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Insurance Carriers Care About Your Retention—Learn Why

Est. 3 min read

Because insurance carriers often consider a fleet’s tenure bands when pricing their coverage, implementing processes that raise retention rates can majorly improve a fleet’s prospects on the insurance market.

But why does driver tenure have such a high impact on a fleet’s insurance costs? This week, we’re exploring that question and drawing on the wisdom of both insurance industry veterans and Idelic’s findings.

Why Insurance Carriers Value Tenure: Safety Culture

For many insurers, long tenure bands are important because they signal that a fleet has a strong safety culture. According to Chris Vogel, Senior Vice President at Cottingham & Butler, long tenure bands show that drivers feel respected at their fleet, which indicates their fleet has a healthy safety culture and an effective Operations Department.

“The fleets that handle retention well are involved at every level. It’s not just a driver manager who’s responsible for someone. Fleets with low turnover stay involved, actively seek feedback, and genuinely care. They don’t view Joe Smith as Truck #54. They know Joe Smith. Because of that, those fleets get a lot better results.”

Why Insurance Carriers Value Tenure: Accident-Risk

In an analysis performed by Idelic’s data scientists using 20+ years of historical driver data from tens of thousands of drivers, it was discovered that the vast majority of accident-risk comes from drivers in their first two years of employment with a fleet, which is, of course, a major consideration for insurance carriers.


Note:
 “Risk Level” does not indicate the amount of accidents for each year, but rather the level of risk in comparison to year 1.

You’ll see that at year two, there is a significant drop in a driver’s risk, meaning drivers are 40% less likely to experience an accident during their second year with a fleet compared to their first.

Having high turnover means that your fleet often has many drivers within their first, most at-risk, year with your fleet. This has major implications for your risk and insurance costs. 

By having well-documented tenure bands of your current drivers to demonstrate how many have been with your fleet for a significant amount of time, your insurance carrier will feel more confident in your fleet’s safety and offer a more competitive pricing.

For fleets who don’t necessarily have the best turnover, there are still steps you can take to achieve a fair rate. By implementing a well-documented plan for turnover reduction and presenting an upward trend in your retention to insurance carriers, you can demonstrate that your fleet is on the road to being safer.  

Fleets can improve retention and reduce insurance costs by implementing the right driver engagement methods, like eliciting driver feedback, implementing proactive training, and offering awards. 

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