Editorial: Trucking's New Insurance Blues

Insurance coverage and rates are once again big news in trucking circles, as underwriters raise their rates for liability and cargo insurance and threaten to stop writing policies in some regions or for trucking operations with poor claims records.

Underwriters are warning carriers to brace for substantial premium increases and telling them they need to cooperate better with insurance companies to improve their performance to reduce claims and keep a cap on rates.

Even more potentially troubling than a major increase in rates — of a least 10% to 20% according to several underwriters — are warnings that some companies may stop writing policies for all trucking companies or for carriers operating in certain parts of the country.

These warnings bring back memories of the crisis during the mid-1980s when several insurance companies refused to writing liability policies for truckers.

To be sure, some of the problems this time around are self-inflicted, with insurance companies dropping rates in recent years in order to garner market share, leading to thin, if any, profit margins. This leaves the insurers vulnerable to any small jump in claims, and calls into question their efforts to increase business in trucking.

And now that claims rates are rising, many of the insurance companies say they’re hurting and need immediate relief.

This run-up in insurance rates comes as fuel is at a three-year high and as the continuing performance of the U.S. economy has made it harder and harder to recruit competent drivers to move ever greater amounts of freight, leading to higher wages and benefits packages. So, trucking companies have got to prepare their customers to bear those increased costs.

Insurers are offering the industry suggestions on how to keep their rates down, ranging from raising the deductibility limits on their liability policies to minimizing the theft risk of trailers by not leaving them unattended in remote or crime-ridden areas.

The same way that some trucking companies are offering shippers lower rates if they pledge to reduce freight turnaround by loading and unloading trailers quickly, at least some insurers say they’re willing to keep a cap on premiums for truckers who agree to work to reduce claims.

Through such cooperation, both sides can make sure that there is no new insurance crisis, while at the same time each makes a reasonable financial return for their efforts.