Safety is a long-term capital investment for a carrier: benchmarking showed that companies with stronger safety performance also tended to have lower insurance cost per mile and better operating ratios.
Insurance Cost per Mile and Profitability
From 2014 through 2020, the inGauge benchmarking platform grew to 220 fleet profiles across operating models and sizes. General-ledger accounts were mapped to a standard structure, improving comparability and limiting misclassification.
One of the clearest correlations was between insurance cost per mile and profitability, measured by operating ratio.
Carriers in the top operating-ratio quartile were, with few exceptions, also in the strongest quartile for insurance cost per mile and CSA scores.
The insurance-cost range was dramatic:
- Top performers approached $0.025 per mile.
- Bottom performers regularly reported more than $0.18 per mile.
That difference consumes a meaningful share of revenue per mile and can determine whether a carrier produces a profit.
What Insurance Cost per Mile Includes
The calculation should include:
- Insurance premiums.
- Deductibles.
- Self-insured retention or surplus.
- Auto liability.
- Excess or umbrella coverage.
- Physical damage.
- Cargo coverage.
- Accident damage that is not reported or covered.
Accident damage should not be hidden in the maintenance category of the income statement.
The freight downcycle prompted carriers to revisit budgets and vendors, but the article warns against reducing safety investment. The resulting damage can last long after the market recovers.
Competition and Shared Risk
Chris Caplice's research described truckload as an exceptionally fragmented market. The Herfindahl-Hirschman Index ranges from nearly zero for a highly competitive market to 10,000 for a monopoly. Truckload's 2019 score was approximately six.
Low barriers to entry contribute to excess capacity and lower rates. They also mean safe, established carriers can indirectly bear insurance risk created by entrants that do not follow the same standards.
Captive insurance arrangements can help separate strong safety performers from higher-risk companies, but the members must continue enforcing collective standards.
Safety as Capital
Treating safety as an investment places it at the center of the operating model rather than viewing it only as compliance spending.
Reduced Accident Frequency
Robust practices reduce crashes, repair and medical costs, and eventually insurance premiums. Accident rate per million miles provides a common peer measure.
Lower Liability
Safety reduces exposure to injured-party claims, property damage, and regulatory penalties.
Stronger Reputation
A proven safety record can differentiate a carrier and attract customers that value reliability. State and national safety awards provide external validation and can also help counter common plaintiff-attorney narratives.
The High Cost of Complacency
A single serious crash can consume years of profit through:
- Legal fees and settlements.
- Higher insurance premiums.
- Lost contracts and opportunities.
- Regulatory penalties or suspended authority.
- Long-term reputational damage.
For a small or midsize carrier, a large event can become an extinction-level loss.
The Strategic Ripple Effect
Crash response also redirects time and capital from expansion, new routes, and service development. Even after direct costs are counted, the event can stall the company's planned growth.
Safety is therefore a foundation for sustainable margin, not a cost to be trimmed when the market weakens. The article's recommendation is to invest more deeply during the downturn and receive the financial and operating dividends later.