Looking to expand your trucking book this year? It’s a potentially lucrative goal—but you’ll need to understand the trucking industry’s myriad regulations before you can achieve it.

“Nothing is more service-oriented, nothing is riskier, nothing requires more of you as an agent up front than a trucking policy,” says Matt Maurer, transportation underwriter at Burns & Wilcox. “You could write a medium-sized property schedule and get decent commission on that, the same as you would on a single two- or three-power unit fleet. But you’re not going to have to touch that policy much. With a truck policy, you’re going to talk to that guy every day. You really have to earn your commission.”

Trucking regulations come from the Federal Motor Carrier Safety Administration (FMCSA): a special unit of the Department of Transportation (DOT) established in 2001 as part of the Motor Carrier Safety Improvement Act of 1999. The FMCSA works with federal, state and local enforcement agencies in addition to the motor carrier industry and labor and safety interest groups in order to prevent fatalities and injuries associated with commercial motor vehicle use.

Here are a few of the regulatory highlights you’ll need to keep top of mind when selling trucking insurance this year.

Safety First

Ward Stein, president of Greenwich Transportation Underwriters, Inc., says insurance agents must be extremely cognizant of their trucking clients’ compliance, safety, accountability (CSA) scores from the FMCSA. “Ignore those scores at your peril—those are the first things an insurance company looks at,” he warns.

The scores measure a motor carrier’s compliance with federal DOT regulations in areas like hours of service, driver fitness and equipment. “The insurance company is going to use those scores to take a look at how a motor carrier compares with the national average for their type of business,” Stein explains. “They’re also going to take a look at how they score overall.”

The higher the number, the further out of compliance the motor carrier is. For example, a score of 90 would mean only 10% of motor carriers in the country registered a worse score, Stein explains.

“Most insurance companies want to insure compliant firms,” Stein says. “That should be captain obvious, but some agents miss it. Instead of just prospecting and finding out when the policy expires, they should initially take a look at the safer scores and determine how well within compliance or how far out of compliance the prospect is.”

If a prospect is in the FMCSA’s “alert category”—the bottom 25-35%, depending on the class—in two areas or more, most companies will decline to quote, according to Stein. If it’s just one area, “it’s marginal,” Stein says, and companies may or may not quote.

“The way the insurance companies understand it, if the motor carrier is compliant and following the rules, that will translate into fewer accidents,” Stein says. “If they’re pushing their drivers to operate when they’re fatigued, they have a higher chance of claims and there’s a potential that the severity of those claims will be higher as well. So it impacts two things: Insurers will expect a higher frequency of loss and a higher severity of loss, both of which directly impact your insurance premiums.”

Obviously, the best risk is one that has very few accidents at a low level of severity. When motor carriers are noncompliant and maintain dangerous standards for their drivers, “ultimately what that does is raise the prices for everybody,” Stein points out. “Insurance is spreading that risk out over the entire populous. Those motor carriers either need to address those serious situations and improve them, or they need to get out of business so they don’t deteriorate the pool.”

What if your prospect’s safety scores are sub-par? “It’s important to talk about the plan of actions that have already been put into place to make them more compliant—and therefore a better risk that would be likely to have fewer accidents of lower severity,” Stein says.

Regulatory Changes

Currently, everyone in the trucking market has a watchful eye on Washington, D.C., says Tommy Ruke, president of Insurance Business Consultants, Inc., who co-founded the Motor Carrier Insurance Education Foundation (MCIEF) in 2013 in order to provide face-to-face presentations, Web-based education and other resources for insurance professionals who work with motor carriers.

This year’s MCIEF conference in Orlando focused largely on the regulatory proposals and changes that could drastically impact the trucking industry in the years ahead, including hires of service; whether CSA scores should be available for public and in-court viewing; electronic logs and speed limiters—the list goes on, Ruke says. “The big topic on top of all that is there’s an increased limit proposal out there that might raise the basic limits from $750,000 to something more than that,” he adds. “That will be a real game changer.”

Ruke also points out that the federal government classifies anyone with a vehicle that has a gross vehicle weight over 10,001 pounds as a motor carrier—and the FMCSA is now enforcing that rule more than ever before. “Whether it’s a contractor, a maintenance company or a distributor, anyone who uses a vehicle with six wheels across state lines is a federal motor carrier who has to have a DOT number,” he explains. “A lot of that enforcement has been mandated to increase a year ago.”

Ruke cites an example in which a South Carolina construction company manager’s truck was stopped en route to Atlanta to pick up materials. “He got cited for not having a DOT number, for not having a fire extinguisher, for his driver not being qualified because he did not have his medical card with him,” Ruke says. “As an agent, do you have anybody who’s driving a truck with six wheels across state lines who’s not 21 years of age? That’s a violation of a federal law, and you’ve just increased the cost of the claim by not having a qualified driver.”

The biggest question mark in the trucking industry today: worker misclassification. “There are three main industries that use independent contractors: construction, trucking and hospitality,” Ruke says, noting that the owner/operators traditionally used in the trucking industry are independent contractors.

The Department of Labor is changing that, and court case after court case has ruled that “unless you’re very, very, very careful, you are an employee,” Ruke says. “I’m dealing right now with a case where the insurance carrier is attempting to collect over $1 million just in premium because of misclassification. The insurance carrier considers the truckers in question employees and is seeking premium for them—and the agent did not straighten that out going in.”

Jacquelyn Connelly is IA senior editor.