An urgent need exists for more comprehensive training of new commercial truck drivers, says a new report commissioned by the Insurance Bureau of Canada.
“Canada’s trucking sector is critical to the success of our economy, transporting over 90% of all food, consumer goods, and materials to consumers across the country,” Celyeste Power, president and CEO of IBC, says of the report’s findings. “The property and casualty insurance industry is working closely with the trucking sector to find solutions to some of the challenges it currently faces, including driver shortages and access to adequate training and risk management.
“This third-party report echoes many of the recommendations that our industry has put forward and we encourage governments across the country to use this report as a call to action to update and improve training and enforcement standards.”
IBC commissioned MNP, a Canadian professional services firm, to identify key factors driving up the cost of insurance for commercial truck operators. MNP conducted a review of driver training programs in various Canadian and international jurisdictions, offering proposals to improve training requirements.
MNP found truck drivers with less than three years of experience are more likely to be involved in a crash. For example, truck drivers in Alberta, Ontario, and the Atlantic provinces with two or fewer years of driving experience were involved in between two and three collisions per 100 vehicles in 2022, the report found. In contrast, drivers with six years of experience got involved in about one crash per 100 vehicles.
Related: How new truckers can get a better ‘insurance experience’
The increased risk of a crash also means an increased risk in crash severity – and thus claims costs for the insurer, the report found.
“Collisions involving heavy loads or dangerous goods tend to be more severe and have potential for greater damage. As a result, the level of required liability coverage increases when these goods are transported, affecting premiums.”
For truck drivers with driving records of one year or less, the average severity of a third-party collision liability claim hovers around the $30,000 mark. In contrast, for drivers with more than seven years of experience, the average severity of the third-party liability claim is closer to $10,000.
The additional frequency and severity of claims for inexperienced drivers means premiums for third-party liability coverage are higher for new commercial truck drivers than for experienced drivers – to the tune of almost $4,000 more per year.
For example, new commercial truck drivers with less than a year of experience in 2022 paid an average annual insurance premium covering third-party liability of up to $5,000. That drops to just under $3,000 for new drivers with at least a year of experience. For drivers with seven years of experience, third-party liability premiums were below $1,000.
“Premiums for vehicles travelling outside of Canada are impacted by exposure to excessive jury verdicts in the United States – court verdicts where juries award plaintiffs exceptionally high amounts,” the report states. This particularly affects truck drivers in Alberta.
MNP goes on to show the impact of improved training on the reduction of claims costs for an inexperienced truck driver.
“To illustrate the impact of improvements in road safety on claim costs, we estimated the reduction in claim costs for each accident avoided for drivers with three years of experience driving a logging truck in Alberta,” the report states.
A table references a projected reduction in claims costs for each accident avoided during the policy years for 2015 through 2018. The report observes claims costs were particularly high in Alberta in 2015, and then levelled off in 2016-18.
“Each accident avoided in 2015 would have reduced claim costs per policy by approximately $581.80,” MNP says in its report. “Between 2016 and 2018, each accident avoided would have reduced claim costs per policy by between $100 and $125.
“Reductions in claim costs would be reflected in adjustments to insurance premiums.”
How to avoid accidents by new commercial truck drivers? The report makes several training and regulatory changes, which Canadian Underwriter will cover in detail tomorrow.
Feature image courtesy of iStock.com/DOUGBERRY
