Canada-wide spike in insurance claims calls for enhanced training, oversight: Report

The number of insurance claims for all commercial vehicles across Canada increased ‘significantly faster’ than the number of commercial vehicles on the road between 2016 and 2022, according to the Commercial Trucking Insurance and Education report released Tuesday.

The Insurance Bureau of Canada (IBC) commissioned MNP, one of Canada’s professional services firms, to identify the key factors impacting the cost of insurance for commercial truck operators.

The data for this study was collected between June 2023 and January 2024, and one of the key suggestions outlined by MNP and IBC is that entry-level training has to be followed by onboarding and mentorship programs, with the funding for the programs’ development and administration provided through partnerships between insurers, carriers, and governments.

“The property and casualty insurance industry is working closely with the trucking sector to find solutions to some of the challenges it currently faces, including driver shortages and access to adequate training and risk management,” said Celyeste Power, IBC’s president and chief executive officer, in a news release.

Accident rates and premiums

The report found that insurance premiums are highly correlated with claims expenses and the risk of a claim being made.

Experience and claims expenses are the largest contributor to increases in premiums, and less experienced drivers – especially those driving for under three years – have a higher chance of getting into an accident. Driver experience and the length of time since a previous claim are correlated with claim frequency and severity.

To illustrate the impact of safety improvements on claim costs, MNP estimated the reduction in claim costs for each accident avoided by Alberta logging truck drivers with three years of experience.

In 2015, each accident that was avoided would have led to a substantial reduction in claim costs per policy, estimated to be around $581.80.

However, between 2016 and 2018, the situation changed. During this period, each avoided accident would have resulted in a much smaller reduction in claim costs per policy, ranging between $100 and $125, which can be attributed to the increase in claim frequency and severity over time.

When it comes to the third-party liability claims frequency, Alberta tops the list and is followed by Ontario and the Atlantic provinces, even though Alberta’s claims frequency per 100 vehicles was decreasing before the pandemic.

In 2021, Ontario and the Atlantic Provinces saw an increase in collision claims frequency relative to 2020, while the trend in Alberta remained relatively stable.

Cargo type & cross-border trips

Additionally, collisions involving heavy loads or dangerous goods tend to be more severe and have a greater damage potential. As a result, the level of required liability coverage increases when these goods are transported, affecting premiums.

Traveling across the border adds zeros to the premiums, too, due to the risks of exposure to ‘nuclear’ jury verdicts. Consequently, premiums for vehicles traveling outside of Canada are increasing.

“Interviewees identified this as a concern for all Canadian jurisdictions, but it was of particular concern in Alberta,” the report reads.

Training leaves something to be desired

However, despite the difference in types and frequencies of claims across the provinces, commercial vehicle safety in Canada is a joint federal, provincial, and territorial responsibility.

This is why MNP has examined regulatory, training and operating environments on a provincial and federal level in the report.

The research has shown that even though roadside inspections and facility audits lead to increased compliance with safety measures, the enforcement of commercial truck violations is inadequate.

While most National Safety Code (NSC) standards have been implemented, the entry-level training is different across the provinces.

MNP adds that the existing entry-level training in Canada is not designed to fully prepare drivers for operating heavy trucks in all conditions.

“Entry-level programs are intended to provide exposure to the industry and basic skills to pass the Class 1 test. They do not cover the full range of competencies required of drivers, which means that graduating drivers do not yet have the full set of skills required to be road ready.”

In addition, the training quality varies by school, and MNP recommends improving oversight of training providers across the country.

“There is inconsistency in how entry-level training is delivered and not all schools provide training consistent with the defined standards,” the report reads. “There needs to be oversight, and standards need to be enforced.”

Telematics and progressive licensing

Other recommendations include piloting the use of telematics to provide feedback to commercial truck drivers, since that has the potential to reduce the cost of onboarding and mentorship.

And while as of now there is no consensus on whether telematics is effective at increasing driver safety, a pilot project could address this gap.

Meanwhile, piloting the use of graduated or progressive licensing would allow new drivers to gain experience gradually, starting with restricted driving conditions and advancing to more complex scenarios over time, the recommendations added.

“We look forward to working together on the items identified in this report and other projects currently underway as we develop a comprehensive road map to address key policy issues in Canada impacting trucking operations, safety, training, licensing and industry oversight,” said Geoff Wood, Canadian Trucking Alliance’s senior vice-president of policy, in a news release.

Philip Fletcher, the president of the Truck Training Schools Association of Ontario, added that the report’s findings substantially represent what the association has experienced in training over the past several years.