The transportation sector has been faced with significant challenges, like driver shortages, supply chain issues, and rising fuel costs. Tune in as Sovereign&rsquo;s <a href="https://www.linkedin.com/in/abigail-bibby-0886b3b8/" target="_blank" rel="noopener">Abigail Bibby</a>, National Claims Specialist; <a href="https://www.linkedin.com/in/kevin-dutchak-7336b317/" target="_blank" rel="noopener">Kevin Dutchak</a>, Commercial Auto Team Lead, National Risk Engineering; <a href="https://www.linkedin.com/in/kevin-stedman-5a83b963/" target="_blank" rel="noopener">Kevin Stedman</a>, AVP, Commercial Solutions; and <a href="https://www.linkedin.com/in/marcus-ouellette-b2319892/" target="_blank" rel="noopener">Marcus Ouellette</a>, Manager of National Auto Underwriting discuss the ever-changing transportation landscape and the many advantages of adopting a holistic view of commercial auto risk management.

How can you control the losses of your commercial auto clients?

Designed with fleet managers in mind, the Auto Risk Management Toolkit offers helpful resources to protect and support your drivers and help prevent road risks before they happen. The toolkit includes: The benefits of defensive driver training
While preventing accidents to keep people safe is the most compelling benefit of defensive driver training, there are several other benefits.&nbsp; Find out what defensive drivers look out for, the key benefits of defensive driver training, and some key defensive skills and techniques to keep your drivers, and fleet, safe. The importance of pre-hire road tests When hiring new drivers, applicants with years of trucking experience can look great on paper. However, regardless of a candidate&rsquo;s work history, it&rsquo;s crucial for fleet owners and operators to conduct a pre-hire road test to ensure the driver&rsquo;s skills and professionalism are up to speed. Learn what&rsquo;s involved and how to put your drivers to the test.&nbsp; Fleet preventative maintenance checklist template This checklist tracks the periodical mechanical inspections required for your commercial power units and trailers, to help you ensure that critical safety functions have been inspected and managed appropriately. It also keeps a log of the maintenance history of your inspected equipment, so that you can track maintenance/repair trends. Non-commercial vehicle pre-trip inspection checklist template This checklist provides a list of critical items for a driver to check on the vehicle prior to the start of the shift or workday. Completing this checklist not only helps ensure the vehicle is safe to drive, it may also help prevent costly on-road breakdowns. Liquid bulk trucks &amp; trailers: product offloading best practice infographic When offloading product from a liquid bulk truck/trailer, it&rsquo;s critical that drivers remain at the controls. Remind your drivers of this important best practice with this pictogram &ndash; and optional decal!

