Cargo thefts and the return of pre-pandemic traffic levels are currently among the most pressing concerns for Canadian transportation firms. To learn more about Transportation Insurance in Canada, we spoke with John McGlynn, Director, Transportation, Burns & Wilcox, Toronto, Ontario.
What are the greatest transportation risks in Canada today?
J.M.: Generally speaking, one of the greatest risks would be traffic reverting to pre-pandemic levels. We were in a lower-traffic environment with lower automobile crash frequency, and we still are in some respects, but there have been reports that this is changing. In addition, crossing the border into the United States still probably represents the greatest risk for a transportation firm because of the elevated jury awards and verdicts that have come out of the U.S. regarding bodily injury claims, so that has not changed. The last thing would be the continued assault on cargo by organized crime. In the past, it might have been confined to higher-value targets such as electronics, but now it could be anything: non-perishable food, any consumer good, anything that can be easily transported and moved out of the country.
What should companies be aware of relative to these risks?
J.M.: Improving the quality of security features in place to safeguard cargo is really important. Many thefts occur from yards where the truck is parked. Second would be continuing to invest in crash-mitigating technologies, such as lane-assist, and other technologies available to minimize the incident frequency of crashes. As far as crossing into the U.S. and jury awards, companies should make sure driver management is well-documented, from hiring and training to regular review of driver behavior. One of the biggest risks is often around the quality of the driver and the time and attention the management spends working with that driver.
What kinds of insurance policies do transportation companies in Canada need?
J.M.: Automobile Insurance is legally mandated in Canada just like it is in the United States, so that basic coverage is essential. They also need to make sure they have Motor Truck Cargo Liability Insurance with adequate limits, and that the coverage associated with their operation is appropriate given where they go and what they haul. They also need to understand any restrictions or reductions in coverage, such as sublimits on certain commodities, which is becoming more common. Depending on the size of the enterprise, organizations may also want to purchase Umbrella Insurance to obtain higher automobile limits above their primary coverage.
What steps should companies take to complement their Transportation Insurance from a prevention standpoint?
J.M.: Hiring a third-party risk management company to conduct a risk management audit could be beneficial, and making sure they have a knowledgeable Transportation Insurance broker working with them so that their risk management requirements are properly understood. By working with knowledgeable risk management and insurance professionals, trucking firm operators can better understand available risk mitigating technologies and select those that will assist them in meeting their risk management goals.
Could you provide an example of a scenario you have dealt with that would be illustrative of the types of risks we have been discussing?
J.M.: We have experienced a number of cargo thefts this year from what were described as “secured” yards. Security needs a refresh as far as what constitutes a secure yard. The law enforcement resources assigned to cargo theft and cargo-related crime is extremely low, so it is paramount that firms secure the cargo in their care, custody and control and consider a refresh on what security means.
What are the greatest opportunities for brokers to get into Transportation Insurance in Canada?
J.M.: It is becoming more difficult for brokers to get into it because the most important element of being a successful transportation broker is to have a wide variety of markets available for Automobile Insurance. In Canada, there are very few market participants in the Transportation Insurance segment. It is very tough right now; having markets is essential.
What advice would you give brokers to increase their success rates with these products?
J.M.: Be a real risk manager and strategic advisor to the business owner so that they really have the greatest understanding of their risk factors and how they can be dealt with. Be a knowledgeable partner and risk manager.
What services or features of Transportation Insurance are specific to Burns & Wilcox? What are the advantages of these?
J.M.: Our core product is Motor Truck Cargo Liability Insurance, and we can provide higher limits, individual trip transit, new venture options for those starting businesses, and more. We have a wide appetite related to commodities and can access multiple markets to secure higher limits as required. The basic transportation insurers can provide some basic Motor Truck Cargo Liability coverage, but when it comes to higher limits, they often will not cover certain products. The service around our attention to broker requests is second to none. We are also seeing more operations going to captives, which is a form of self-insurance, and we have seen some success in helping brokers manage the cargo risk associated with accounts that are being placed in captives.
