With the rise in e-commerce and demand for delivery, final-mile delivery represents a growing need in coverage. Independent agents are best positioned to educate customers on these coverage decisions.
Over the past few years, more customers have started seeking out local deliveries of food and goods that they previously would have picked up themselves. This has caused a shift in the commercial auto and trucking space, dramatically impacting the demand for delivery, and driving growth in the gig-economy delivery market.
Final-mile delivery—that last step to bring a product to the customer's door—has unique risk exposures compared to traditional trucking. These delivery drivers need more flexible motor cargo insurance products to cover their risks. Independent agents are uniquely positioned to best serve their customers by offering the ease, choice and advice to deliver comprehensive, affordable coverage.
Here are three things independent agents should know about final-mile delivery and how you can better serve these customers:
1) Final-mile delivery is not the same as trucking. While final-mile delivery has some of the same risk exposures as traditional trucking, the scale is very different. As these delivery drivers make frequent stops, they are at increased risk of theft. This is one of the most common causes of loss in the delivery space.
The other common cause of loss is damage. The growth in delivery has led to more inexperienced delivery drivers on the road. These less experienced drivers are more at risk of an accident, increasing the risk of damage to the cargo they are carrying.
However, this space has lower severity than the traditional trucking industry. These drivers drive fewer miles and haul smaller, less valuable loads. As a result, there is a lower risk of damage from an accident or theft during the course of delivery.
While it is clear that the growing demand for delivery necessitates motor cargo coverage for more businesses, these customers need a product that is more flexible and affordable than traditional motor truck cargo offerings. They need a product that can be customized to meet their needs, such as the new motor cargo product released by Liberty Mutual last year.
2) Agents are uniquely positioned to offer the best protection. One of the biggest challenges faced by companies using final-mile delivery is in the insurance purchasing process, which is usually not intuitive or customer friendly. Most customers are not aware that there is a commercial use exclusion on their personal auto policy and that they need business insurance to protect them.
Affordability is the other challenge faced by customers, especially when they are shoehorned into policies that are designed for traditional trucking operations. In this case, drivers must either pay steep prices for limits and coverages that they don't need or risk being liable for the theft and damage of goods in their care during the delivery process.
Independent agents can serve a critical role in educating customers on the risks and the best coverage solutions. They are also uniquely suited to recommend appropriate customized solutions through products like Liberty Mutual's motor cargo product that are specifically designed with flexibility and scalability.
3) This is an opportunity to grow your book. In this “new normal," delivery is a customer expectation in many purchase decisions. Fast delivery is no longer a value-add. It is the standard—and final-mile delivery is a critical component in the e-commerce equation. In fact, according to the World Economic Forum, there are expected to be 36% more delivery vehicles on the roads by 2030.
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. The growth of final-mile delivery also offers agents a unique growth opportunity.
Increasing growth of the gig economy in the delivery space means that more people are turning to a business lines policy when they realize that their personal auto policy does not offer adequate protection. With more customers—either established businesses or independent gig operators—needing the counsel, advice and education from independent agents in this area, agents have an opportunity to harness the significant momentum from the industry growth.
Liberty Mutual's new Motor Cargo product is available in most states and will become available to more states in 2022.