Auto Risk Management Toolkit

Featuring: Kevin Dutchak, Audra Butt, and Leah Strader&nbsp;
As part of a year-end Q&amp;A series, three experts at Sovereign Insurance share the loss trends from 2021 and what to watch out for in 2022 in the transportation sector.&nbsp; KEVIN DUTCHAK, RISK SPECIALIST, COMMERCIAL AUTO What were the loss trends/key exposures you saw this past year? For fleet owners and operators, the loss trends I saw in 2021 were along the lines of sideswipe/lane change losses, rear-end collisions, and backing incidents whereby the driver strikes an object when backing up (pro tip: think GOAL&hellip;<a href="https://www.sovereigninsurance.ca/advice-and-tools/managing-risk/get-out-and-look-goal-in-action" target="">Get Out And Look</a>). The majority of these losses are related to driver behaviour issues, such as not following proper procedures or taking unnecessary risks. In addition to looking at loss trends, it&rsquo;s also important to look at loss severity. For example, the potential for a rear-end collision to be a severe loss event is significant.&nbsp;&nbsp; What are some of the emerging risks to keep an eye out for next year? While this isn&rsquo;t new, an ongoing risk is the lack of a sound driver-selection process. Many companies aren&rsquo;t doing pre-hire road tests, reasoning that the drivers they&rsquo;re hiring are experienced so pre-hire road tests aren&rsquo;t necessary. I always say it&rsquo;s great that the drivers are experienced, but without a pre-hire road test we don&rsquo;t know if they have the appropriate behaviours for the position. These include everything from doing pre-trip inspections to driving behaviours like using signals properly and taking sound defensive driving actions. When screening applicants, the focus should be on driver competency, not just experience. See: <a href="https://www.sovereigninsurance.ca/advice-and-tools/managing-risk/the-importance-of-pre-hire-road-tests" target="">The importance of pre-hire road tests</a> How can organizations mitigate these risks? It&rsquo;s critical for operators to hire the right drivers and do their due diligence, including conducting reference checks with previous employers and conducting pre-hire road tests. It&rsquo;s also important to hold orientation and training to provide new hires with information about the specific needs of the company. For example, what are your company policies? What are your expectations of your drivers? When you consider the importance of being safe on the road and the cost of equipment, it&rsquo;s more than worth the relatively small investment of pre-hire road tests and training. Final point &ndash; periodic refresher training with existing drivers will guard against complacency, ensuring the safety of all drivers within the fleet. See: <a href="https://www.sovereigninsurance.ca/advice-and-tools/managing-risk/best-practices-for-hiring-and-onboarding-new-drivers" target="">Best practices for hiring and onboarding new drivers</a> AUDRA BUTT, AUTO UNDERWRITING MANAGER&nbsp; What were the loss trends/key exposures you saw this past year? One loss trend is the theft of catalytic converters, a car part that contains trace amounts of precious metals. The value of these metals has risen significantly over the past few years, so catalytic converters continue to be an attractive target for thieves.&nbsp; See: <a href="https://www.sovereigninsurance.ca/advice-and-tools/managing-risk/catalytic-converter-thefts-are-revving-up-but-they-can-be-prevented" target="">Catalytic Converter Thefts are Revving Up, but they can be Prevented</a> The second loss trend involves thieves exchanging locks on gates at truck yards and construction sites. When a worker unlocks the gate, oftentimes they leave it hanging on the gate rather than locking up again. Thieves will come along and switch the lock with an identical-looking one. Then when the workers lock up and leave the site, the thieves have free access to the yard where they can steal equipment and cargo.&nbsp; See: <a href="https://www.sovereigninsurance.ca/advice-and-tools/managing-risk/be-aware-of-lock-swaps" target="">Be aware of lock swaps. Protect your business.</a> What are some of the emerging risks to keep an eye out for next year? Catastrophe loss should be on everyone&rsquo;s radar. For example, with recent floods and mudslides in B.C., many commercial vehicles are being rerouted into the U.S. and coming back into Canada. So, we will be seeing more U.S. exposure on accounts that previously had none. Another risk to watch is having too much of an accumulation of vehicles at one location. In this scenario, if there&rsquo;s a flood, fire or other disaster, all the vehicles will potentially be impacted.&nbsp; How can organizations mitigate these risks? When it comes to theft, increased security measures are the primary course of action. Security measures should range from administrative controls such as company policies, to enhanced on-site security measures, to prevention measures on the equipment itself. With catastrophe losses, it&rsquo;s important to pay close attention to new exposures that could potentially happen in existing policies. Organizations should also consider having their vehicles spread out at different locations where possible.&nbsp; LEAH STRADER, SENIOR UNDERWRITING SPECIALIST&nbsp; What were the loss trends/key exposures you saw this past year? When it comes to commercial trucking and transportation, we&rsquo;re seeing higher exposures and greater severity of losses. After the Humboldt tragedy in Saskatchewan, the public wants to be assured that big heavy trucks aren&rsquo;t going to be a hazard when they&rsquo;re sharing the same roads. As a result of loss severity, the market is tightening up on the types of limits that are available, which makes it more challenging for brokers to place an entire account with one carrier.&nbsp; What are some of the emerging risks to keep an eye out for next year? Autonomous commercial vehicles&mdash;with no driver at the wheel&mdash;is becoming a reality in some global markets. There&rsquo;s still a lot of testing being done on autonomous vehicles and with liability issues, again, the public is demanding that these vehicles are safe. On top of that, there is the question of whether autonomous vehicles would fall under an auto policy or P&amp;C because they&rsquo;re controlled by systems. While some people believe autonomous vehicles are just around the corner and others think they&rsquo;re still many years away, this emerging technology is definitely one to watch.&nbsp; How can organizations mitigate these risks? Fleet owners and operators have to make sure they have all their ducks in a row in terms of safety and maintenance. It&rsquo;s critical to conduct frontline training and ensure drivers know what the rules are, sign off on the rules every year, and follow them. From a carrier and broker perspective, it&rsquo;s important to work together and have a true partnership. At Sovereign, we value working with brokers who are knowledgeable in transportation, provide the right direction to their insureds, and are willing to work with us in getting risk assessments done. It&rsquo;s important for insureds to know that we are all working together to mitigate loss exposures and help keep our roads safe.&nbsp;

