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R&R Insurance Blog

How are SMS Scores used by Insurance Underwriters?

Posted by Brian Balongue

BASICs OverviewNot long ago, I can recall when it seemed like only the larger, national, insurance carriers specializing in trucking insurance would take into consideration SafeStat Scores in underwriting a trucking Risk. This included carriers like Great West, Northland, Lancer, Sentry, Carolina Casualty, Continental Western, etc. At the same time very few, if any of the underwriters working for the smaller regional carriers, at least in the Upper Midwest, knew where to look for this information let alone how to interpret it. When I speak of smaller regional carriers, I’m talking about companies like Acuity, Integrity, Secura, General Casualty, etc. From my standpoint as a trucking insurance agent, this was a good thing, the less they knew, the easier it was for me to place a piece business with them especially business that was marginal from a SafeStat standpoint but that may have had good loss experience. Well, those days are over thanks to the Central Analysis Bureau.

Now, every insurance carrier we access specializing in trucking insurance subscribes to what is termed a "CAB Submission Report" from the Central Analysis Bureau. To put it in a nutshell, this is a report available by subscription. They gather their information from all of the various FMCSA websites including SAFER, SMS, and Licensing and Insurance websites. They take that information and put it in a nice easy to read report focusing on key points for underwriting review. Even the novice trucking underwriter will pick up on problem areas. In addition to pointing out all of the relevant information, the underwriters can sign up for alerts and be made aware if there are any serious violations or changes in scores within a particular category of SMS scores. For the first time in my career, I have actually had companies cancel policies, not because of loss problems, but strictly because of a conditional ratings and SMS scores.

  1. How are the underwriters using this information? I asked some of my underwriters this same question and here are some of my responses:
    - As an initial screen of eligibility
    - To verify radius of operation and type of operation whether contract carrier, common, or broker
    - Type of commodities hauled
    - Prior insurance carrier information (do you shift your insurance frequently?) - also number of cancellations, etc
    - CSA rating
    - Out of Service - how often and why
    - Number of trucks and total mileage - is this trending up, down, or stable
    - Any hazmat indications and who are they shipping for? They will be looking for travel in higher population density areas.
  2. Pricing, higher CSA scores translate into higher rates; lower CSA scores translate into more favorable rates.
  3. Underwriters will use this report to see if there are any other operations that had authority at the same address. They're checking to see if there were any chameleon carriers operating under a different name. They will check the vehicles listed on the inspection reports with those submitted on the equipment list.

Insurance underwriters are now using this as one of the tools in their tool box. Some companies are even imposing specific scoring criteria. It’s more important now more than ever to be constantly trying to improve these scores. As Will Rogers said, “even if you’re on the right track, you’ll get run over if you just sit there.” In these economic times, it’s more important than ever to partner with people who can dramatically affect your bottom line. This is done through knowledge, resources, and ingenuity. Contact me to discuss how we can work together to lower your risk and save you money.

Topics: Fleet Safety, Business Insurance