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SPECIALTY LINES MARKETS
TRUCKING
There are two sides to every story
By Larry G. France
Input from agents, MGAs and carriers is invaluable when assessing the current conditions in any insurance line. We can gauge the attitude of markets and see what the major issues are affecting pricing, underwriting, and capacity for the future.
However, the insured’s viewpoint can add valuable insight as to why a particular market may be experiencing a certain degree of softness or hardness, as well as letting us know how well the industry can handle rate changes. In the case of the trucking market, this is especially true as rising fuel costs are having an impact across the board.
The exchange of information within the insurance community is very useful, but if we don’t get an insured’s perspective, it would be like a doctor diagnosing an illness without talking to the patient, or a field commander dismissing intelligence reports.
The insured perspective
We went to the home office of Celadon Trucking Services in Indianapolis to get their perspective on the issues facing the trucking market. Started in 1985,Celadon now is the largest transporter of truckload freight between Canada and Mexico. It has terminals in Michigan, Illinois, and Texas; employs more than 3,500 people; and runs over 7,200 trailers. It has handled more than two million crossings between the United States, Canada and Mexico since 1985. The vast majority of Celadon’s drivers are employees.
Celadon’s top management addressed the major transportation issues, such as driver shortages, safety, technology, and recruiting. According to Brett Terchila, director of recruiting for Celadon, he’s not aware of a shortage of drivers. He said that it’s more likely to be a “churning” of drivers. Some companies may be losing drivers to other companies that provide better working conditions. Terchila said that the over-55 drivers are used to staying on the road for periods of weeks, even months. The younger drivers who are coming into the market will not work those hours. Terchila noted that Celadon pays well and offers more time at home for its drivers. The time away from home is 10 to 17 days and their drivers receive one week’s pay for every 30,000 miles driven. Celadon has a saying that they have two customers, the driver and the client.
According to a recent article in the Indianapolis Star, a report by Little Rock, Arkansas-based Stephens Investment Banking, drivers ranked “respect from management” second only to pay, more important than health care benefits, pension plans, and time away from home. Almost 40% said they left their last trucking job because of a lack of recognition and respect.
According to Terchila, Celadon offers some of the best driver benefits in the industry, in addition to continuous training.
William Osborn, vice president of safety for Celadon, said, “When you hire drivers, you bring in the best and support the drivers by being interactive with them.” The corporate emphasis needs to be on the long view, not the short view. He said that everyone must be involved—including drivers and dispatchers.
All trucking operations have to comply with new, stricter federal regulations regarding drug and alcohol abuse. In addition, Homeland Security has affected the time that drivers must wait in checkpoint lines and at border crossings, and time equals money in transportation.
Celadon, with its more than 2,000 border crossing per week in and out of Canada and Mexico, stands to be affected more than most.
Kenneth Core, vice president of risk management for Celadon, said that the delays over the last 24 months rose more than 50%, but crossings into Canada have been better in the last year.
All delays, whether at border crossings or elsewhere, also have an impact on the bottom line because of fuel consumption while waiting.
In order to operate more efficiently, today’s transportation operation needs to rely on technology. The expenditure of thousands of dollars in the systems for base operations and mobile equipment ultimately can be offset by fewer delays.
Thomas Glaser, president and COO for Celadon, said, “We track where the pick up is to made or delivered, monitor drivers’ hours to see if we need to slow them down or even take them off the road if they are in danger of exceeding their maximum. We can reroute them if an overpass clearance is too low, map out the best way to get from point A to point B, and find street addresses.” Glaser said that some new technology—such as electronic logbooks—has been in testing for some time but all the bugs have not been worked out.
The August 2004 Specialty Lines article on trucking stated: “The trucking market is very stable
Unless …
• interest rates begin to rise
• new markets unwisely try to buy business
• fuel prices continue to increase
• hiring standards are lowered to address the need to add drivers.”
