Commuter transport stuck in a decade-long slump

Commuter transport stuck in a decade-long slump

Commercial vehicle carriers continue to hike premiums for primary and excess/umbrella coverage, while simultaneously limiting capacity and implementing tight risk assessment and underwriting criteria.

Broker Clark Miller of Burns & Wilcox's Transportation Practice Group says underwriting criteria are getting stiffer. "The pool of accounts eligible for normal markets continues to dwindle, while the E&S market remains quite active."

This is true for both for-hire trucking and heavy business auto segments such as garbage and recycling, environmental contractors, and general contractor fleets.

Burns & Wilcox is a growing North American wholesale insurance broker and managing underwriter. Clark, located in Arlington, Texas, said carriers are starting to "check off certain states or metro regions entirely" in addition to boosting auto liability costs.

According to him, insurance companies want transport companies to avoid particular locations. "Some insurance firms say, ‘We're not writing accounts based in this state, or these five counties, or this corner of the state.'"

The political climate in a state or region may cause carriers to avoid it. For example, in some areas, juries award significant $10 million+ awards against commercial transportation corporations or other professions that may cause bodily injury.

According to one analysis, the average nuclear verdict against a commercial transportation client increased from $2.3 million in 2010 to $22.3 million in 2021. This has led to recent rate and renewal increases.

"The fear of these enormous verdicts pushes insurance firms to settle claims rapidly, often exceeding policy limitations," Clark explained. "The obvious result is that greater claim settlements force rates up."

A documented and enforced safety management system and DOT compliance are [commercial transportation] clients' best defense against nuclear judgements. I know several competent agencies serve their clients with such systems and support."

Clark stated that technology is boosting driver safety with telematics, cameras, sensors, and things like simulated driver training.

"Dash cams and telematics to capture driver performance used to be something that produced bonus points with insurance companies," Clark said. "Nowadays, insurance companies demand motor carriers and insureds to employ this technology as standard."

"To take it a step further, we're already seeing auto liability programs that use telematics data nearly in real-time to rate drivers. It will be interesting to see how that develops over time - it is a novel development."

Clark predicts the transportation insurance market to continue "becoming worse" into the second quarter of 2022. In this scenario, it is vital for agents and brokers to provide compelling client submissions that help differentiate risk.

"Presenting the account as attractively as possible is key now," Clark said. "Ways to do it include data analysis and a narrative.

"Data analysis will require pre-underwriting to estimate risk and potential profitability vs the target that you're looking for. It's all about providing data to support what the insured is doing to make their future more profitable for underwriters than their past.

"As a wholesale partner, we absolutely work hard to aid our agencies and producers." To improve the marketability of your account rather than just blasting it out to market and crossing your fingers and hoping for the best.

You may read the Original article at https://www.insurancebusinessmag.com/us/news/commercial-auto/commercial-transportation-industry-stuck-in-a-decadelong-hard-market-403422.aspx