Changes in the insurance transportation marketplace are coming in 2019 and beyond. There are many different factors that are playing pivotal roles in changing the entire landscape and upending what we’ve been used to for decades. From technology to driver shortages, commercial property to new players in the freight market, there is so much to be looked at.
The transportation industry is considered a scale of the U.S. economy. If freight is moving forward, the economy is mirroring it. But with driver shortages, low truck supply, and new technologies changing the way companies operate, trucking firms and transportation insurance are being shifted into uncharted territory.
Strong Economy, Weaker Employment
According to the American Trucking Association, the trucking industry is undergoing the fastest growth it’s seen in 20 years. Tax reform, increases in truck tonnage, employment, manufacturing, and equipment are pushing the industry forward. This positive trend is being held back in some ways by the driver shortage that’s occurring due to a tighter labor market. While the economy is up and freight levels are following suit, there aren’t enough drivers to handle the current loads. While the high demand has expanded rates for truckers, a lack of drivers is holding back some possible growth.
Rising Costs of Doing Business
The rising costs of making business happen is another constraint on trucking firms and the transportation insurance market. The cost today compared to five years ago is high and only getting higher. The industry is seeing the cost of implementing new technologies, such as smartphones, electronic logging devices, come down but it can still be very expensive to run a company.
This theme has overlapped with trucking insurance. Rates have gone up significantly in the last couple of years, even with a slight dip back in overall pricing in the last couple of quarters. Averaging rate increases and flat renewals are far from being common again. The trucking industry is seeing smaller companies look for ways to save on finances in today’s market to keep operations going. This could mean that transportation insurance is either brought to a minimum or taken out completely.
Currently, the transportation insurance market is seeing rate increases in both physical damage and auto liability. Underwriting has seen more demands being asked of the client and has tightened up when it comes to looking at what clients are doing in safety. Underwriters are paying closer attention to hiring as there are a lot more requirements on the motor carrier today. Insurance rates may not be going down anytime soon and may actually continue to rise the rest of the year.
Smaller Fleets and Startups
The trucking sector is presenting opportunities for insurance specialists even with the challenges its facing. When it comes to the world of small fleet companies and new ventures, like tech startups with trucking operations, plenty of people are taking notice. But while new companies are exciting and keep popping up, finding the right transportation insurance company at a fair price can be hard to come by.
There are a wide number of new companies kicking the tires, so to speak, in the space, including drivers who have had experiences with other companies and try to start their own business. A startup or small business can be looking at a high premium based on their uncertainty from an underwriting perspective.
Another thing holding companies back in terms of insurance is growth. While the getting is good right now for business, there is so much competition within the small fleet community that a company with two or three contracts isn’t promised that they will get another one or two in the coming year or so. WIth carriers having strict guidelines on growth, obtaining insurance may be hard.
About Genesee General
At Genesee, we strive to provide quality insurance solutions for the Commercial E & S sector. Our longstanding expertise has allowed us to successfully serve your clients for over three decades. Our specialized products include coverages for Transportation, Garage, P & C, Professional, Brokerage Property, Specialty Programs and many more. For more information about our products, we invite you to contact us today at (800) 282-8755.