Celadon’s operation shows how the impact of these factors can be lessened through technology to cut down on fuel being wasted during long delays and improving benefits so that drivers are attracted to the company. However, the size and international presence of Celadon makes it somewhat unique when compared with smaller fleets and owner/operators. When the economic outlook started going south in the late 1990s and was hurt further by 9/11, some transportation companies went out of business and a percentage of drivers left the industry. So there may in fact be a smaller pool of drivers from which these carriers are trying to recruit.
The insurance market perspective
“From an underwriting perspective we understand that economics will impact the viability of the risk,” said Dale Schueffner, principal officer of Northland Insurance Companies.
Schueffner said that the trucker who’s running harder and longer to break even may compromise safety. “We emphasis proper risk control procedures along with good underwriting, working as a team with our agents and insureds to identify and review potential problems, recommending corrective actions which reduce and/or eliminate losses.
“Successfully insuring truckers today is far more than the availability of the market and collecting the premium,” said Schueffner. “The truck insurer and the agent who want to be successful in this business must work closely with the insured to help keep that equipment safely and economically moving down the highway.”
Delta General Agency, Inc.’s, Linda Horn, senior transportation underwriter, shares the same attitude, noting that the transportation industry is changing day to day. “Premiums quoted last year certainly will not sell this year. New county mutual programs and standard companies are available in the marketplace for many classes of business, including long-haul trucking. We are seeing heavy competition on larger accounts, $100,000 and over in premium, as these new markets are introduced.”
Horn also stated that lower premiums and flexible payment arrangements, whether in reporting or premium funding, are getting the attention of many trucking companies that are looking for relief from cash flow concerns.
“With the cost of fuel and fleet maintenance, truckers are seeking ways to avoid increasing their hauling rates to their customers,” according to Horn. “Insurance, being one of the biggest expenses to every trucker, is being looked at very seriously as a means to reduce some of these expenses. The monthly out-of-pocket premiums as well as the annual premiums are of a concern.”
Horn concluded, “We must know where each insured is with their insurance needs and what they are looking for us to do to help with their renewal concerns.”
Markel Insurance Company of Canada is the largest insurer of trucking in Canada. We asked President Mark Ram to comment on the top three trucking issues in Canada. “The rising cost of diesel fuel is perhaps the most pressing concern for Canadian truckers,” said Ram. “The cost of diesel fuel has increased 45% in the past 22 months. For the average long-haul trucker, that’s hundreds and even thousands of dollars in additional and unexpected expenses per month. While many truckers depend on surcharges to compensate for fluctuating diesel costs, this might be only a short-term measure. Nobody knows how high the costs will increase or how quickly.”
Ram said the current driver shortage continues to be a challenge in Canada, and this poses two problems. First, there’s a sheer shortage in the number of drivers. Some sources say that 375,000 new drivers are needed over the next 10 years to serve an expanding economy and replace retiring drivers. Second, Canada lacks a national standard for qualifying new truck drivers. This has enabled, according to Ram, less-than-reputable driving schools to push new drivers into the industry to meet the soaring demand. “Put simply, we need more qualified truck drivers in Canada now.”
A third issue, according to Ram is timely claims reporting. “From an insurance perspective, one of the most important concerns is the immediate and direct reporting of claims. Research shows that faster reporting can translate into lower claims cost. For example, a two-week reporting delay can increase the average cost of a claim by 18%, and a five-week delay produces a 48% increase. Immediate and direct reporting of claims and losses enables an insurance company to go to the scene and conduct its own investigation and gather evidence that can help in the event of a lawsuit. If you wait too long, the accident or loss gets cleaned up, and it’s likely that the evidence that can protect you in court is long gone.”
The changing marketplace can create new opportunities for some when they least expect it.
In 2001 after a merger of Charter Insurance Companies and Financial Indemnity Company, Unitrin Specialty was created and focused on personal and commercial vehicles. It was writing in seven states and had $26 million in written premium, with a heavy emphasis in California. That changed when turmoil hit the Texas MGA marketplace.
