Health Insurance Matters

By Lina Demedieros

Increasing Sustainability and Profits with Proper Coverage

Recently, I received a post card from Vancouver from a reader advising it was much better being a driver than an Owner Operator. Thank you for your comments, however, the sole difference is money management. All these opportunities exist in Owner Operator community as more trucking companies increase compensation acknowledging overall expenditure absorbed by the O/O.

On October 31st, 2008, I attended The Health & Safety Association conference, Dr. Peter Strahendorf spoke of “Internal Responsibility Systems and Due Diligence” in regards to Health and Safety matters within an organization, how it was everyone’s responsibility and NOT exclusive to management.

As an Owner Operator, this starts with you at many levels. After 14 years, I have heard some of the largest trucking companies negotiate benefits on a volume basis on behalf of their Owner Operators. One message was always loud and clear. Low cost insurance and affordable alternatives. The insurance industry took plans off their shelves sold back in the 1950’s to meet the demands of O/O. These plans affording catastrophic coverage sold in millions depleted the industry of Quality Owner Operators, because they found themselves “not covered” for many situations after the fact. However, today we do have many O/O’s and carriers who witnessed the impact of their sustainability and profits which is directly and indirectly influenced by the choices made from a risk management standpoint.

A driver gets an hourly wage or salary per month, Employment Insurance, Canada Pension Plan and sometimes Benefits. The inherent cost to the employer is large since they are subject to pay health tax, payroll tax, CPP contribution on your behalf, WSIB coverage and Group Benefitsthat produces an average of a $100 to $150 monthly expense for the employer. A $45,000 net taxable income after tax delivers only approximately $30,000 of take home pay after all these expenses have been addressed. The tax man alone gets approximately 20-28% of your pay cheque.

As an Owner Operator earning $140-$150,000 Gross, you pay tax or draw corporately on $45,000 excluding your truck payment, insurance, meals, CPP coverage, private insurance for loss of income, out of province (if required), health & dental coverage. The tax man still takes 20-28%, however you do own the truck, pay for maintenance and fuel. The key to profitability is managing your money. The opportunity here to reduce your operating costs is amazing. Your job is to ensure that the opportunities you get will generate a profit.

It is everyone’s responsibility to sustain business and increase profits. When you leave the decision solely up to the transport carrier it becomes a heavy burden on their operational costs which reflects your operating costs. Driver models are easier to manage but equally harder to find. The investment is so great at many different levels, from a corporate standpoint not easily implemented because of safety and health matters not to mention the due diligence that rests with the company and everyone within the organization.

Independence and freedom has its advantages but comes with a price. The choices you make in regards to your own personal loss of income from an injury and or illness, extended health care or life insurance standpoint has a direct impact on your partner; the transport company. The largest operational cost is fleet insurance and your insurance portfolio handling risk management which directly impacts all aspects of your business in the event of a loss.

As an advisor, who specializes in this market providing proper risk management solutions we always listen to your concerns, implementing proper risk management solutions which may be difficult based on reaction without consideration of impact on other aspects of business. However, this management style has lead to many losses that directly impacted your fleet insurance and companies abandoning the industry as a whole.

As we draw near to the end of 2008 many fleets have learned that many Owner Operators are NOT exercising their own “internal responsibility system” by implementing proper risk management solutions. Survival of this industry is dependent on everyone’s co-operation in transportation. Each and every Owner Operator should implement his or her own “internal responsibility system”. Once this has been accomplished there will be savings, increased profits and sustainability in the industry. The key is to start managing your own business and understand your limitations. Merry Christmas!

Lina M. Demedeiros
Living Benefits Specialist
E&O.E.

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