Loss trends and emerging risks: Transportation

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In a traditional industry like insurance, change can sometimes happen at a gradual pace. But there&rsquo;s one emerging technology many businesses might be wise to move quickly on: Generative AI.
Hailed as a transformative force in business, Generative AI (GenAI) refers to deep-learning models that can generate high-quality text, images and other content based on the data they were trained on.1 While GenAI&rsquo;s roots trace back to the early days of artificial intelligence in the 1950s, the technology burst on the public scene in 2022, when OpenAI launched a consumer-facing GenAI tool called ChatGPT.2
In the insurance sector, experts say GenAI is &ldquo;fundamentally reshaping everything from underwriting and risk assessment to claims processing and customer service.&rdquo; More specifically, GenAI tools &ldquo;have the potential to automate processes, enhance customer experiences and streamline claims management, ultimately driving efficiency and effectiveness across the industry.&rdquo;3
In the Canadian Underwriter 2024 National Broker Survey, sponsored by Sovereign Insurance, brokers were asked how beneficial certain changes or investments have been in their organizations. Just over a fifth (21%) of respondents said using artificial intelligence and machine learning tools such as ChatGPT have been highly beneficial to them. Brokers were also asked how beneficial certain investments and actions have been for strengthening their business. Twenty-two percent of brokers indicated AI and machine learning tools have been highly beneficial on that front.&nbsp;
While it&rsquo;s still early days for generative AI, there&rsquo;s no doubt brokers and carriers alike are thinking about how they can harness the power of GenAI across their operations. Here&rsquo;s a look at a few key areas where the sector can leverage AI.&nbsp;
Claims management: For carriers, one promising application is in claims management, says Ricky Chan, Senior Solution Architect at Sovereign Insurance. &ldquo;Generative AI can help automate claims processing and assessment, which in turn increases adjusters&rsquo; productivity, allowing them to focus their expertise on more complex claims,&rdquo; he says.&nbsp;
Underwriting: GenAI can also help inform underwriting decisions. As Accenture notes, the technology highlights risk control analysis insights to show loss prevention measures in place and the effectiveness of those controls. Generative AI can generate a comprehensive narrative of the overall risk and its alignment to the carrier&rsquo;s appetite and book, as well as identify and source missing data.4
Submissions: For brokers, GenAI has a variety of promising use cases, such as submission preparation and client Q&amp;As. According to Accenture, the effort required to identify adequate coverage and prepare submissions can be dramatically reduced through GenAI. Specifically, the technology can prompt the broker on the types of questions they should ask based on what is known about the insured, the industry the insured operates in, and the risk profile of the insured&rsquo;s company compared to others. In addition, GenAI could identify potentially overlooked up-sell or cross-sell opportunities.5
Information and knowledge: For any company, GenAI can make day-to-day work life easier by performing administrative tasks and knowledge gathering, an area that Sovereign is currently exploring. &ldquo;There are substantial positive impacts to day-to-day operations, such as summarizing information and meeting minutes, intelligent information search and ease of access of information,&rdquo; says Ricky.&nbsp;
Chad Hunter, Vice-President, Information Technology at Sovereign Insurance, adds that Sovereign &ndash; like many companies &ndash; uses a handful of different platforms and domains, including e-mail, OneDrive, SharePoint and Microsoft Teams. By using a natural language chatbot or co-pilot tool, the company&rsquo;s knowledge and data could be streamlined. For example, &ldquo;instead of underwriters having to go to several different spots looking for knowledge, they could use the chatbot&hellip; and behind the scenes, that generative AI model will go to all the different areas and provide real-time responses,&rdquo; explains Chad.&nbsp;
What&rsquo;s next for GenAI? Beyond just talking about the possibilities of the technology, many companies in the insurance space &ndash; Sovereign included &ndash; are now testing and learning. Looking ahead, Deloitte notes that as generative AI moves from possibilities to practicalities, choosing the right use cases, selecting appropriate tools, getting to scale, and accurately measuring progress will all be important steps.6

