Carriers cut insurance coverage as premiums soar, ATRI report reveals

Carriers have reduced insurance coverage levels, increased deductibles and self-insurance retention levels, and decreased investments in other cost centers, a new report has found.

The American Transportation Research Institute (ATRI) released a report Thursday analyzing the impacts on the trucking industry of rising insurance costs.

(Illustration: ATRI)

ATRI found that despite increased liability exposure, incident costs and involvement in carrier accidents remained stable or decreased among the majority of respondents.

The analysis used detailed financial and insurance data from dozens of motor carriers and commercial insurers. The report assesses the immediate and longer-term impacts of rising insurance costs on carriers’ financial conditions, safety technology investments and accident outcomes, as well as the strategies carriers use to manage the Escalating Insurance Costs.

Despite reductions in insurance coverage, increased deductibles and improved safety, almost all motor carriers experienced substantial increases in insurance costs from 2018 to 2020.

(Illustration: ATRI)

Premiums increased across all fleet sizes and sectors, with small fleets paying more than three times as much as very large fleets on a per mile basis.

The ATRI report on The Impact of Petty Verdicts and Settlements in the Trucking Industry found that this category of litigation resulted in an average payout of between $406,386 and $449,792.6. Factors related to the litigation process – rather than the accidents themselves – have a statistically significant impact on payment amounts.

Cases in high-litigation states such as California, Michigan, New Jersey, and North Carolina, for example, “had average litigation payouts more than 50% higher than the national average.”

Reductions in coverage limits offered by insurers also force carriers to seek alternative sources of coverage or operate with greater exposure to nuclear verdicts.

Motor carriers have responded by adopting various strategies to restructure insurance policies, improve safety and redistribute operating costs.

However, insurance costs are not the only ones to increase. New technologies that help make trucks safer, bonuses or higher wages that promote safe driving practices, and administrative initiatives to develop more comprehensive safety training and legal protocols have all had costs. higher marginals.

(Illustration: ATRI)

A third of respondents said they have reduced salaries or bonuses due to rising insurance costs, and 22% have reduced investments in equipment and technology, which could create future security and safety issues. shortage of drivers.

However, in the short term, accident data confirms that carriers that increased deductibles or reduced insurance coverage generally had an incentive to reduce accidents the following year.

Road-facing cameras have become a strategic tool for insurers, carriers and drivers as they provide irrefutable safety documentation, reducing claims and defense costs. Camera evidence allows insurers to immediately determine the empirical facts of an incident to determine the most effective response to a legal action, whether a settlement or a challenge in court, and minimize costly round trips.

“ATRI’s study supports Triple-I research on rising insurance costs and social inflation – that increased litigation and other factors significantly increase insurers’ reimbursements,” Dale said. Porfilio, insurance director of the Insurance Information Institute.

“External factors that go far beyond carrier safety are driving up commercial trucking insurance costs, which in turn forces carriers to rethink their business strategies. Higher premiums eventually tend to be passed on to consumers in the form of higher prices for goods and services.

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Justin D. O'Neill