noted.

The two men and other trucking insurance specialists were quickto point out that in spite of these concerns, on balance theybelieve the implications of CSA are overwhelmingly positive forinsurers, motor carriers and the general public. (For more detailsof how CSA will work, see the related article on page 14 and thebrief bulleted outline contained in this article below.)

"We won't know until we actually get our hands on the data,"[but] there's a general feeling [among] insurance carriers thatthings are going to get better as a result of CSA," according toDeane Sager, trucking industry specialist for Northland Insurancein St. Paul, Minn. "Even the American Trucking Association backsCSA. I have yet to talk to anybody who sees the information CSAprovides as a bad thing."

One of the FMCSA's stated goals is to achieve a greaterreduction in large truck and bus crashes, noted Mr. Sager. "I thinkeverybody agrees the overall effect is going to be positive for thetrucking industry," he said.

SAFER ROADS AHEAD

Among the positive aspects of CSA that experts highlighted forNU are:

o Greater focus on driver behavior in a newDriver Safety Measurement System, or DSMS. The DSMS and a CSMS, orCarrier Safety Measurement system, will replace FMCSA's currentsystem, known as SafeStat, which evaluates carriers only.

o More frequent scoring of driver and motorcarriers using a system of six Behavior Analysis andSafety Improvement Categories, or BASICs, and a crash indicator,based on reportable accidents.

Scores on the BASICs, such as "driver fitness" and "fatigueddriving," are updated monthly, and for motor carriers, performancemeasures will be "normalized"–in other words, they will beevaluated against peer companies through percentile rankings. Peerswill be determined based on factors such as the number of powerunits and miles driven.

o A higher level of contact from enforcersthrough early interventions such as warning letters and off-siteinterventions, as well as targeted on-site interventions focused onspecific safety issues, instead of full-blown complianceaudits.

"Before CSA, a motor carrier's interaction with the DOT waspretty negligible," Mr. Sager said–noting, for example, thatinvolvement in a fatal accident would flag a trucking company for afull compliance review.

Now with the same amount of people, the DOT–based on [SMS]scores–will be able to send out a letter instead of performing afull three-to-four-day compliance review. The letter will tell themotor carrier what areas it is deficient in and will require thecarrier to respond to a plan to correct the deficiency, hesaid.

"So where a DOT officer could see 1- or 2 percent of motorcarriers in a state in a given year, their touches now will bemultiple-times higher," Mr. Sager said.

Bob Hart, risk control specialist for Northand, explained thatunder the current SafeStat system, only data trackingout-of-service violations and moving violations from roadsideinspections was used and organized into four broad categories orSafety Evaluation Areas–accident, driver, vehicle and safetymanagement.

In contrast, CSA's SMS will emphasize on-road performance byusing all safety-based inspection violations to calculate BASICs,and there will be a more direct link between the ratings andinterventions.

Before CSA, a DOT officer might perform a roadside inspectionfor trucks whose carriers had SafeStat scores in the 75-to-100range, Mr. Ruke said. "But the officer had to have a reason to putthe DOT number into the system" to see the score–for example, if atruck was going too fast or its loads weren't properly secured.

That inspection could turn up areas that need to be improved, orthe DOT officer could even put a truck out of service until theunsafe condition was corrected. Some conditions also generatedfines, but none of this was a factor in the FMCSA rating of atrucking company, he said.

The only time a trucking company got a rating that under the oldsystem was either "satisfactory," "unsatisfactory," or"conditional" was when an FMCSA officer knocked on a carrier's doorto perform an on-site, multiday compliance review, so the two weredisconnected, he explained.

"The FMCSA recognized that the old system was a reactive system.They really didn't pay attention to a motor carrier until they hadgotten into trouble and had created crashes or instances that theyhad to investigate," he said. "The new system will be moreproactive and have early intervention."

Northland experts speaking during a webinar earlier this yearsaid that FMCSA will respond initially to carriers that have one ormore deficient BASICs with warning letters and targeted roadsideinspections.

Intermediate levels of intervention–such as off-siteinvestigations (allowing motor carriers to send documentation) andtargeted on-site investigations will be used when deficiencies showup in two or fewer BASICs, while full-blown audits are reserved forthose with continually deficient BASICs, worsening multiple BASICsand fatal crashes or written complaints, they added.

Through this process, the FMCSA expects to perform seven-to-10times more interventions overall, they said.

