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National Freight did not look like a particularly promising candidate for achieving self-insurance status from the Interstate Commerce Commission in 1991 when John J. Carney became risk manager of National Freight Industries Inc., the Vineland, N.J.-based holding company that includes long-distance trucking firm National Freight.

The trucking company had a lackluster safety record, having lagged behind the trucking industry average for a number of years. Standard operating procedures and documentation of steps taken to improve safety weren't in place. The process itself for winning ICC self-insurance status was complex, cumbersome and time-consuming.

In fact, even now, only 56 trucking companies out of a potential pool of about 60,000 qualify for self-insurance status, which is now overseen by the U.S. Department of Transportation.

And National Freight is one of those 56.

"They said it couldn't be done, and he did it," said Thomas A. Lucci, principal with National Commercial Insurance Services of Chagrin Falls, Ohio, a company that provides National Freight Industries with consulting and brokerage services.

To apply for self-insured status, National Freight had to submit the past three years of insurance history, including safety ratings and job descriptions of everyone in the insurance and claims department, Mr. Carney said. He had to outline the entire safety program. Mr. Carney prepared a book on the essentials of risk control and described the company's drug program. He also detailed National Freight's cargo claims history.

In addition, to achieve the designation, National Freight had to agree to buy $14 million in excess insurance above the $1 million self-insured retention, he said.

He also had to detail what estimated savings would arise if the company won self-insured status. Mr. Carney said he estimated the amount to be more than $600,000 in first year, pointing out to the ICC that National Freight could put savings back into the organization by improving the company's safety program and creating new jobs.

But "the real key to self-insurance is the collateral issue," he said. A self-insured trucker must maintain letters of credit and notify the Department of Transportation if there's any drawdown. Drawdowns must be replenished within 60 days, he said.

Mr. Carney submitted a 121-page application in early 1994. The document was hand delivered to the ICC, he said.

The ICC approved the designation in eight months. National Freight posted $2 million in irrevocable letters of credit to cover $2 million in bodily injury and property damage as well as $10,000 per occurrence for cargo insurance.

The real concern of regulators is to make sure of the "financial ability of National Freight to protect the public" and to have a safety program in place, he said.

The designation is particularly important because the trucking business operates on a very tight profit margin, he said. "You're making pennies per miles," he noted.

In addition, the designation has become a marketing tool.

"When the federal government says, 'Yes, you're OK to self-insure' with the rigid requirements they have, it raises us up several levels in the eyes of the customers."

Ironically, market conditions have led National Freight to reconsider its self-insurance program, he said.

"Even though we have the ability to self-insure to $1 million, we've reduced our retention to $500,000," said Mr. Carney.

"The market was soft, our record was good, and the timing was right." As a result, National Freight bought liability insurance from Fireman's Fund Insurance Co. to cover the top half of the $1 million it had previously self-insured, and locked it in for three years.

"Six, seven years ago, we couldn't have bought it," he said. "We had to sell ourselves."