As more businesses offer delivery, motor cargo exposures have increased. Agents are well positioned to understand risk and advise customers.
The impact of COVID-19 on consumer purchasing has created a lasting shift in the trucking and delivery industry. As demand for delivery increased, so did motor cargo exposures.
This change has created new demands for motor cargo insurance, but the traditional products are not always the best fit for the evolving market. This has created a new opportunity for independent agents to serve their customers by understanding their unique risk profiles, identifying key coverage needs and offering the ease, choice and advice to deliver comprehensive, affordable coverage.
Here are four things independent agents should know about the evolving market:
1) More companies are delivering. In 2020, consumer purchasing habits increased the demand for final mile delivery from companies like Amazon. With customers demanding quick shipping, more businesses began to offer delivery as a service to meet the shifting business climate.
The World Economic Forum cited a 25% rise in e-commerce deliveries in 2020, and this shift in behavior is expected to continue into the future.
Any business transporting property owned by others needs motor cargo insurance. Given the broad range of businesses that now perform transportation and delivery services, from large trucking companies to individual Amazon delivery drivers, there is substantial opportunity in this space, and an increasing demand for agents to understand carriers' product offerings and coverages.
2) Motor cargo is for more than just semi-trucks. Motor cargo insurance coverage has typically been designed for fleets of semi-trucks. With robust base forms and high limits, existing products fit traditional trucking markets.
However, motor cargo insurance is also needed for final mile and on-demand delivery businesses, and existing products are often cost-prohibitive for smaller final mile and on-demand delivery operations. These types of businesses need products that can be customized and tailored to their unique risk exposures with lower limits, a wide variety of optional coverages and affordable premiums.
Products like Liberty Mutual's new motor cargo product (expanding into more states in 2022), meet the needs of the smaller operators, while still providing robust coverage for the traditional semi-truck market.
3) Agents are well-positioned to understand risk and offer solutions. As consultative advisors, it is critical that agents understand the full spectrum of a client's exposures when they are using their auto for deliveries. Traditional motor cargo products are often more expensive and robust than what many final mile and gig-economy delivery drivers require, so agents can advise clients on more affordable and customizable options, such as the new product released by Liberty Mutual last month.
With the increased motor cargo exposures, agents should understand the products available in the market that can meet the needs of the emerging market segments, while still offering comprehensive protection to the traditional trucking industry.
4) The market is continuing to grow. Final mile delivery is projected to continue growing from $40 billion in 2020 up to $70 billion in 2025, according to Freightwaves, the world's leading supply chain intelligence platform. This is a growing industry that will only continue to strengthen in the future.
It is critical that independent agents understand the unique risks posed to customers in this industry and how carriers, like Liberty Mutual, can offer best-in-class solutions.
In November 2021, Liberty Mutual launched a new motor cargo product; this product will become available to more states in 2022.