Another facet of CSA that should mean safer highways is the"normalization" or percentile ranking process, which works likegrading curves used in schools.

"You're going to be compared against your peers, and when thebad ones either get better or go out of business, then you've gotto get better to stay above the numbers," observed Mr. Ruke. "It'sa self-fulfilling prophecy."

THE ROLLOUT BEGINS

Mr. Hart said actual scores started to be released in moststates at the beginning of August, allowing motor carriers a firstlook at scores relative to peers. Initial warning letters won't begoing out until December.

"Trucking companies should make every effort to find out wherethey stand," he said, noting that they should also take advantageof the scoring preview to identify if any data used to developscores is inaccurate, such as an accident or a violation chargedfor somebody who never worked for the company. (See pages 14 and 19for more on exactly what data motor carriers and third parties canaccess under CSA.)

"Based on communication with some of our customers, that hashappened," he said. Mr. Sager explained that a truck motor carriermay be pulling a trailer with a different name on the side, whichis mistakenly recorded by a police officer on a report at anaccident scene.

Robert Moseley, a transportation attorney with Smith MooreLeatherwood in Greenville, S.C., highlighted existing flaws inroadside inspection data under SafeStat and expressed concerns thatproblems could persist as CSA moves forward. "The data is still thedata. It is just being organized and treated differently," he said,suggesting that an existing system to handle discrepancies–aprogram known as Data Q–is ineffective.

"The way it should work is you should have the ability to appealthose decisions–this is not my truck, not my driver, whatever. Butthe problem is that you're giving an appeal to the same guys thatgave you the ticket," he said.

The Northland specialists reported, however, that under CSA2010, there's a process that makes it easy to question data issues,and they already have seen it work well for customers across thecountry.

As the rollout moves ahead, and as FMCSA starts using allroadside inspection data for motor carrier evaluations, expertsalso differ on the question of whether firms that were rated"satisfactory" under SafeStat will see their ratings move to"marginal" or "unfit" under CSA?

"I don't think anybody knows," said John Schrunck Sr., presidentof Professional Safety Consulting in Lincoln, Neb., a firm thatperforms motor carrier risk evaluations for firms themselves andfor insurers.

"Nobody, including FMCSA, felt really good about the reliabilityof information [under SafeStat], and once they had it, and finallygot out to a very small percentage of motor carriers to look atthose operations, so much time has passed," he said.

He added that "the complexity of the entire program made it kindof a dinosaur to work with," contrasting that with the new system,which he suspects will feature the automated production of warningletters and more cursory safety audits performed in DOT officeswith information at hand rather than traveling to motor carrierlocations.

"If I were an insurance carrier today, I would watch it, I wouldlearn about it, but I would not cancel a bunch of insureds becauselow and behold they got a warning letter or something else," hesaid.

"We've seen motor carriers when we went in after the DOT auditand we wondered why they passed," he reasoned, suggesting there wassome subjectivity in the on-site audit process in the past.

"We have seen some very insurable operations that have gotten abad rap, and conversely, some with great statistics that were anaccident waiting to happen and probably already had," Mr. Schrunksaid.

Mr. Moseley believes "CSA formulas are designed so that moremotor carriers fail."

"From my practicing standpoint, we're going to see more in thenature of appeals from FMCSA decisions, ratings and inspections.The enforcement side is going to heat up," he predicted.

"I certainly don't disagree with the FMCSA's desire tocontinually do better, but our safety statistics over the lastseveral years are really as good as they've ever been. So we wereheading in that direction before CSA came about," he said, echoingan observation made by every transportation expert interviewed forthis article, as well as a recent report from the DOT itself. (Seerelated article, http://bit.ly/aSQcN3.)

At Northland, Mr. Sager and Mr. Hart highlighted awareness ofCSA as a factor that will improve recent favorable trends.

"The old system, SafeStat, was not in the forefront of a motorcarrier's mind," Mr. Sager said. "You didn't think about it all thetime because it didn't change very often and it wasn't brought upvery often."

With CSA, however, "the whole debate is front and center, andliterally in the minds now of everyone," he said, referring to thewebinar and seminars presented by insurers and by all 50 statetrucking associations.

Mr. Hart reported that CSA is one of the first topics customersbring up when he visits. "I think just that by itself, more peopletaking this more seriously will begin to reduce accidents," hesaid.