Transport companies struggle to hire new drivers due to rising insurance costs

“With the industry being busy, you know, experienced drivers already have jobs. Newly licensed drivers are looking for jobs. They are eager to work but we can’t hire them,” says Vanessa Stewart, Brovac Mobile Vacuum Truck Services office manager.

That’s because insurance companies are reluctant to insure drivers with less than three years of experience.

“We got a quote from a third-party insurance (company) and they wanted three times the cost of our entire fleet for one truck for one driver to be attached to that truck,” says Stewart.

“We have multiple different trucks, we have hydrovacs, we have combo units, we have vac trucks and we work when the calls come in,” explains Stewart. “One day we need a hydrovac, the next day we might need a combo unit so we can’t make a guy sit for however many days, we don’t know when the next call will come in.”

It’s not only small transportation companies that are dealing with sky-high insurance costs. It’s also independent drivers like Karan Kumar.

With five years of experience behind the wheel, Kumar operates privately out of Calgary.

He says the total cost he pays for insurance is more than $3,500 a month and says it’s just the new cost of staying on the road.

“I tried many companies but this is the cheapest I can get. So I already shopped everywhere but this is the cheapest I can get. So they said we can’t help you right now so you have to pay $3,000 or you can’t drive,” says Kumar

Since 2007 Connection Career and Safety Services has been providing commercial driver training in Medicine Hat.

Co-owner Janice Kirchner says they have recently seen significant challenges for companies wanting to hire newly licensed drivers.

“Although the Mandatory Entry Level Training program (MELT) Class 1 mandated program was introduced in 2019 in an attempt to standardize training and increase new driver safety, the insurance rates have been on the increase,” says Kirchner

“Companies have shared with us their frustrations. There is a shortage of commercial drivers, but the insurance costs for smaller companies is often prohibitive,” adds Kirchner.

Kirchner says one local company shared it would cost about $60,000 to insure a new driver per year.

The Medicine Hat Chamber of Commerce is working with its provincial counterparts to address the issue, forming a task force to investigate the problem after local businesses reached out with concerns.

After speaking with the Insurance Bureau of Canada, Alberta Transportation Motor Association and several local brokers, the chamber found companies have been losing money by insuring new drivers.

“From our research, we actually found that the insurance companies, during those first three years of a new driver, are taking huge losses because of the number of accidents and incidents that they are facing,” says Alex Zabel, industry support and government relations, Medicine Hat & District Chamber of Commerce.

The research also discovered insurance companies are hesitant about the effectiveness of the MELT program that drivers need to complete to receive their Class 1 license.

“Which makes it prohibitive for a new driver, brand new out of the MELT program, to even get the experience to become a driver. Obviously then this adds to and exacerbates the problem we are seeing with truck driver shortages which further complicates the supply chain issues,” adds Zebel.

A policy developed in Medicine Hat was recently adopted by the Alberta Chamber of Commerce at their annual general meeting in May. The policy has seven suggestions on how to improve the MELT program and reduce insurance costs for businesses.

And more importantly make the road safer for all drivers.

“A reorganization of the program really so that it gives more ability and autonomy for the driver training school to teach what the student most needs to know because the program is so rigged and structured that there is really no ability if somebody needs to take more time on reversing for example,” explains Zabel.

“So that insurance companies aren’t facing losses, so that we have safer drivers on our road and so that ultimately our small businesses are able to hire those new drivers and we aren’t seeing these concerns that are happening,” adds Zabel.

Some other suggestions include using virtual driving simulations, offering mentorship programs to new drivers and providing transportation companies with a subsidy for hiring new drivers.

by Brendan Miller

Transport companies struggle to hire new drivers due to rising insurance costs

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