In 2001,Unitrin went from $2 million of written premium in Texas to $26 million in 2002. A large portion of the new premium was in extra heavy trucking. Two-thirds of the business in Texas is tractor-trailers and other heavy trucks.
“Agents began submitting a ‘heavier’ book of business, so we had to gain the trucking expertise in a hurry and make the adjustments in our internal structure,” said Glenn Corbitt, commercial product manager.
Corbitt said that Unitrin currently writes in the seven states and plans to expand to two additional states per year.
According to Corbitt, some of the direct writers are placing coverage on sand and gravel haulers for what would appear to be less than soft market prices. If that is the case, those insureds may well prepare for a new carrier in the future. Writing those classes of business is difficult enough when you are getting the right rate and have years of expertise.
Yes, there two sides to every story. Getting to know your clients’ needs and concerns may produce more and longer lasting relationships.
The September Specialty Lines article will be Pay for Play/Leisure Risks followed by Professional Liability in October and Apartments/Condos in November.
The following responded to our survey and indicated that they are a market for certain classes of trucking risks.
Aberdeen Insurance Group
1364 Welsh Rd., Ste. E2
North Wales, PA 19454
Contact: Thomas S. Downie
Phone: (800) 845-4150
E-mail: aberdeeninsgrp@hotmail.com
Web site: www.aberdeeninsgrp.com
An E&S broker operating in DE, MD, NJ, OH and PA with limits of $1 million CSL. Target class is general commodities (intermediate and long-haul). Will not write local or haulers of petro products. Can offer GL. Insurance Company of Pennsylvania is the A+ rated company.
Adriatic Insurance Co.
3501 N. Causeway Blvd., Ste. 1000
Metairie, LA 70002
Contact: Joseph E. Taylor
E-mail: jtaylor@adriaticinsurance.com
Web site: www.adriaticinsurance.com
An insurer that operates in AL, AR, AZ, CA, DC, FL, GA, IA, ID, IL, IN, KS, KY, LA, MD, MI, MN, MO, MS, MT, NC, NE, NJ, NY, OH, OK, OR, PA, SC, SD, TN, TX, UT, VA, WA, WI, WV and WY with physical damage limits of $115,000 per vehicle; combination, $150,000; and motor cargo of $100,000 per load. Adriatic is an A rated company.
Aon Specialty Product Network
200 E. Randolph St., 18th Fl.
Chicago, IL 60601
Contact: Aon Specialty Product Network will direct you to the appropriate provider company.
Phone: (877) 275-2776
Fax: (312) 381-6211
E-mail: moreinfo@askaspn.com
Web site: www.askaspn.com
An MGA/E&S broker/program administrator that operates in all states. Various A rated or better carriers are used to place coverage.
Arlington/Roe & Company, Inc.
8900 Keystone Crossing, Ste. 800
Indianapolis, IN 46240
Contact: Joe Ricigliano, Ext. 8611; Perry Fague, Ext. 8690; Jackie Mattingly, Ext. 2404
Phone: (800) 878-9891
E-mail: jricigliano@arlingtonroe.com pfague@arlingtonroe.com jmattingly@arlingtonroe.com
Web site: www.arlingtonroe.com
An MGA that operates in IL, IN, KY and OH with limits of $1 million. Target classes are long-haul (general commodities), intermediate (general commodities), local (general commodities). Will not write Haz-mat exposures. Can offer cargo, GL and physical damage. Carriers are Guilford (A-), Stratford (A+), National Casualty (A+), Canal (A+), National Indemnity (A+), and AIG (A+).
BAT Insurance Corp.
801 N. Brand Blvd., Ste. 310
Glendale, CA 91203
Contact: Tony Trocino, Ext. 101
Phone: (818) 409-3900
E-mail: ttrocino@choprainsurance.com
An E&S broker that operates nationwide with limits of $10 million. Target class is high-hazard truckers. Will not write taxi cabs. Can offer cargo, truck physical damage, and valet service. Carrier is rated A+.
