While hard market conditions continue within the trucking industry, clients continue to shop around for better rates. Here are three ways to assist clients in getting the best rate and coverage to meet their needs.
Hard market conditions continue to be a factor in the trucking industry. Although the demand for freight is up and trucking companies are poised to take advantage of this in 2021, how this will affect insurance rates is yet to be seen.
“While the pandemic has allowed carriers to catch up a little, it's more of a reset than an ability to lower rates and bring a softer market," says Mark Gallagher, national transportation practice leader, Risk Placement Services. “Years of underperforming combined ratios have forced insurance carriers to pass on double-digit premium rate increases, which have risen 10-15% year-over-year since 2010."
While a hard market is not conducive to finding lower rates, it does “tend to prompt more shopping, so this is a great time to market your agency's value proposition to the trucking community," says Peter Niro, truck product development manager, Progressive Insurance.
Here are three ways to assist your trucking clients to get the best rate and coverage to meet their needs:
1) Adapt and diversify. Clients that adapt and diversify to meet the new demands for various types of freights “should be positioned well moving forward," Gallagher says.
While the demand for consumer goods such as home office furniture and outdoor recreational equipment has increased, the pandemic has adversely impacted the demand for the transportation of goods in other areas.
“The West Coast wildfires will cause less produce to be available. Therefore, the demand to haul it before it spoils will cause those truckers to be in demand at a high price," Gallagher says. “Freight capacity has also shrunk for building materials that are in high demand, such as lumber, concrete and steel, [which are] needed to rebuild many areas of the country damaged by hurricanes and wildfires."
Trucking companies will play a key role in transporting the COVID-19 vaccine this year, a charge for which “the trucking industry is extremely adaptable and is ready for the changes," says Bryan Woods, chief operations and financial officer, Paramount General Agency—a subsidiary of Integrated Specialty Coverages.
As clients meet the needs of the changing environment, “I would encourage agents to take a more active role in planning discussions with their commercial auto markets," says Dan Clements, director of sales, transportation, Sentry Insurance. “Learn about their appetite for growth in the upcoming years, their financial results, and how you fit into their plans."
2) Safety technology. “We anticipate average renewal premiums to go up by at least 10%, more for accounts with adverse prior loss experience and elevated Central Analysis Bureau (CAB) scores," Woods says. “Moving forward, agents should work with insureds on documenting maintenance and loss control programs and enhancement plans, as well as maintaining detailed driver qualification and training files."
Developments in telematics and safety technology like dashcams may present the long-term answer to helping bring about lower rates.
“A major development in the truck market is that large states like Texas and Florida have adopted electronic logging devices (ELD) mandates for most intrastate trucking operations, similar to the federal mandate for truck operations engaged in interstate commerce," Niro says.
Telematics and safety technology can help business owners monitor and promote safe driving habits and can help establish facts in the event of an accident. “Sharing your knowledge and expertise with respect to saving on insurance costs and promoting safe driving behaviors is a great way to grow your business and build trust with clients," Niro says.
Moving into 2021, “favorable CAB scores, inspection selection system scores and documented safety and training plans are key factors that will impact underwriting and insurance costs across commercial trucking," Woods says. “Harnessing CAB, other data sources and AI to leverage risk selection and underwriting are the largest opportunities within commercial trucking insurance."
3) Avoid coverage gaps. While working with clients to help lower rates through increased safety measures, it's important to evaluate their overall coverage needs and avoid any coverage gaps. “The features included in a policy contract can vary from one carrier to the next, and professional truckers will need a variety of coverages to meet contractual obligations and protect their business," Niro says.
“Cyber coverage continues to be underutilized in trucking," says Nick Saeger, assistant vice president of transportation product, pricing & underwriting, Sentry Insurance. “Motor carriers are still heavily targeted and having coverage that protects them, their data and assets is a great coverage."
Like many industries, the trucking industry has seen an increase in cyberattacks. “Cyber liability coverage is harder to obtain after a cyber event, as the company will experience more scrutiny in the marketplace," Woods says. “It's better to have the coverage in place prior to a cyber event."
As clients' businesses evolve, “it's important to review growth plans, ensure the policy is rated accurately, highlight key features of your client's policy contract, and understand if coverage needs have changed," Niro says.
Olivia Overman is IA content editor.