SPECIALTY LINES MARKETS
And 9/11 plays a big role as well
By Larry G. France
The number of possible markets to access trucking is declining faster than Martha "it's not a good thing" Stewart stock is declining in value. It has been that way for some time. Joe Hutlemyer, president of Seaboard Underwriters says: "The number of markets writing transportation business has declined from roughly 125 six years ago to about a dozen presently. We are not seeing many new entrants, and the pricing continues to increase at a 15% to 20% pace." Hutlemyer also states that reinsurance terms remain strict.
Robert Fiore, senior executive underwriter at Hartford's transportation business unit, says that "while we've seen the liability market for truckers harden from $2,500 per power unit to the present $4,500, there are a few major carriers that continue to hold pricing down." Fiore doesn't believe that this will continue after the July 1 reinsurance treaties renew. "I think that we will see liability pricing of $6,000 per power unit for $1 million CSL by year-end 2002."
Some believe that the pricing will slow. Slow probably means a less than 10% increase. The fact that the trucking market is extremely small compared to just a few years ago contributes to the price increases. There are only so many carriers to access. That number could just as easily be reduced with the financial climate in today's insurance arena.
George Estel, senior vice president of Crump Underwriting Services, is one who thinks pricing will increase but at a slower pace. "Long-haul truck rates continue to climb although the rate of increase seems to be slowing," says Estel. "Rates for $1 million CSL liability are currently in the $4,500 to $550 range, depending on the deductible." Estel expects the rate of increase to be in the area of 5% to 15% for the balance of 2002.
The truck market did not harden overnight, and 9/11 cannot take all of the blame for this market change. Robert Baldwin, executive vice president of Baldwin Sadler Corp.; and Larry Weisberg, vice president, North American operations at VFS Insurance Group, a subsidiary of AB Volvo, express similar opinions.
"Even before 9/11, we noted a significant 'hardening' in the trucking specialty market. The 9/11 tragedy, in our opinion, accelerated an already constricting market," Baldwin says.
Continuing, Baldwin points out: "Over the last five years, 'new players' did not price truck liability, physical damage or motor truck cargo based on actual claims statistics. Trucking classes sustain both loss frequency and loss severity. Adequate price-to-risk ratio was not met. The aftermath of the soft market has been an exodus of primary insurers and reinsurers from trucking classes."
Weisberg agrees that 9/11 only accelerated the hardening of the truck market. "Companies that had existed on cash flow underwriting and investment income for the past several years are now focused on how to generate an underwriting profit, as investment yields have fallen. Additionally, higher reinsurance rates and lack of reinsurance capitol at times have forced primary carriers to limit their offerings."
Weisberg says transportation companies that had not paid attention to their loss ratio and safety records are being hit particularly hard. These companies typically had not been required to pay higher premiums as a result of their questionable records since insurers had been focused on volume instead of profit.
When the market gets tight, most reinsurers are not going to go out on a limb on classes that take close watch in soft-market conditions. Trucking is a tough class to write even when you know what you are doing. Thus, the market shrinks, the pricing goes up because it probably needs to but also because it can, and underwriting guidelines are adjusted to reflect the tighter market.
"Today, we hear frequently from primary insurers that they must allocate their surplus to classes of business that maximize their return on equity," says Baldwin. "Trucking over the long run can be profitable, but in the last five or six years it has not. Thus, the desire to write it has diminished." Baldwin says that reinsurance capacity is also being directed at those classes that offer the highest possible rates. "Many of those reinsurers do not believe trucking yet offers adequate rates. The biggest challenge that truck writers will confront over the next year is finding financially qualified reinsurers to support their program."
Weisberg says that clients can keep their premiums down by dropping physical damage on older units altogether while maintaining the coverage for higher-valued units, or by adjusting down the values of units in the fleet to match current market conditions. "Over time, of course, the best way to secure the most coverage for the best rate is to pay attention to safety details, hire experienced drivers, and drive your claims cost down. As an insurance customer of any type, always remember that eventually you pay for your own claims, so a clean record is always the best buy."
Within the tough truck market there are even tougher risks. Several that come to mind are hazardous materials haulers, loggers, tankers, coal and dump, and flatbed truckers. Add to that the fact that since 9/11, national security has dictated that operating a truck in specific areas of the country or carrying certain cargo presents terrorist risks. This makes underwriting this class even more difficult. Also, waiting to clear a checkpoint prior to entering a tunnel or other critical areas adds to the trucker's downtime
Higher insurance rates and fuel costs, and increased downtime put pressure on the expense side. In the final analysis, truckers are not the only ones to bear increased costs. These costs will be passed on to consumers in cost of goods--and the cycle continues.
