Market Recap: Trucking

As we look back this year and ahead to next year, Bryan Woods, COO and CFO of Paramount MGA, provides insights on trucking insurance and how Paramount has approached the market. An ISC company, Paramount has several proprietary transportation programs, including Domestic  Trucking Liability and Trucking Liability for carriers transporting goods to and from a recognized US Trade Zone for companies in Texas and California. In addition, Motor Truck Cargo, Truck Physical Damage, and Non-Trucking Liability are available in most states – through its direct and wholesale markets.

The primary liability market remains competitive, according to Bryan, despite an overall move toward high per-insured unit pricing. “We pushed rate throughout 2022 with a year-over-year increase of 20%+. However, overall premiums for new business and renewals have declined as the rate adequacy needed to provide carrier and reinsurer profitability has not been recognized by all market competitors. Paramount has seen recent evidence of players in the niche still issuing policies at rates that aren’t aligned with underlying loss costs.”

Bryan explains that, because of Paramount’s multiple liability markets and the capacity to meet demand at the targeted rates, its carrier and reinsurer partners are pleased with its risk selection and pricing levels. “Moving forward, there should be no issues providing the capacity needed to serve our agents and their insureds.

“On the Cargo and Physical Damage side, the market remains soft, especially on larger accounts. We look to package these coverages with liability risks whenever possible.”

What Does 2023 Look Like in Trucking Liability?

Paramount anticipates liability rates from competitors increasing as losses stack up against historically inadequate premium levels for those who have not taken proactive rate increases over the last two years. “With two solid years of rate increases under our belt, Paramount should be better positioned to be more competitive to the market, as we were earlier in recognizing the need for rate adequacy.”

Bryan does emphasize that high settlement amounts continue to play a role in driving rate adequacy. “While Paramount’s carriers generally seek to settle claims before they reach trial, rising settlement amounts in the many locations our insureds travel through still drive loss costs and the resulting premium that must be charged.”

Other trends, in addition to seeing historically underpriced competitors now pushing rate, include larger trucking carriers turning to self-insured structures to combat rising insurance costs. “In addition, we are monitoring the impact of higher diesel costs on small fleets and new ventures formed by experienced operators. Our average fleet is around four units, and small fleets continue to face the challenge of rising insurance costs and ever-increasing diesel prices. Although we have seen no meaningful decrease to date in demand for Paramount products, we recognize  inflationary pressure has the potential to  push down freight demand.”

Improving an Insured’s Risk Profile

Paramount recommends insureds carefully monitor their CAB scores, especially Hours of Service and Vehicle Maintenance, to improve their risk profile. “Despite the driver shortage, having well-documented driver training, background checks, and regular MVR checks are also critical. In-cab cameras are valuable in ascertaining exactly what happened in an accident. The lack of these controls allows plaintiff attorneys to push for inflated loss settlements. We look at these risk-mitigation measures and more during our underwriting process and adjust pricing accordingly.”