BISYS Commercial Insurance Services
158 N. Harbor City Blvd.
Melbourne, FL 32935
Contact: Michael Oliver
Phone: (800) 444-8474
Fax: (321) 757-6145
E-mail: trucking@bisys.com
Web site: www.bisyscommercialins.com
An MGA that operates countrywide with primary liability limits of $2 million and excess and umbrella of $10 million. Target classes are local, intermediate and long-haul dry goods, refrigerated goods, intermodal, flatbeds, fleets, and owner/operators. Will not write hazardous materials haulers. Can offer physical damage, cargo, GL, non-truck liability, occupational accident, and passenger medical. Carriers are Lincoln General (A-); and Carolina Casualty, Axis, Adriatic, Great American, and Lloyd’s, which are all rated A.
Caitlin-Morgan Insurance
11555 N. Meridian St., Ste. 100
Carmel, IN 46032
Contact: Gerry Dumke, Ext. 280; Mike Eiteljorge, Ext. 235
Phone: (800) 723-7475
Fax: (317) 575-4454
Web site: www.caitlin-morgan.com
An MGA/broker that operates in AL, CO, IA, IL, IN, MI, MO, MS, NC, NE and TN with excess liability limits of $1 million. Will write workers comp. AIG is the A+ rated carrier.
Central Insurex Agency, Inc.
800 S. Washington St.
Van Wert, OH 45891
Contact: Deb Moser, Karen Schmid
Phone: (800) 736-7131
Fax: (800) 736-7026
E-mail: dmoser@central-insurance.com kschmid@central-insurance.com
Web site: www.central-insurex.com
A general agent that operates in OH only with limits of $1 million—on selective accounts, $2 million. Target class is steel haulers. Can offer physical damage, cargo, and GL. Northland, Fireman’s Fund, and Lloyd’s are the carriers.
Delaware Valley Underwriting Agency, Inc.
420 S. York Rd.
Hatboro, PA 19040
Contact: Rosemarie Stumpf, Jeff Wright, Kelli Steffey
Phone: (800) 388-0215
Fax: (215) 672-7983
E-mail: info@dvua.com
Web site: www.dvua.com
An MGA/E&S broker that operates in DE, KY, MD, NC, OH, PA, SC, VA and WV with limits of $1 million in-house with excess limits available. Will consider various classes except Haz-mat. Can offer physical damage, trailer interchange, cargo, truckers GL, excess and umbrella. All carriers are A- rated.
EIB
P.O. Box 4439
Sandy, UT 84091
Contact: Russ Sorenson, Missy Byrum
Phone: (877) 678-7342
Fax: (801) 304-5551
E-mail: russs@eibdirect.com
melissab@eibdirect.com
Web site: www.eibdirect.com
An E&S broker that operates in all states with all limits. Will consider all classes. Carrier is B- rated Prime Insurance Syndicate.
Hanover Excess & Surplus, Inc.
P.O. Box 12450
Wilmington, NC 28405
Contact: Renee Davis, Stephanie Morgan, Jeanne Hall
Phone: (800) 672-9006
Fax: (800) 910-8136
Web site: www.hanoverxs.com
An MGA operating in NC, SC and VA with primary limits of $1 million CSL. Will not write chemicals, dump trucks, or fleets over 9 units. Can offer cargo, physical damage and GL. Lancer Management is the A- rated carrier.
International Brokerage & Surplus Lines
122 E. Pine St.
Lakeland, FL 33801
Contact: Clyde Holliday, Janner Holliday
Phone: (863) 687-2940
Fax: (813) 569-1768
E-mail: info@ibsl.com
Web site: www.ibsl.com
An MGA that operates nationwide with motor truck cargo in-house authority to $250,000, physical damage for single trucks to fleets. Target classes are dry goods, flatbeds, refrigerated goods, autos/boats, truck brokers, mobile homes, and household goods. Will not consider Haz-mat. Can offer incidental contractor’s equipment—online quotes via Web site. Lloyd’s is the A+ rated carrier.
