The Impact of Driver Turnover on Trucking Insurance Costs
Employee turnover is one of the most difficult challenges most businesses face, costing US companies as much as $1 trillion each year. (1) The trucking industry is no exception. In fact, it costs as much as $6,000-$12,000 per driver when a trucking company loses an employee. (2) Replacing a driver requires staff time and resources to devote to recruiting, hiring, and training which can add strain to business operations and budget. If that’s not enough, trucking companies often face an unexpected expense due to driver turnover – increases to their insurance cost.
The Relationship Between Driver Retention and Insurance Premiums
An experienced driver is a trucking company’s greatest, and most valuable, asset. The longer a driver remains with one company, the more experience they gain, both with the company itself and in the occupation overall. They become more familiar with company policies and the federal regulations drivers and companies must abide by. All these factors increase the likelihood that the employee will be a safe and responsible driver.
Tenured employees increase a company’s safety record in other ways as well. If a driver stays with one company, they are more likely to feel invested in the strength of a company’s reputation, and their role in protecting it. They are also more likely to be happy and comfortable in their position, empowering positive moods and mental health, positioning them better to perform well in a difficult and often stressful role like driving a truck. Also, if a trucking company employs an individual for a longer period, it is likely because they are safe, responsible drivers with few driving violations.
And safety is paramount in determining a carrier’s insurance costs. The safer a driver is, the fewer accidents and violations they are involved in, the fewer the claims made on the company’s insurance policy, and the lower their insurance premiums. Additionally, insurance companies assess a number of factors when determining a trucking company’s risk level, which ultimately influences insurance costs, including how many drivers a company has to replace during a policy term.
Reducing Driver Turnover
Some retention strategies include:
Competitive compensation and benefits Truck driving is a rewarding career that helps people provide for themselves and their families. One of the best ways to foster driver retention is to improve compensation and offer benefits including bonuses, health insurance, retirement plans, and other perks.
Training and safety programs The more prepared they are, the more confident a driver will be in their role, and the more likely they are to want to stay in it. Investing in their skill growth and safety also helps employees feel valued and cared for.
Positive company culture Employees are more likely to remain at a company where they feel appreciated and supported. Fostering a positive company culture includes encouraging communication, soliciting and acting on driver feedback, building team rapport, and recognizing employee accomplishments.
Growth and advancement Employees are also more likely to want to stay with a company where they can see a future with increased responsibility and promotion.
Hiring practices One of the easiest ways to ensure driver retention is to hire the right people to begin with. An employee is unlikely to stay in a job that isn’t a good fit for them, and that mismatch could cause additional problems and conflict with other employees, further degrading company culture and increasing employee dissatisfaction and turnover. Utilizing background checks, verifying driving records and work history, and speaking with references can help ensure you end up with the right employee.
Technology While some employees may feel uncomfortable with your use of technology to monitor driver behavior, it can help companies identify concerns before they become large problems and empower proactive improvements to further support employees. Insurance companies may also offer discounts for using technology like electronic logging devices.
Work-life balance Long-haul truck driving is strenuous and requires drivers to spend a lot of time away from their homes and family. When possible, it helps to build driver schedules that allow them to spend more time at home.
Mitigating driver turnover not only supports operational efficiency but also helps curb insurance costs, enhancing and protecting a profitable business. Trucking companies that prioritize it benefit from improved safety records, lower insurance expenses, and a stronger reputation in the trucking industry.
Safety is a major factor in insurance premiums, as well as your company’s CSA score, a number calculated by the Federal Motor Carrier Safety Administration (FMCSA) that relates to a carrier’s safety performance, measures compliance with safety regulations, and identifies high-risk fleets, carriers, and drivers. At SWZ, we are experts when it comes to understanding and improving CSA scores, and our SCORE Report can help you understand your safety score, identify safety issues, and learn how to resolve them. Request yours today.
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