The following have responded to our survey and indicated that they are a market for various types of trucking risks:
All Risks Ltd.
1920 Greenspring Dr., Ste. 200
Timonium, MD 21093
(DE/MD)
Contact: Mike Kern
Phone: (410) 828-5810, Ext. 3506
Fax: (410) 828-8179
E-mail: mkern@allrisks.com
NC/VA
Contact: Rex Regan
Phone: (804) 330-4652, Ext. 204
Fax: (804) 330-9485
E-mail: rregan@allrisks.com
PA
Contact: Dave Bowersox
Phone: (717) 600-0417, Ext. 1202
Fax: (717) 600-2291
E-mail: dbowersox@allrisks.com
Web site: www.allrisks.com
An MGA that operates in DE, MD, NC, PA and VA, with limits of up to $2 million. Target classes are owner operators, fleet operations, bobtail/deadhead, for-hire and not-for-hire, intermodal operations, and mobile home toters. Will not write hazardous material haulers. Other coverages offered are liability, physical damage, and cargo.
Several A rated carriers are used to place coverage.
BAT Insurance Corp.
465 S. Beverly Dr.
Beverly Hills, CA 90212
Contact: Tony Trocino, CPCU
Phone: 310-282-0753
Fax: (310) 282-7133
An E&S broker that operates in CA and NV with limits of $1 million. Will offer physical damage. The Berkshire Group is the A rated carrier.
Bolton & Co.
455 South 4th Ave., Ste. 1045
Louisville, KY 40202
Contact: Jackie Reinert
Phone: (800) 626-5209
Web site: www.BoltonMGA.com
An MGA operating in IL, IN, KY, OH, TN and WV, with limits of $2 million liability and $250,000 cargo. Will not write coal haulers. The A rated or better carriers are Canal, Scottsdale, Northland, and National Indemnity.
Burns & Wilcox Ltd.
30833 Northwestern Hwy., Ste. 220
Farmington Hills, MI 48334
Contact: Call 800 number for local branch
Phone: (800) 521-1918
An MGA/E&S broker that operates in all states except AK, HI, MA, ME, NH, NJ, NY, RI, and VT, with primary limits of $1 million and excess limits of $1 million+. Target markets vary per carrier. Will write property, GL motor truck cargo and physical damage. All carriers are rated A or better.
Casualty & Surety, Inc.
200 Chase Park South, Ste. 100
Birmingham, AL 35244
Contact: Lamar Andrews
Phone: (205) 733-1197
Fax: (205) 733-0805
E-mail: landrews@csiapex.com
Web site: www.csiapex.com
An MGA/E&S broker that operates nationwide. Target markets are coal trucking and long-haul trucking--physical damage and cargo only. All carriers are A rated.
Crump Insurance Services, Inc.
1000 Ridgeway Loop Rd.
Memphis, TN 38120
Contact: George Estok, Sr. VP, Crump Underwriting Services
Phone: (800) 26-CRUMP
Fax: (901) 684-3818
E-mail: george.estok@crumpins.com
Web site: www.crumpins.com
An MGA that operates in all states except AK, HI, LA, MA, NY, NH, RI, VA, VT and WA (filings pending in LA, NY, RI, VT and WA), with limits of $1 million CSL, $250,000 cargo, and $1 million CGL (truckers classification only). Target markets are long-haul truckers operating 15-150 power units. Classes not written include dump trucks, hazardous materials, petroleum products haulers. The A rated carrier is the Insurance Corporation of New York
Delaware Valley Underwriting Agency, Inc.
420 S. York Rd.
Hatboro, PA 19040
Contact: Rosemarie Stumpf, Deneen Dallago
Phone: (800) 388-0215
E-mail: stumpf@dvua.com
dallago@dvua.com
Web site: www.dvua.com
An MGA operating in DE, MD, OH, PA and VA, with limits of $1 million. Will offer MTC, physical damage, CGL and umbrella. Canal and National Indemnity are the carriers.
FalconTrust Group
4909 SW 74th Ct.
Miami, FL 33155
Contact: Albert Sotero
Fax: (305) 661-1020
E-mail: marketing@falcontrust.com
Web site: www.falcontrust.com
A national program manager that operates in all states with limits of $1 million CSL auto liability. Will consider a minimum of 10 power units; will not write hazmat or flatbeds. Also offered are physical damage and cargo. Zurich is the A rated carrier.
Freberg Environmental Ins.