Sources&nbsp;
1 IBM, &ldquo;<a href="https://research.ibm.com/blog/what-is-generative-AI">What is generative AI?</a>&rdquo; April 20,2023 2 Medium, &ldquo;<a href="https://matthewdwhite.medium.com/a-brief-history-of-generative-ai-cb1837e67106">A Brief History of Generative AI</a>,&rdquo; Jan. 7, 2023 3 EY, &ldquo;<a href="https://www.ey.com/en_us/insights/insurance/how-insurers-can-leverage-the-power-of-generative-ai">How insurers can leverage the power of generative AI</a>,&rdquo; Aug. 28, 2023 4 Accenture, &ldquo;<a href="https://insuranceblog.accenture.com/3-ways-insurance-underwriters-gain-insights-generative-ai">3 ways insurance underwriters can gain insights from generative AI</a>,&rdquo; March 21, 2024 5 Accenture, &ldquo;<a href="https://insuranceblog.accenture.com/5-key-generative-ai-use-cases-in-insurance-distribution">5 key generative ai use cases in insurance distribution</a>,&rdquo; Feb. 13, 2024 6 Deloitte, &ldquo;<a href="https://www2.deloitte.com/content/dam/Deloitte/us/Documents/consulting/us-state-of-gen-ai-report-q2.pdf">Now decides next: Getting real about Generative AI</a>,&rdquo; April 2024

