By George Spencer
“You may feel like it’s an FMCSA investigation, but that’s not our goal,” said Bob Crescenzo, vice president of loss control and safety at ABA member Lancer Insurance Co. He recently led a seminar on what motorcoach operators should expect during an insurance inspection/audit review. He addressed delegates at the annual meeting of the North Carolina, Virginia, and South Carolina motorcoach associations in Roanoke this past Sept. 16–20.
“Our goal is to create a communication process,” said Crescenzo. “We’re not the IRS or the FMCSA. We’re partners with you and, as such, we’ll ask to see your policies and procedures and such things as logs for drivers from the past few days, CSA scores, records of all FMCSA investigations, and look at your website. When we walk in, we have an idea of what we want to do.”
According to Crescenzo, it’s all about risk management. “That’s the identification, understanding, and reduction of risk with the goal of spending less money on claims,” he said. “The audit should be a win-win for both the operator and its insurer.
“The purpose is to get to know your company and how its operations work, to review its policies and procedures and see how they relate to your CSA scores, and to put that together in a way that allows for recommendations and an action plan,” he added.
Crescenzo reminded attendees that an insurance company’s “purpose is to be your partner, so we can all have the same goals and objections—to control risk and reduce claims and save everyone as much risk and claim expense as possible.”
From his point of view, if the initial underwriting process goes smoothly, it sets the stage for a solid working relationship.
“An underwriter often looks for more than what is requested on your insurance application,” said Crescenzo. Typically, an underwriter will be interested in any or all of the following:
- A company’s historical vehicle types, how many it owns, and their mileage.
- Historical driver information and where those drivers worked before they came to your company.
- How vehicles are used (i.e., for charters, tours, fixed routes, or events).
- If a company expansion or contraction is anticipated, resulting in a significant addition or deletion of vehicles, respectively.
- Financial statements/information. An insurer will want to know if an operator is highly leveraged or if it has a history of financial stability.
- Website information. Is your website for marketing purposes, or does it describe your business, or both? Do you do everything you say you do on your website? Are its pictures realistic?
- SMS scores and compliance with state and federal regulations. An underwriter will ask: “Do you have a portal account on the SMS system?” He’ll want to know how you deal with inspections and violations.
- Your company’s use of electronic devices, such as ELDs and GPS and monitoring programs.
- Business plan and marketing plan. If an underwriter sees that you have a business and marketing plan, they’ll think your business is well-organized and that you’re thinking about the future and understand management and financial risk.
- Five or more years of claims data (loss runs and claims settlements).
Above all, you must communicate what your business does. “An underwriter generally does not have operational experience in your industry, and when someone from the safety and loss-control department comes out, our goal is to build a bridge back to the underwriter about how we are going to work with the company we’re insuring,” Crescenzo said.
George Spencer is a Chapel Hill, N.C.-based freelance writer and frequent contributor to ABA media.