1451 Larimer, Ste. 200
Denver, CO 80202
Contact: Gayle Watson, Diana Pantle
Phone: (800) 377-4152
Fax: (303) 623-8101
E-mail: gwatson@feiinsurance.com
Web site: www.feiinsurance.com
An MGA that operates in all states except AK, AL, FL, HI, LA, MA, MS, northern NH and NY with limits of $1 million CSL. Target markets are hazardous materials and hazardous waste haulers--2 power units minimum, 100 power units maximum. Will also offer GL and pollution liability. Gulf Insurance Group is the A rated carrier.
The Hartford
690 Asylum Ave.
Hartford, CT 06115
Contact: Robert Fiore
Phone: (860) 547-2906
Fax: (860) 547-6096
E-mail: robert.fiore@thehartford.com
Web site: www.hartford-specialty.com
An insurer that operates in all states except AK, AL, FL, HI, LA, MS, TX and WV, with auto liability and GL limits of $1 million CSL. Target market is dry freight haulers. Will also offer physical damage and interchange. The Hartford and Hartford Fire Insurance Co. are A rated carriers.
International Broker & Surplus Lines
120 E. Pine St., Ste. 11
Lakeland, FL 33801
Contact: Janner Holliday
Phone: (800) 348-IBSL (4275)
Fax: (863) 687-4684
E-mail: info@ibsl.com
Web site: www.ibsl.com
An MGA that operates in the southeastern U.S. (program availability varies by state), with limits of $1 million auto and GL (other coverages to varying limits). Target markets include long- and short-haul--most commodities except hazardous. Also offers two additional programs: Truckers Package Program for FTC/MTC on a package/monoline basis and truckers NTL Program for NTL/FTC/MTC on a package/monoline basis. All carriers (which vary by program) are A rated.
M.J. Kelly Co., Inc.
4415 E. Sunshine
Springfield, MO 65809
Contact: Katie McCroskey
Phone: (800) 725-7211
Fax: (417) 883-7103
E-mail: kmccroskey@mjkelly.com
Web site: www.mjkelly.com
An MGA operating in AR, IA, IL, KS, MO and OK, with CSL primary liability limits of $1 million. Target market is explosives with physical damage and motor truck cargo also offered. All carriers are A rated.
Market Finders Insurance Corp.
P.O. Box 6549
Louisville, KY 40206
Contact: Shirley Gordon, Joe Miller
Phone: (800) 626-5660
Fax: (502) 426-7970
Web site: www.mfic.com
An MGA that operates in IN, KY, NC, OH, SC, TN and WV, with various limits. Target markets are monoline cargo, physical damage, GL and excess auto liability. Cannot write primary auto liability. Various A rated or better carriers are used to place coverage.
Midwestern Central Agency, Inc.
255 NW Blue Pkwy.
Lee's Summit, MO 64063
Contact: Connie Carrell
Phone: (800) 788-4347
Fax: (816) 246-1290
Web site: www.mgakcmo.com
An MGA operating in KS, MO and NE with limits of $1 million. Will offer motor truck cargo, GL and truck physical damage. Carolina Casualty is the A rated carrier.
Prime Insurance Syndicate Inc./I.E.B.S.
P.O. Box 439
Sandy, UT 84091
Contact: Pete Andersen
Phone: (877) 243-8181
Fax: (877) 452-6910
E-mail: petea@primeis.com
Web site: www.primeis.com
An MGA (I.E.B.S.)/insurer (Prime) that operates in all states with limits as needed. Will consider all classes. Lloyd's is an A rated carrier; Prime Insurance Syndicate is rated C.
RISC, Inc.
2001 Bryan Tower, Ste. 2900
Dallas, TX 75201
Contact: Jim Parker, Sherry Macauley, Jody Moraski
Phone: (800) 725-7472
An MGA/E&S broker that operates in Texas and adjoining states with primary limits of $1 million and $10 million x $1 million excess. Target market is Texas garaged vehicles. Will offer cargo and physical damage. All carriers are A rated.
Robert A. Schneider Agency
5620 Smetana Dr.
Minnetonka, MN 55343
Contact: Mary Alyce Slowe
Phone: (952) 938-0655
Fax: (952) 938-0701
Web site: www.rasinc.com
An MGA/wholesaler that operates in IA, MN, ND, SD and WI, with limits of $2 million. Target market is fleets with over 100 units. Also offered are liability, physical damage, cargo, GL, property, and inland marine. Canal, Carolina Casualty, Empire Fire & Marine and Wilshire are the carriers.
Roush Insurance Services, Inc.