Why the insurance sector should keep step with GenAI 

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Even the most advanced technologies and significant investments in cybersecurity can&rsquo;t fully protect businesses from a major cyber risk: their own employees.
In the 2024 Voice of the CISO report by cybersecurity firm Proofpoint, 74% of survey respondents said human error is their most significant risk when it comes to cyberattacks. This finding is echoed in a 2023 study by Verizon, which found that human error is indeed a factor in 74% of total breaches, despite ongoing efforts by enterprises to strengthen their defences and increase training in cybersecurity.1,2
Employee training can fall short for several reasons: distractions in the workplace, a lack of awareness about the critical role employees play as the first line of defence, and the challenge of staying on top of the evolving threat landscape, to name a few.3
Small- and medium-sized businesses (SMBs) face an even bigger challenge: They might not have the resources to conduct employee training in the first place, relying instead on third parties to support their security measures. This can be a costly mistake.
Despite the perception that cybercriminals only target large corporations, certain types of attacks, such as social engineering, are more frequently aimed at small businesses. These companies are typically not financially prepared for an attack, and it could even put them out of business. According to IBM&rsquo;s 2023 Cost of a Data Breach Report, the average cost of a data breach on organizations with fewer than 500 employees is US$3.31 million.4,5
<h4>Simple steps for employee training in SMBs</h4>
While it may not be feasible for SMBs to regularly conduct extensive employee training sessions, mitigation strategies don&rsquo;t have to be complex. There are simple and cost-effective measures that can be easily understood and adopted, making it possible for SMBs to strengthen their cybersecurity efforts.
Make employees aware of the critical role they play: First and foremost, employees must understand the &ldquo;why.&rdquo; According to a 2023 survey by the Insurance Bureau of Canada, many employees underestimate the role they play in being cyber safe at work and the impact of potential cyberattacks on their employer. Nearly half (47%) believe technology plays more of a role in protecting their workplace from cyber threats than they do; 30% believe their employer is solely responsible for protecting the organization from cyber threats; and 31% do not believe cyber criminals would target them.6
Whether it&rsquo;s in the form of interactive workshops or channels like emails and posters, employers should regularly communicate security awareness to staff. When they are aware of the importance of cybersecurity and their role in safeguarding their company, employees are more likely to take this issue seriously and report suspicious activities.7,8
Educate employees about common and evolving threats: Educating staff about different types of cyberattack, how to spot them, and how to respond to them is crucial for protecting against breaches. Recognizing phishing tactics, for example, includes identifying suspicious emails, unusual requests, and fake websites. Staff should also be clear on who to contact if they encounter a suspicious message. In a social engineering attack, cybercriminals may mimic the writing style of a CEO to trick an employee into sending money. In this case, businesses should have dual controls in place, meaning a second person should verify the request.9,10
As part of awareness training, SMBs can take advantage of free online resources, such as webinars, toolkits, articles and e-learning courses from cybersecurity organizations like the <a href="https://www.cyber.gc.ca/en/small-medium-businesses" target="_blank" rel="noopener">Canadian Centre for Cyber Security</a> and the <a href="https://www.unb.ca/cic/webinars.html" target="_blank" rel="noopener">Canadian Institute for Cybersecurity</a>, the Government of Canada&rsquo;s <a href="https://www.getcybersafe.gc.ca/en/resources/get-cyber-safe-guide-small-businesses#C7" target="_blank" rel="noopener">Get Cyber Safe</a> platform, as well as cybersecurity firms.
Other ways to keep employees informed are through newsletters with tips, news about recent threats and best practices; informal lunch-and-learn lessons where employees can share news and insights; and a database or guidebook where employees can stay up to date on the latest threats and find answers to their cybersecurity questions.11,12,13
Nurture a cybersecurity culture: A strong culture of cybersecurity &ndash; meaning it&rsquo;s entrenched in the company&rsquo;s values &ndash; is essential. SMBs should lead by example, showing the company is committed to cybersecurity at all levels. This makes employees more likely to follow suit. Since employee engagement is a key element of building a cybersecurity culture, business leaders should also recognize and reward employees who demonstrate good practices.14
