The trucking insurance market is facing significant challenges, leaving many brokers and their clients in a tough spot. With insurance premiums skyrocketing, legal uncertainties rising, and some insurers exiting the market, brokers who fail to adapt could jeopardize their clients’ businesses.
Kenny Planeta, a transportation broker at Heffernan Insurance Brokers, highlights a dramatic shift in the industry. He notes that while costs for drivers, equipment, and fuel have surged, freight rates have remained stagnant. This imbalance is putting immense pressure on profit margins for trucking fleets. In fact, Planeta shared that he has seen long-time clients decide to sell their businesses due to these financial strains.
Legal unpredictability is also driving up costs. Planeta points out that it’s not the severity of claims that’s causing premiums to rise, but rather the uncertainty surrounding liability. He recently witnessed a minor accident escalate into a $275,000 payout during a mediation, where he had expected only a $25,000 settlement. Insurers are increasingly opting to settle cases to avoid the risk of hefty jury verdicts, especially in unpredictable jurisdictions.
As the number of willing carriers decreases, brokers are finding it harder to secure insurance for their clients. Planeta advises brokers to start the process early and review claims frequently, rather than waiting until the last minute. Proper documentation is crucial; underwriters are quick to decline accounts that are incomplete or have a history of losses.
Some fleets are managing to thrive despite the challenges. Planeta notes that these successful fleets typically have strong claims histories, maintain consistent safety records, and engage with brokers early in the process. He mentions that group captives are now available to smaller fleets, allowing them to access better insurance options.
However, rushing submissions can lead to costly mistakes. A 25% increase on a $400,000 premium could mean an extra $100,000 in costs. Planeta warns that outdated information or last-minute changes can derail deals. He emphasizes that the gap between effective brokers and others lies in their market knowledge, given the niche nature of trucking insurance.
To improve client relationships, brokers need to shift the conversation. Many clients mistakenly believe that insurers are profiting from high premiums. In reality, insurers aim for a loss ratio of 55-60% to remain profitable. Planeta often educates clients about the math behind insurance costs and the importance of being on an insurer’s "want" list.
Frequent shopping around for insurance can backfire, creating inconsistencies that frustrate underwriters. Instead, Planeta advocates for a focused approach: one broker, one strategy, and transparency throughout the process. He believes that the best deals come from working closely with knowledgeable brokers who can present clean, compelling applications.
In today’s volatile market, it’s essential for brokers and fleets to act with discipline. Waiting until the last minute can lead to dire consequences, including financial losses that could threaten the viability of trucking operations.