How trucking risk is evolving in Canada - from cargo theft to driver training to broker liability

Welcome to IB Talk, the leading podcast for the insurance industry across Canada, brought to you by Insurance Business. Welcome to IB Talk Canada. My name is Bran. Today I'm joined by Randy Ramkassoon, Vice president of transportation at NFP Canada.

We're talking about how trucking risk is evolving from rising claim severity, cargo theft, to the liability questions that come with carriers broking their own freight. Randy, welcome. Hi, I appreciate it. Thanks for having me.

Well, you did a good introduction of who I am. Again, my name is Randy Ramkosun. I work with NFP. We're an Aon company.

I've been in this transportation industry in this role specifically for about 14 or 15 years now. Time flies. I've been honored to be able to meet a lot of people who are in the business and just provide support where I can. So thank you for having me.

You've been in the transportation industry, insurance space for a while, as you said. So what would you see as the single biggest way the risk picture has changed, let's say in the last few years? I would say perhaps a lack of awareness, a less stringent qualification process with qualifying individuals to enter the business, which has led to increased risk for the driver as well on the roadways. Yeah, so can you explain that just a little bit more?

What professionals do you mean? Well, I mean, the drivers that are being qualified, I'm not sure how in-depth the companies are getting. Maybe the drivers are getting in the truck a little bit easier. I know that we once used to, they used to be primarily manual trucks.

Now it's all automatic. So it's easier for, you know, individuals to operate these units. But I believe that I'd say a little bit less, you know, the qualification process, you know, may have been reduced. Those also points to areas which we can focus on to see the standards improve or to see the risk in the industry reduced.

so we've been hearing a lot about rising claims severity and trucking you we just scratched the surface with the first question but what's driving that how is it changing the conversations that you're having i'd say with more distractions combined with possibly a less qualifications or less training that creates an inability for the drivers to handle these situations that require you to have defensive skills because distraction on the road by other roadway users i'd say has increased as well.

So we are seeing more severe claims from this, this combination. Yes. So when you say distractions, what do you mean? You just said other road users as well.

So what is the driver for that change? For sure. Thank you. Perhaps there's a lot more people using their cell phones.

They have possibly more things on their mind. They could, you don't necessarily have to be on your cell phone to be distracted if you're driving, but you're not focus on the road, that's, you could be cognitively distracted. So those items combined with, and if there's many other similar road users, you know, practicing the same thing and you're driving a truck now, you have to be focused to be able to deal with a situation should it arise. Cause you know, everybody's moving at a pretty quick pace, especially on the highways.

And if you're distracted combined with that, then you can have a, you know, if it's a loaded truck and you meet with a car, you hit a car, it can, it can have a pretty severe outcome. And we're seeing that. Yes. Does it have to do anything with people coming from all over the world?

Maybe there a different driving style or maybe there are different driving customs as well There could be some cultural changes on the roads Perhaps I know that we seen the populations grow It could be the difference in cultures, perhaps at other places in the world, but I don't want to specifically point to that. But that combined with the also advent of the cell phone, you know, it's increased. Everybody has a phone now. So that's definitely increased the distractions out there.

So a few combinations, shifting cultures, more distractions, more people seem to be stressed out. We have to be aware of mental health more than we once used to. You could see that has taken a place in creating more distractions in individuals, whether it be behind a wheel or even simply just crossing a road, right? You see it everywhere.

Yes. And the one trends that we did mention before this podcast is the litigation trends in trucking. How are they changing? How are they showing up in the Canadian market specifically?

Well, I would say more claimants are willing to sue for injuries, especially when the truck driver is liable. I won't get too in-depth just to keep this at a good pace, but definitely if the truck driver is liable, which is questionable because most of the times they're not. But if you don't have proof of that through like a dash camera or something like that, it could be difficult to actually be able to prove that. But I would say most of the time, yeah, we're seeing third parties are willing to sue for injuries.

So that's how it's affecting the Canadian marketplace. I haven't seen similar size awards in Canada that I've seen in the U.S. or at least read about.

It appears that third parties are more willing to sue if they're injured in an incident involving a truck now. I'm happy that you mentioned the U.S. because that's what I wanted to ask about those plaintiff strategies.

Maybe they originated in the U.S., maybe not, but are they starting to cross the border? Are they starting to show up more in Canadian trucking claims?

There is a popular theory in the U.S. called the reptile theory. I don't know that Canadian lawyers are starting to use this actually, but it's pretty much where they are provoking fear into the case and kind of, you know, trying to show it at the trucking company or the driver wasn't qualified to be on the road.

I haven't seen that strategy happen or occur in Canada, but like I said, they are willing to sue for injury, but there hasn't been any, you know, nuclear verdicts, quote unquote, out here. So I'd say that we haven't been hit with the similar judgments as the US, but that doesn't mean it can't happen in the future. So why does driver qualification, why does training matter from an underwriting standpoint? You just mentioned a couple of ways in which it can be relevant.

So what do insurance really insurers actually want to see? Well, if the drivers are qualified well, it doesn't mean that through the qualification process, if you have a good process and the person doing it is able to identify perhaps some gaps in that driver's ability to operate the equipment safely, they can still hire the driver. They just should provide some additional training from an underwriting standpoint. They'd like to see more, you know, they'd like to see more safe drivers on the road because that's a way to improve the performance in terms of their, they have certain stats that's measured.

You know, the U.S. has the something called the SMS report. And then in Ontario, we have the CBR level too.