Another way to build a strong cybersecurity culture is to speak employees&rsquo; language. Experts advise communicating in plain language, avoiding technical jargon and focusing on practical advice employees can use daily. For example, rather than using the term &ldquo;multi-factor authentication,&rdquo; they can explain there is an extra layer of security when logging in.15
Additionally, fostering open communication and a &ldquo;no-blame culture&rdquo; is essential. Employees should feel comfortable asking questions, reporting suspicious emails and voicing concerns without fear of reprisal.16
While SMBs may face resource constraints, the cost of not investing in cybersecurity &ndash; even in the simplest of ways &ndash; is far greater. By prioritizing employee awareness and creating a strong cybersecurity culture, businesses can turn their weakest link into their strongest line of defence.
&nbsp;
&nbsp;
Sources
1 Proofpoint, &ldquo;<a href="https://www.proofpoint.com/us/newsroom/press-releases/proofpoints-2024-voice-ciso-report-reveals-three-quarters-cisos-identify" target="_blank" rel="noopener">Proofpoint&rsquo;s 2024 Voice of the CISO Report Reveals that Three-Quarters of CISOs Identify Human Error as Leading Cybersecurity Risk</a>,&rdquo; May 21, 2024
2 Verizon, &ldquo;<a href="https://www.verizon.com/about/news/2023-data-breach-investigations-report" target="_blank" rel="noopener">2023 Data Breach Investigations Report: frequency and cost of social engineering attacks skyrocket</a>,&rdquo; June 6, 2023
3 Skillsoft, &ldquo;<a href="https://www.skillsoft.com/blog/why-security-training-fails-and-how-to-fix-it" target="_blank" rel="noopener">Why Security Training Fails And How To Fix It</a>,&rdquo; June 3, 2022
4 &nbsp;StrongDM, &ldquo;<a href="https://www.strongdm.com/blog/small-business-cyber-security-statistics" target="_blank" rel="noopener">35 Alarming Small Business Cybersecurity Statistics for 2024</a>,&rdquo; Feb. 1, 2024
5 Business.com, &ldquo;<a href="https://www.business.com/articles/smb-budget-for-cybersecurity/" target="_blank" rel="noopener">The Cost of Cybersecurity and How to Budget for It</a>,&rdquo; Aug. 13, 2024
6&nbsp; Insurance Bureau of Canada, &ldquo;<a href="https://www.ibc.ca/news-insights/in-focus/ibcs-research-suggests-business-owners-and-employees-could-be-putting-their-organizations-at-risk" target="_blank" rel="noopener">Are you cyber savvy? IBC&rsquo;s research suggests business owners and employees could be putting their organizations at risk</a>,&rdquo; Nov. 6, 2023
7 LinkedIn, &ldquo;<a href="https://www.linkedin.com/advice/1/you-need-communicate-security-awareness-your-ob68f" target="_blank" rel="noopener">You need to communicate security awareness to your employees. What are some effective ways?</a>&rdquo;
8 FasterCapital, &ldquo;<a href="https://fastercapital.com/content/Train-your-employees-on-cybersecurity.html#The-Importance-of-Cybersecurity-Training-for-Employees" target="_blank" rel="noopener">Train your employees on cybersecurity</a>,&rdquo; June. 4, 2024
9 Pure IT, &ldquo;<a href="https://www.pureit.ca/five-ways-small-businesses-can-stop-a-cyber-breach-from-ever-happening/" target="_blank" rel="noopener">Five Ways Small Businesses Can Stop A Cyber Breach From Ever Happening</a>&rdquo;
10 Teal, &ldquo;<a href="https://tealtech.com/blog/cybersecurity-awareness-training-for-employees/" target="_blank" rel="noopener">5 Ways to Promote Employee Cybersecurity Awareness Training</a>,&rdquo; July 25, 2024
11 Mitnick Security, &ldquo;<a href="https://www.mitnicksecurity.com/blog/remote-security-tips" target="_blank" rel="noopener">Remote Security: 5 Cyber Security Tips for Employees and Businesses</a>,&rdquo; Feb. 22, 2024
12 The AME Group, &ldquo;<a href="https://www.theamegroup.com/headlines/engage-employees-to-increase-cyber-safety/" target="_blank" rel="noopener">Engage Employees To Increase Cyber Safety</a>&rdquo;
13 &nbsp;Compyl, &ldquo;<a href="https://compyl.com/blog/cybersecurity-awareness-training-for-small-business/" target="_blank" rel="noopener">Getting Started With Cyber Security Awareness Training for Small Business</a>,&rdquo; Sept. 5, 2024
14 Babylon Solutions, &ldquo;<a href="https://www.babylonsolutions.com/cybersecurity-guide-for-small-businesses-how-to-protect-your-company/" target="_blank" rel="noopener">Cybersecurity Guide for Small Businesses: How to Protect Your Company</a>,&rdquo; Oct. 7, 2024
15 SMB Solutions: &ldquo;<a href="https://www.smbsolutions.com.au/10-easy-steps-to-building-a-culture-of-cybersecurity-awareness/" target="_blank" rel="noopener">10 Easy Steps to Building a Culture of Cybersecurity Awareness</a>,&rdquo; Aug. 23, 2024
16 Tripwire, &ldquo;<a href="https://www.tripwire.com/state-of-security/cultivating-cybersecurity-culture" target="_blank" rel="noopener">Cultivating a Cybersecurity Culture</a>,&rdquo; Jan. 23, 2024

Empowering employees to help prevent cyberattacks

Considering the growing shift towards online business operations, it's becoming increasingly vital for small and medium-sized businesses to prioritize cyber security. Here are ten tips to enhance your business&rsquo; cyber security:

How can you control the losses of your commercial auto clients?

How can you control the losses of your commercial auto clients?

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