Jimcor Agencies
525 Plymouth Rd., Ste. 305
Plymouth Meeting, PA 19462
Contact: David Pottle, Ext. 229; Peggy Chapman, Ext. 230
Phone: (800) 521-9559
Web site: www.jimcor.com
An MGA/wholesaler that operates in CA, CT, DE, FL, IL, IN, MD, ME, NJ, NY, OH, PA, RI, VA and VT with limits of up to $1 million. Target class is 1-25 power units, intermediate and long-haul. Will not consider Haz-mat, dumping, logs, coal or mobile home haulers. Can offer physical damage, motor truck cargo, trailer interchange, GL and excess liability. AIG, Chubb, Lloyd’s, Essex, Gen Star, ACE, and United National are the A- or better rated carriers.
M.J. Hall & Company, Inc.
709 N. Center St.
Stockton, CA 95202
Contact: Cindi Larson, Ext. 141; Kathy Cortez, Ext. 136
Phone: (209) 948-8108
Fax: (209) 465-3843
Web site: www.mjhallandcompany.com
An MGA/E&S broker that operates in northern CA only with limits of up to $25 million. Target class is small fleets (10 power units or less). Can offer GL, MTC, property, and excess liability. All admitted and nonadmitted carriers are rated A++.
M.J. Kelly Co., Inc.
4415 E. Sunshine
Springfield, MO 65809
Contact: Sandy Shue, Tracy Fisher, Z Heffern
Phone: (800) 725-7211
Fax: (417) 883-7103
E-mail: sshue@mjkelly.com tfisher@mjkelly.com eheffern@mjkelly.com
Web site: www.mjkelly.com
An MGA/E&S broker that operates in AR, FL, IA, IL, KS, MO, MS, OK, TN, TX and UT with limits of $1 million. Target classes are flat-bed, reefer hauler, and dry freight. Will not consider Haz-mat. Can offer garage, public and business auto, motor truck cargo, and auto physical damage. Lincoln General, Essex, National Indemnity, Stratford, Interstate, and Western Heritage are the A rated or better carriers.
McLeckie Insurance Group
P.O. Box 770
Naples, TX 75568
Contact: Bill McLeckie, Jason McLeckie
Phone: (877) 905-9090
Fax: (903) 897-0062
E-mail: bill@mcleckie.com
Web site: www.mcleckie.com
An MGA/E&S broker that operates in all states with limits as required. Can offer motor truck cargo and truck physical damage. Various admitted and nonadmitted carriers are used.
Midlands Management Corp.
3503 N.W. 63rd, Ste. 305
Oklahoma City, OK 73123
Contact: Brandon Davis, Dewey Isham
Phone: Davis (800) 800-4007, Isham (888) 743-2628
E-mail: bsdavis@midman.com disham@midman.com
Web site: www.midlandsmgt.com
An MGA—call for details regarding states, limits and target classes. Can write monoline liability, monoline physical damage, monoline cargo, monoline non-trucking liability. Can also offer package products. All carriers are A rated.
Prime Insurance Syndicate Inc./I.E.B.S.
P.O. Box 4439
Sandy, UT 84091
Contact: Any underwriter
Phone: (877) 243-8181
Fax: (877) 452-6910
E-mail: uda@primeis.com
Web site: www.primeis.com
An insurer (Prime) and MGA (I.E.B.S.) that operates in all states with all limits. Will consider all classes. Prime is rated B-.
Robert A. Schneider Agency
5620 Smetana Dr., Ste. 225
Minnetonka, MN 55343
Contact: Kathy Anderson
Phone: (800) 832-6038
Fax: (952) 938-0701
E-mail: rs@rasinc.com
Web site: www.rasinc.com
An MGA/E&S broker operating in IA, MN, ND, SD and WI with limits of $5 million. Target market is high-risk types. Can offer liability, physical damage, cargo, and GL. Canal, Carolina, and Empire are the carriers.
