In light of impending changes to the federal Compliance, Safety, Accountability (CSA) program, insurance companies are searching for better ways to identify unsafe motor carriers. Duke Tomei, Executive VP and Transportation Practice leader at USI Insurance Services, noted that there’s industry-wide doubt about the correlation of current CSA scores to accidents.
A combination of the current CSA scoring system and the dramatic increase in severity of claims is causing shipping prices as a whole to increase. Five years ago, what would have been a $200,000 claim is now up to $500,000 according to Chris Mikolay, VP of National Accounts and Truck Alternative Risk at the National Interstate Insurance Company. The new changes being looked at by the CSA means insurers can audit a carrier’s safety protocol more closely to gather whether it cares about safety and is acting in accordance. Carriers are responding by employing insurance deductibles and alternative risk management strategies based on the risks their companies are willing to take.
What does this mean for your supply chain?
Shippers can expect increases in shipping costs associated with higher risk industries and products specifically. This is due to carriers choosing those higher insurance deductibles and risk management strategies to combat the impending federal CSA changes.
However, the CSA Safety Measurement System changes will result in more accurate carrier safety ratings in the near future. This means that even though carrier prices are going up, so is the quality of service. The increase in price and quality of service means an increase in the value of your supply chain.
Although carriers in the near future will be vetted more closely by insurance companies—resulting in an even tighter carrier market—higher quality carriers will be more easily accessible to your company’s supply chain needs.
BM2 Freight Services, Inc.
Phone: (859) 308-5100