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Virus, higher trucking premiums roil transportation sector: RPS


The COVID-19 outbreak has roiled transportation insurance markets as trucking continues to drive rates higher in the sector, according to a report released Tuesday by Risk Placement Services.

“The jarring impact of COVID-19 has caused disruption across the transportation industry. Various segments have adapted and repurposed their business models, while others have been forced to halt operations,” said the report from the managing general agent/underwriting manager and wholesale insurance broker.

Years of underperforming combined ratios have forced insurance carriers to pass on double-digit premium rate increases, with rates rising 10% to 15% year-over-year since 2010, RPS said in a statement issued with the report.

“As the commercial auto insurance industry continues to struggle with a myriad of challenges that have influenced premium rates over the last decade, plus the impact of the current pandemic, the current market firming is expected to continue during the second half of 2020,” RPS said.

As part of the response to the impact of coronavirus, insurance carriers have reduced premiums, deleted units and waived monthly minimum reporting for mileage, receipts or units, it said.

This comes in the face of a commercial auto sector that has struggled for years to achieve profitability, it said.

“Inadequate pricing and reserving has led to premiums that have not kept up with losses for several years,” the report said, adding that “insurance carriers have had underperforming combined ratios that have steadily increased since 2014.”

The last year for which data is provided, 2018, showed a combined ratio of 112.9%, up from 111.0% in 2017 and 110.4% in 2016, the report said.

Trucking continues to see challenges against this background.

“Trucking is a difficult class of business for insurance carriers,” Mike Mitchell, area president of RPS’ transportation practice, Southeast region, said in the report. “Truckers are on the road every day, so the exposure is always there.”

Even companies that haven’t experienced losses are getting hit with rate increases, the report added.

Trucking markets substantially influence the overall commercial sector, the report said.

“While the commercial auto marketplace is impacted by a number of different classes of business, the trucking industry is contributing to the continual rise in premiums and influencing rates more than any other,” RPS said.

Trucking faces a number of challenges in addition to the constant exposures of being on the road every day, including an aging workforce and driver shortages, the report said.

More insurance and risk management news on the coronavirus crisis here.