Seaboard Underwriters, Inc.
3035 S. Church St.
Burlington, NC 27215
Contact: Libby Smith, Elaine Barrow, Flip Hogan
Phone: (800) 222-2407
Fax: (336) 229-6977
E-mail: libby@seaboardunderwriters.com elaine@seaboardunderwriters.com flip@seaboardunderwriters.com
Web site: www.seaboardunderwriters.com
An MGA that operates in all states except CA, CT, LA, MA, ME, NH, NJ, NY, RI, TX, and VT with primary limits of $1 million and excess of $4 million. Target classes are for-hire and private carriers (1-250 units) and public auto. Will not consider hazardous commodity haulers. Can offer commercial auto liability, physical damage, GL, motor truck cargo, garage, and non-trucking liability. The A rated carriers are ACE, Empire, Crum & Forster, National Interstate, Colony/Interstate, Scottsdale, Lloyd’s, State National, Stratford, Carolina Casualty, and St. Paul E&S.
Swett & Crawford
21650 Oxnard St., Ste. 1400
Woodland Hills, CA 91367
Contact: Craig Rubin
Phone: (800) 262-6099
Web site: www.swett.com
An MGA/E&S broker that operates in all states with primary limits of $1 million, and unlimited excess. Target classes are long-haul and intermediate distance, non-hazardous commodities. Will not consider truckers requiring $5 million in liability due to commodities hauled. Can offer physical damage, cargo, GL, and excess liability. All carriers are rated A- or better. Availability varies by state.
United Brokers, Inc.
P.O. Box 1243
New Albany, IN 47151
Contact: Amy Zettel
Phone: (800) 444-4824
Fax: (812) 949-4015
E-mail: amyz@ubinc.com
Web site: www.ubinc.com
An MGA that operates in AL, FL, GA, IL, IN, KY, MN, OH, OK, TN and WV with limits of $1 million—excess of $5 million available. Target classes are dry box van, refrigerated commodities, and flatbed freight. Will not consider Haz-mat. Can offer GL truckers, bobtail, excess/umbrella, non-trucking liability, physical damage, and cargo. Carriers are Occidental Fire & Casualty, National Casualty, Penn-America, and American Southern.
Unitrin Specialty
8360 LBJ Freeway
Dallas, TX 75243
Contact: Greg Corbitt
Web site: www.unitrinspecialty.com
An insurer specializing in commercial vehicles that operates in AZ, CA, CO, OR, TX and WA with limits of $1 million. Target markets are preferred trucking, dump trucks, couriers and artisan. Will not write livery, emergency vehicles, logging or tow trucks. Can offer truckers liability. Unitrin is an A rated company.
W.A. Schickedanz Agency, Inc.
300 W. Main St.
Belleville, IL 62220
Contact: Steve Miller, Michael Miller
Phone: (800) 869-9976
Fax: (618) 233-0672
E-mail: sales@waschickedanz.com
An MGA that operates in AR, IL and MO with primary limits of $1 million, and excess of $10 million. Will not consider Haz-mat. Can offer auto liability, physical damage, cargo, non-trucking liability, trailer interchange, and GL. Occidental Fire & Casualty, National Indemnity Group, and Lloyd’s are the carriers.
Yates & Associates Insurance Services
2100 E. Fourth St., 2nd Fl.
Santa Ana, CA 92705
Contact: Alvin Hardridge, Rudy Mendoza, Dean McNicol
Phone: (800) 660-1125
Fax: (800) 378-8588
Web site: www.yates-assoc.com
An MGA operating in 48 states with limits of $750,000 and $1 million (excess available). Target classes are dry goods, building materials, groceries, and electronics. Can offer cargo, GL, trailer interchange, and physical damage. All admitted and nonadmitted carriers are A rated. *
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