Since the epidemic, there has been a rise in travel and the number of cars on the road, which has led to an increase in crashes and other car problems and an increase in the need for towing and roadside help.
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The demand for tow trucks has also been impacted by the unstable economic climate. Drivers are choosing to leave their older cars on the road for longer periods of time due to the extremely lengthy wait times for new cars and the significantly higher costs for used cars. This is increasing the likelihood of accidents occurring that may need towing services.
Tow-truck operators have faced difficult insurance circumstances recently, much like the rest of the commercial vehicle and transportation business. The loss ratios of commercial vehicle insurance have declined as a result of issues with social inflation, hefty judgment verdicts, and rising auto claim expenses. The market has hardened as a result, with some carriers increasing premiums, reducing capacity, and enforcing stringent risk selection and underwriting standards.
Hard-market cycles are challenging for all parties—insureds, brokers, underwriters, and carriers—but when it comes to an essential service like towing, everyone recognizes that cooperation is required to find practical solutions.
distinct exposures
Operators of tow trucks are subject to some special risks in comparison to the larger transportation and commercial vehicle industries. Tow-truck drivers face serious side-of-road risks while approaching or handling an incident on a road or highway. This is especially true as they are frequently called to work in dangerous driving circumstances because of bad weather, heavy traffic, or difficult terrain. The trucks might be struck by other vehicles on the road, resulting in a costly repair work and claim. Because of the towing and recovery equipment mounted to the chassis cab, the trucks have high insured values.
In addition, the operators run the risk of getting hurt physically loading damaged vehicles and being sued for vicarious culpability just for being a part of a potentially contentious circumstance. In addition, the business faces unique risks such as conflicts with vehicle owners during the repossession or impounding of a vehicle, as well as difficulties pertaining to fraud.
Techniques for risk management
Tow-truck operators can use risk-management techniques to reduce some of these dangers. To begin with, owners of tow trucks should examine closely at the way their company is operated. Many of their contracts are time-sensitive, high-risk, and demand drivers to be there at a given time, which contributes to driver burnout and the continuous problem of driver shortages.
In addition, telematics and dash cams—both looking inside and outward—can be used by tow-truck operators to safeguard drivers in the case of a collision and to encourage safe driving habits. By assisting in the determination of blame in an accident, these techniques can lessen the possibility of nuclear jury judgments and socially inflated claims.
Dash cameras and telematics have shown to be effective risk management tools for tow truck operators, but they have had to get over the notion of being “Big Brother.” In order to let insureds realize that these instruments have instant benefits, education is essential. Although there are up-front expenses, telematics and dash cameras have the potential to save towing companies a great deal of money, particularly in current recessionary climate where every penny counts.
A partnership yields benefits.
Hard market cycles are when the power of commercial partnerships is most evident. Astute partners concentrate on contributing variables and come up with innovative ways to minimize expenses rather than quickly changing pricing and underwriting tactics to counteract skyrocketing claims costs.
For Trinity Underwriting Managers (TUMI), an Amwins Company, this entails examining the frequency and nature of claims to identify any trends and determine the most effective risk-management techniques. This greater focus on minimizing day-to-day claim frequency also correlates to lowered risk of a serious claim arising and eventually helps assure the long-term survival for tow truck owner-operators.
Establishing a two-way communication culture facilitates the construction of a bridge for those pivotal talks. It is not sufficient to have a dash cam; the driver must always have it turned on. At least there is a foundation of trust to bring up the matter and remind everyone that these measures are in place to safeguard them and their business in the event that a risk warning reveals that isn’t the case.
Conclusion
To determine the best potential insurance and risk management solutions, reputable underwriters want to hear the whole story—warts and all—about the genuine risk profiles of tow-truck operators. This calls for open communication regarding risk management, solid stakeholder relationships, and an understanding that long-term gains may come from investing in devices like telematics and dash cameras.