So from the insurance perspective, if the drivers are able to operate the equipment safely and manage situations when they occur, you will see those points, those stats doing well, which will actually lead to less claims as well. Less claims that they're actually found liable for. Because like I mentioned before most of the time when we liable for an incident we see a lawsuit follow behind it in Canada but especially in the United States And you did mention right now that it not a black or white picture So is there a gap maybe between what freight carriers think is good enough for driver oversight and what underwriters are actually looking for?

Well, maybe perhaps the quality of the training that's being provided and how regular, how often, and are they actually able to drive the message? Are they able to get the drivers on board with it or are the drivers just attending for the sake of? So it's kind of the insurers would like to see that you have a good safety culture. And is the transportation company able to create that safety culture?

I would say that would start from the top. If the person making a lot of the important decisions has bought into that, then we have to try to get everybody involved. And if you see that, you will see the gap between what the insurer is looking for and the transportation is actually doing close. When we actually started to think about this podcast, one of the main concerns, one of the main ideas that I had was that the cargo theft losses are on the rise.

They just hit a billion dollars across Canada and the US. Is that changing how you approach cargo coverage and what you ask your clients? Well, yes, cargo theft is getting larger and larger. As time goes, it looks like, you know, especially on weekends and holidays and stuff like that, I will always continuously try to make my guys aware that it's never a good idea to make sure that you're parking at safe locations.

It's well secured, gated fence. They have continuous monitoring. Try, if you do have to have loaded trailers, try to keep that as private as possible. A lot of the stuff is just information that gets out to certain parties looking, you know, that are involved in this.

don't take risks like jumping out to grab a coffee here and there. You could come back and your truck is gone. It's not only the cargo that's a concern. Even equipment is just getting taken to actually go take that cargo from another carrier.

So they may take your truck to go take another carrier's trailer. So you have to protect that. It's good if you have good tracking on the equipment and just feel good about where you're leaving your equipment overnight. Does it feel secure?

Do they have good practices in play? Are they willing to share video footage with you if you request it. Ensure that your parking is safe and you have some kind of good tracking. You may need a couple because the individuals that steal the trucks or the trailers or cargo, they're very aware of your tracking.

So in some cases we've come across, you've actually have to have two or three. So I don't want to bombard them with too much expenses. I'm just letting you know what we've seen having to be put in place as a, as a actual solid form of protection. There have been some news about carriers that also broker freight, and there is a growing concern about that.

So what are the liability and fraud risks there? Why should brokers be paying attention? Well, there's been some large cases in the US, especially one that occurred recently, C.H.

Robinson. I'm sure a lot of individuals or brokers in the business would be aware of this. And it's not that easy for them to get out of the situation. If they hire a carrier that gets involved into a severe situation, let's say perhaps involves a fatality or multiple fatalities, the broker can be called upon to demonstrate how they actually qualify this carrier prior to providing them with any freight.

So brokers should ensure that they have a good vetting process. That vetting process would involve understanding a little bit about the carrier in terms of their safety, their ratings. A lot of this stuff is publicly available. You can hire services to even do this for you.

There's different services out there they can subscribe to. But they should ensure they have a good process in place and be able to provide proof of that vetting process if called upon which you can be called upon providing that much easier than they once had to It's also good to have a good lawyer in place and draft a broker carrier agreement. Sometimes some of those are floating around in the industry, but get it from a lawyer. It might cost you a little bit, but I think that small cost up front, at least you've got the backing of somebody who's licensed.

And these agreements will outline the standards that should be upheld between you and the carriers that you're selecting. And when it comes to specialized cargo, subcontracting as well, where do you see the biggest gaps between what's disclosed and what's actually happening on the ground? I haven't seen a lot of this. When I have come across this, it might be a broker has told a carrier, okay, we need you to pick up a load.

And perhaps when they showed up there, they didn't have the right equipment for it, such as the load could have been overweight. and they showed up with a trailer that won't hold it. Now that carrier kind of scrambles to find another carrier that can. That has led to some issues that you could run into coverage problems.

So I would say, you know, if you're a broker, try to be as transparent as you can with the carrier so they show up prepared. And if your carrier, ensure that your insurance company is aware of any kind of freight that you could find in your possession. That would close the concern of any coverage issues. If a broker is sitting across from a transportation client tomorrow, what's the one question they should be asking the client that most of them aren't?

So I'll actually circle back to a little bit of the theme that I was mentioning earlier. They should ensure that the carrier they're going to work with, they have good measures in place in terms of, you know, are they, you know, is risk management a priority to them? Do they want to have a safe culture? Are they supporting the drivers and providing them with additional training and education?

Are they proactive? And like I said, they should, not only does the broker need to have a good vetting process, but they want to ensure the carriers are kind of mimicking something similar. Obviously, their vetting process would involve hiring individuals. So that would be anybody from the drivers to dispatch and operations.

So they just want to feel confident in the culture that the transportation company is, they have in place. And again, it's always good to make sure that you have a broker carrier agreement in place that would outline the standards. And that way the expectations, there's no surprises. The expectations has been laid out in those contracts.

Yes, we covered a lot of stuff today. We covered a lot of ground, but if you were to leave our audience with one takeaway message from our conversation, what would that be? Ensure that anybody you're doing business with, whether you're a broker or a transportation company, that you have good processes in place. There's a culture of safety and compliance and risk management and that there's transparency.

It's a partnership. So you have to treat it like that. It doesn't matter how much stress you're under to move a load. It's still good to take the time to just be a little bit acquainted with one another, build that trust and just ensure that you're both aligned in terms of your risk management process.

That was Randy Ramkasun, Vice President of Transportation at NFB Canada. Randy, thank you for taking the time and sharing your perspective. I really appreciate it. I appreciate it.

Thank you for having me. To our listeners, thanks to all for listening to IB Talk Canada. We'll see you next time. Thank you for tuning into IB Talk.

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