P.O. Box 1060
Noblesville, IN 46061
Contact: Vince Duvall, Ext. 14; Scott Sackers, Ext. 23; Tony Armor, Ext. 17
Phone: (800) 752-8402
Fax: (317) 776-6891
E-mail: vince.duvall@roushins.com scott.sackers@roushins.com tony.armor@roushins.com
Web site: www.roushins.com
An MGA that operates in IL, IN and OH, with primary limits of $1 million--trucking, $1.5 million--public auto and $1 million to $5 million--excess. Most classes will be considered. Reliant American Group, Scottsdale, and National Casualty are the A rated carriers.
Seaboard Underwriters, Inc.
P.O. Box 1478
Burlington, NC 27216
and
25 Main Place, Ste. 300
Council Bluffs, IA 51503
Burlington
Contact: Flip Hogan, Elaine Barrow
Phone: (800) 222-2407
Fax: (336) 229-6977
Iowa
Contact: Mary Zeller
Phone: (800) 517-5665
Fax: (712) 388-3159
Web site: www.seaboardunderwriters.com
An MGA that operates countrywide except in AL, LA, MA, NJ, NY and TX, with primary limits of $1 million and excess limits of $4 million. Target market is hazardous materials. Will also offer truckers liability, motor truck cargo, non-trucking liability (bobtail), physical damage and excess liability. The A rated or better carriers are Sirius America, Lloyd's, and Ace.
Surplus Insurance Brokers Agency, Inc.
P.O. Box 749
South Bend, IN 46624
Contact: Jean Allen, Todd Pontius
Phone: (800) 342-5706
Fax: (800) 578-7758
E-mail: jallen@surplusins.com, tpontius@surplusins.com
An MGA that operates in IN only, with limits of up to $2 million. Target market is local, intermediate, and long-haul. Will not write private passenger types, trash haulers and hazardous. Also offered are liability, physical damage, med pay, UM-UIM, GL and cargo. Northland is the A rated carrier.
Swett & Crawford
109 S. 7th St., #600
Minneapolis, MN 55402
Contact: Doug Hathaway
Phone: (612) 233-0361
Fax: (612) 333-3666
E-mail: DougHathaway@swett.com
Web site: www.swett.com
An MGA that operates in all states except LA and MA. Will write GL, property and umbrella, with limits of $1 million (CSL), $500,000 (cargo) and $250,000 (physical damage per vehicle). Will not write haz mat. Various A rated carriers.
Transportation Insurance Specialists
158 N. Harbor City Blvd., 4th fl.
Melbourne, FL 32935
Contact: George Corolla, Ext. 3463
Phone: (800) 444-8474
Fax: (321) 757-6147
Web site: www.tis-ins.com
An MGA that operates in all states except AK, HI and MA, with primary limits of $1 million; excess on selected accounts. Will not consider dump, hazmat or sand and gravel. Will offer physical damage, CGL, MTC, property, passenger accident, Occ. Act. GAIC, Royal & Sun Alliance, and LGIC are A rated carriers; RWIC is a B rated carrier.
Truckers Insurance Associates, Inc.
P.O. Box 1494
Des Moines, IA 50306
Contact: Gary K. Albaugh
Phone: (800) 652-9515
Fax: (515) 276-1418
E-mail: info@truckersins.com
Web site: www.truckersins.com
An MGA operating in IA, IL, KS, MO, NE, ND and SD, with liability limits of $5 million; cargo $500,000; physical damage (per vehicle) $250,000. Target markets are most types of trucking risks. Prohibited classes are liability for haulers of extra-hazardous materials. Will also write auto liability, GL, physical damage, cargo, WC, property and inland marine. Northland, Empire Fire and Marine, and Carolina Casualty are the A rated or better carriers.
United Brokers Inc.
P.O. Box 1243
New Albany, IN 47151
Contact: (primary) Amy Zettel; (cargo, physical damage) Erin Miles
Phone: (800) 444-4824
Fax: (812) 949-4015
Web site: www.ubinc.com
An MGA that offers primary in GA, IN, KY, OH, OK, NC, TN and WV and physical damage and cargo in the 48 contiguous states--with limits of up to $1 million. Will not consider hazmat or dumps. Will offer GL, property, umbrella, excess, and inland marine. Occidental Fire and Casualty, Penn America, and American Southern are the carriers.
W.A. Schickedanz Agency
P.O. Box 445
Belleville, IL 62222
Contact: Steve or Jack Miller
Phone: (800) 869-9976
E-mail: sales@waschickedanz.com
An MGA that operates in IL and MO only, with CSL limits of $1 million. Will offer motor truck cargo. Insurance Corp. of Hannover is an A rated carrier; Acceptance Casualty and Occidental Fire & Casualty are B rated carriers. *