Well, safe to say the past couple of years have been strange, so what’s in store for Owner Operators and Truck Insurance in 2022?
Last Mile Delivery
No surprise here, Last Mile Delivery exploded during Covid and continues to grow. In 2020, the LMD industry was valued at $18.7 billion and it’s expected to grow to $62.7 billion by 2027.
Truck Accident Litigation
Setting aside nuclear verdicts over $1 Million that have increased by 335%, ATRI reports that other litigation cases resulted in an average payment of between $406,386 and $449,792.
Settlements are also coming in 37.7% higher than verdict awards.
Here’s the alleged infractions and average payment size according to their November report “The Impact of Small Verdicts and Settlements in the Trucking Industry”:
There’s a reason insurance costs vary from state to state. For example, these 4 states had an average litigation payment over 50% larger than the national average:
- New Jersey
- North Carolina
Insurance companies look at where your vehicles are garaged and tagged to determine your main state of operations.
Commercial Auto Insurance Marketplace
Despite years of increased truck insurance premiums, profitability for this market has been negative since at least 2010.
The good news is that fewer cars on the road during Covid allowed the commercial auto market to experience results that were the best it’s seen in years…but unfortunately still unprofitable.
AM Best still maintains a negative market segment outlook for commercial auto. For this reason, few new companies enter the truck insurance marketplace.
Insurance underwriters continue to search for methods to determine safe risks they want to insure, and all are competing for trucking accounts with a pattern of safety.
Safety Technology Leads the Way
So insurance companies want data, data, data…
They start with monitoring the FMCSA Safer System which documents violations and incidents. Plug in any DOT number for a Company Snapshot, Safety Measurement System score (SMS) as well as Licensing and Insurance info.
Most insurance providers now offer credits for permission to monitor your Electronic Logging Device (ELD). Some discounts are significant.
For example, Progressive offers a “Smart Haul” technology program that offers average savings of $1,384 per year for DOT accounts.
SnapShot “ProView” is their telematics device for drivers who do not have an ELD.
Look for road-facing camera discounts to emerge soon. It was a hot topic of discussion at the Motor Carrier Insurance Education Foundation (MCIEF) annual conference. Impressive newer technology and methods provide protection for the DRIVERS’ rights while providing irrefutable safety documentation.
Coro reports that the transportation sector has seen cyber attacks rise almost 150% between January 2020 and December 2021. Trucking is especially vulnerable due to it’s reliance on networked systems for operations.
For most readers here, Cyber Insurance is affordable and can easily be added to your Business Owner Policy (BOP) for a few hundred bucks. Anyone who stores digital data needs this coverage to protect themselves from data compromise, computer attacks and electronic extortion.
Know the value of your vehicle
It’s the wild, wild west out there on vehicle values and fuel costs. If world events don’t calm down soon, expect the wild ride to continue. Remember that at the time of loss, the insurance company will look at the vehicle’s Stated Amount and Actual Cash Value (ACV) and pay whichever is LESS. Read this to learn more.
…Then think about your possible Out of Pocket Expense
In the event of an At Fault Accident, decide now if you’re flush to absorb the Downtime Loss of Income or Rental Replacement cost. Think about a possible Tow Bill and whether you would prefer to absorb it or insure for it. We’ve all heard the tow truck horror stories.
There are a number of stand alone Big Rig Towing policy insurance companies. In 2022 Progressive jumped into the fray with their new Heavy Truck Roadside Assistance Program.
Here’s what Underwriters (and the algorithms) look at to determine pricing:
1. Age, Experience, Violations and At-Fault Accidents
2. Any Pattern of NOT At-Fault Accidents
3. Any Pattern of Driver and Unit Turnover
4. Number of Out of State Drivers
5. Evidence of Hidden Drivers
6. Payment History on Current Policy
7. Years with the Same Policy
8. OOS – Out of Service Violations
9. Credit, Credit, Credit…
I hope this blog helps my Owner Ops feel SOME sense of control over their biz future, though if this strange world continues I won’t be surprised to see a dinosaur cross the street:)
Shelly Benisch, TRS, CIS
Commercial Insurance Solutions Inc.