Most trucking companies share the same risk management strategy, they buy insurance. These are typically guaranteed cost policies that provide peace of mind because the buyer knows that the most it can cost to manage losses is the policy premium. At the end of the policy period that same buyer often has two frustrating realizations. First, the company paid a lot more for insurance than they experienced in losses and second, their premium for the coming year is going up despite all of that unused premium from this past year. Oh, but that premium was used; it became the underwriting profit for their insurance company.
If all we did at Dillon Risk Management was sell insurance, then our solution to every problem facing our clients would be for them to buy more insurance. As buyers often learn, the truth is insurance is not always the solution and can be part of the problem. The proper application of insurance is to protect your assets against an unexpected or catastrophic loss while retaining the smaller expected or predictable losses yourself.
Buying insurance is not a risk management strategy; it is a risk financing alternative. It is passive and becomes active only after a loss occurs; it is not a risk control measure engaged to prevent losses. Insurance may not even have the effect of reducing losses, it may just pay them. By contrast, a risk management strategy involves both developing a strong commitment to implement effective risk control practices to prevent losses and taking responsibility for funding expected losses.
There are products which allow small to medium trucking companies the same benefits afforded larger companies by assuming a tolerable amount of risk with the top end security of complete protection in the event of a severe loss. Dillon Risk Management facilitates participation in captive programs for small and medium sized fleets that have historically not been able to participate in these risk funding programs. Now they can benefit from the same alternatives available to the “big guys”. We help our clients to focus on identifying their risk appetite by examining the relationship of loss exposures to loss tolerance. From there we can develop responsible methods for managing risk that can benefit our clients financially.
We’ve partnered with an underwriting organization that has developed three captive options for trucking firms as small as 15 units. This risk management product delivers all the benefits of risk retention programs with less volatility. The captives are characterized by efficient claims management, effective loss control and a variety of tax advantages. These captives offer long-term pricing predictability and stability.
Our responsibilities are clear; we help our clients manage their exposures to loss. Agents who only sell insurance have a clouded focus. They may have obligations to both the insurance company and their clients and must serve the interest of both. We have no stock analysts, venture capitalists, shareholders or underwriters we answer to. We have industry professionals that intensively evaluate your fit with available risk financing and risk control alternatives to bring our clients the best solution for their risk management challenges. Dillon Risk Management is equipped to handle the needs of any transportation company throughout the nation.
Insurance companies are in business to make a profit. This is both understandable and expected. But, our clients can also reap the benefits of the investment income and underwriting profit that insurance companies writing guaranteed cost insurance enjoy. The alternatives we offer allow our clients to achieve these returns and to rework their cost structure to be more competitive in their given market sector. Trucking companies are no longer limited to an insurance expense, but instead have a risk management incentive.
