NEWS & REPORTS

ATRI: VALUE OF RISK AND SAFETY PER ANNUAL OPERATING EXPENSE

Aug 19, 2024 | Reports

Doug Marcello

WHY IT MATTERS:  The value of safety and risk is not theoretical.  ATRI’s
Annual Operational Cost of Trucking Study quantifies its value and importance to the bottom line.  And with anticipated premium increases, it is now more vital than ever to reduce risk so that an insurance captive is a financially viable alternative for your company.

THE BIG PICTURE:  I recently wrote that safety was an investment, not a cost.  Management and operations should not think of it as a burden, but as a protection of the bottom line.

This value is brought home by ATRI’s Annual Operational Cost of Trucking Study for 2024.  Get a copy at An Analysis of the Operational Costs of Trucking: 2024 Update (truckingresearch.org)

Insurance and risk are major expenses.  The report quantifies the amount and demonstrates the crucial need to act to minimize this exposure.

THE NUMBERS:  For those in your organization that thrive on the quantifiable—you know, “if you can’t count it, it doesn’t exist—here are some data points for them.  And these do not include PD coverage.

AVERAGE MARGINAL COST OF INSURANCE PREMIUM:  $.099 per mile or $3.99 per hour.

Think about it:  Your insurance costs you ten cent for every mile you run.  Four dollars for every hour your truck operates.

Consider that in relation to your rates.  And your bottom line.

The bad news—in 2014 premiums were $.071/mile and $2.86/hour.  That’s an increase of almost three cents per mile and almost $1.20/hour.

I became an attorney to avoid math, so check me. And I defer to the mathematically inclined to do the percentages.

These costs per mile vary per region of the country:

-Midwest: $0.083

-Northeast: $0.092

-Southeast:  $0.104

-Southwest:  $0.097

-West:  $0.105

And LTL’s—average cost at $0.045/mile.

-INCREASE-2022-2023:  Insurance premiums increased 12.5% in 2023 from the prior year.  ATRI did the math, so it is correct.

The only item to increase more was tolls (21.4%).  Wages “only” increased 7.6% and benefits only 2.7%.

Worse news—the “word” is that last year’s premium increase percentage will pale in comparison to this year.  I’m hearing increases of 15%-25% this year.

-TOTAL COST OF RISK:  Premiums are just the beginning.  If you’ve read my articles or heard me talk, it is the Total Cost of Risk that matters.

More importantly, it was a key element of the ATRI study on Impact of Rising Insurance Costs on the Trucking Industry  The Impact of Rising Insurance Costs on the Trucking Industry (truckingresearch.org)

“Total Cost of Risk”?  Premium plus deductible/retention plus cost of risk reduction technology.

ATRI analyzed the first two—premium plus the out-of-pocket deductible/retention amount.  The overall industry average out-of-pocket expense per mile was $0.036 in 2023 (or $1.44 per hour). That would make a total (premiums + out-of-pocket expenses) of $0.135 per mile or $5.43 per hour.

What it found per the combined premium plus out-of-pocket expenses based on fleet size, was as follows:

-Less than 5 trucks:  $0.175/mile

-5-25 trucks:  $0.204/mile

-26-100 trucks:  $0.171/mile

-101-250 trucks: $0.136/mile

-251-1,000 trucks:  $0.132/mile

-More than 1,000:  $0.110/mile

ACTION:  Inactivity is not an option.  You must attack the problem as you would other costs. You’ve read and heard me before:

-Proactively prepare to avoid exposure—avoid “Death by Dogma”;

-Attack the “Dark Period” when billboard attorneys gin up damages;

-Respond immediately—prepare today for accident response

-Litigate aggressively and be prepared to go to trial.

BOTTOM LINE:  It’s the bottom line.  A bottom line impacted by insurance premiums and out-of-pocket payments.  Further proof that safety is not an expense as much as an investment.

About the Author

NEWS & REPORTS

2024 Commercial Vehicle Safety Symposium

Presentations from the 2024 Pennsylvania Commercial Vehicle Safety Symposium; August 2024 FMCSA Update NDASA Drug and Alcohol Testing Update Doug Marcello; Cost of Noncompliance Presentation Richard C. Kelly; Civil Liability  

Chevron deference is gone. What does that mean for trucking?

A world without Chevron deference empowers courts to ignore agencies’ interpretations of their own statutory authority, bringing new vulnerability to emissions regulations, FMCSA rulemaking, and more.   Jeremy Wolfe The Supreme Court in June overruled Chevron...

4 Core Metrics Safety Directors Should Be Looking At Each Week

Scott Rea You know the old saying: “You can’t manage what you don’t measure?” As a Safety Director tasked with overseeing recruiting, compliance, and safety efforts in your company, you must use metrics to avoid wasting time and money, keep auditors and plaintiff’s...

CATEGORIES