The commercial auto insurance market is facing tough times in 2024, with most major carriers struggling to make a profit. Data from AMS shows that 14 out of the top 20 insurers reported combined ratios over 100%, meaning they are paying out more in claims and expenses than they earn in premiums. This difficult environment is forcing trucking companies to rethink how they manage risk to keep their fleets covered.
For many insurers, the last profitable year was 2021, during the pandemic when fewer vehicles were on the road. Since then, costs have kept rising due to factors like large jury awards, social inflation, and increased legal claims. These pressures have pushed premiums higher, even as trucking companies face shrinking profits.
Mark Gallagher, national transportation director at RPS, described the situation as a hard market that is either arriving or already here. He explained that premiums and losses both continue to rise, with some insurers even leaving the commercial auto space altogether.
The insurance challenges come on top of a weak freight economy. Spot and contract freight rates remain low, orders for new heavy-duty tractors have dropped by about 15% compared to last year, and bankruptcies are affecting fleets of all sizes. Rising interest rates only add to the strain.
To cope, trucking firms are making key changes:
- They are focusing more on specialized freight with steadier income or better safety records. This helps offset tight margins.
- Some operators are buying assets from failed competitors and offering extra services like final-mile delivery or dedicated contracts to keep customers loyal.
- Insurers are rewarding clients who report accidents quickly, often through telematics technology that speeds up claims and reduces costs.
- Safety efforts now rely heavily on using data, not just devices, to coach drivers and track risky behavior.
For brokers, helping clients survive the tough market means being organized and proactive. Providing detailed data upfront, encouraging timely claims reporting, and exploring excess and surplus (E&S) markets for flexible coverage are all important steps. Brokers should also help clients make the most of telematics data to prove safety and reduce risk.
Another growing concern is cargo theft, which is becoming more sophisticated. Criminals often use social engineering to trick truckers into diverting loads. Regular cargo insurance usually doesn’t cover these scams. Mike Mitchell, regional VP at RPS, emphasized that brokers need to educate clients about cyber coverage and endorsements that protect against these losses. Truckers should also adopt stronger cyber hygiene, like using multi-factor authentication and double-checking instructions.
In short, the commercial auto market remains challenging for both insurers and trucking companies. Those who adapt through better risk control, data use, and smarter coverage choices will have the best chance of staying covered and profitable in these difficult times.