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Specialty Lines Market Long-haul trucking By Larry G. France The trucking market has obstacles coming from all sides. The cost of fuel is skyrocketing, and some independent drivers have chosen to park their rigs because they cannot afford to run with such high overhead. This is coupled with a number of other factors to produce a driver shortage that has risen to an all-time high. The other factors include retirements and experienced drivers leaving to take advantage of more attractive job offers. And this is occurring at a time when there is an increased need for additional drivers to meet the demands of the transportation business. The cost to maintain equipment and meet safety requirements also enters into the equation. Michael Oliver, senior vice president at BISYS Specialty Programs, notes that fuel costs are up from 20 cents per mile at this time last year to 45 cents per mile currently. Many firms have fuel surcharges built into their contracts with customers, which allow them to pass along additional costs. The smaller firms and independent operators are more significantly impacted by fuel prices because many times they lack the leverage to negotiate a fuel surcharge. As for some of the other difficulties confronting this market, he says, “The current new driver shortage is estimated to be around 20,000 and projected to be 111,000 by 2014,” says Oliver. “Add to that the number of replacements needed for retirees and 539,000 new or replacement drivers will be needed in the next 10 years. This shortage of drivers makes for a very competitive employment environment. Drivers know they can leave a job today and have many opportunities waiting for them. Driver turnover can be a big concern, especially if a trucking firm is losing its best drivers. Currently turnover rates for some larger firms eclipse 100%.” Oliver continues, “Driver quality and experience are direct determinants of accident risk. For accidents between trucks and private passenger vehicles, trucks were the critical cause in 55% of the cases; truck driver reasons accounted for 87% of the causes of those accidents. Consequently, in order to be successful insuring trucking companies and owner operators, underwriters must pay close attention to driving records, hiring practices, and driver training. Other tools that underwriters utilize are Safer scores and financial statements. Safer reports are a measure of violations related to driver and equipment during DOT roadside inspections.” Oliver says that underwriters should really concentrate on the income statement and cash flow to make sure the trucking company is healthy enough to properly maintain equipment and make payroll. “There have been few new insurance carrier entrants in the liability market for trucks,” he continues. “Liability rates have been steady to slightly declining. There have been some property markets that have been more aggressive on the physical damage and cargo lines. This has exerted some pressure on rates for those coverages.” Joe Hutelmyer of Seaboard Underwriters points out that although “there are very few new players in the marketplace,” there is “plenty of capacity. As a result, pricing is dropping off some, especially on large risks. “We expect the pricing to remain relatively stable in 2006, with fleet pricing decreasing by 5% to 7%. We also see more decreases in the physical damage and motor truck cargo lines of business due to short-tail capacity leaving the property cat market in the wake of last year’s storms,” Hutelmyer concludes. DriveCam Inc. is a global driver risk management (DRM) company that reduces claims costs and saves lives by improving the way people drive. Del Lisk, vice president-safety services at DriveCam, offers these safe-driving tips for long-haul truckers. • Maintain plenty of following distance, at least 4 to 6 seconds. • Don’t wait for merging traffic to adjust to you—make early adjustments so they can’t jeopardize your safety. • Constantly scan your mirrors so you won’t be surprised by drivers cutting in. • Avoid in-cab distractions such as cell phones, eating or map reading. • Look at least 15 seconds down the road—early recognition is the key to safely driving heavy equipment. • Travel at a speed appropriate for conditions—don’t fall into keeping up with the pack. • Don’t push it—if you’re tired, pull over and rest. • Keep your cool—don’t let the bad drivers surrounding you get to you. For more information on DriveCam, visit www.drivecam.com. The landscape has changed dramatically for medium and small trucking operations, according to Charles Hadley, CIC, CPCU, underwriting manager at Sagamore Insurance. “Much like the larger truck lines, they are also struggling with the rising fuel costs and the continuing driver shortage. We are seeing a change in the makeup of the driver base in the smaller and medium size truck lines, since they can’t compete with the wages and the benefits offered by the larger truck lines. We are seeing younger, less experienced drivers and semi-retired drivers being hired on a more frequent basis. These increases in these two groups raise additional safety and underwriting concerns.” Hadley says that the insurance landscape is changing also. “We are seeing some long time writers of trucking insurance review and, in many cases, overhaul their underwriting criteria. As a result, a number of risks that previously fit the guidelines are being asked to go elsewhere. “Liability rates appear to be stable in most areas. Physical damage rates will vary significantly by carrier. For those agents that have access to several markets, splitting coverage between two or more carriers is normal. This allows the agent and the insured to get the best overall rate from sound, stable insurance carriers,” states Hadley. It would appear that rates overall for clients are staying in the stable or flat range. Higher fuel costs and driver shortages are approaching the critical point, and there doesn’t seem to be any let down on the horizon for either. The next three Specialty Lines articles will feature Pay for Play Leisure Risks in September, Professional Liability in October and Apartments/Condominiums in November. The following have responded to our survey and indicate that they are a market for trucking lines business. Visit www.insurancemarketplace.com for additional information. Adriatic Insurance Co. An S/L insurer that operates in most states with the following limits: physical damage, $115,000 per vehicle; $150,000 combination; motor cargo, $100,000 per load. Adriatic is an A rated company. Arlington/Roe & Co., Inc. An MGA/wholesale broker that operates in IL, IN, KY, MI, OH and TN with liability limits of $1 million - $5 million, physical damage limits of $10 million-plus, and cargo of $250,000-plus. Target classes are dry goods/general commodities, dump operations, garbage haulers, flatbed, and refrigerated. Can offer GL and workers comp. The A rated or better carriers are AIG, Canal, Stratford, Lloyd’s (physical damage and cargo), National Indemnity, Colony-Business Auto, Northland-Business Auto. BISYS Trucking Program An MGA that operates in all states (except) AK and MA with primary CSL limits of $1 million (higher limits available). Target class is any type of commodities, local, intermediate, long-haul, small/large fleet, operations in the business of transporting goods on behalf of others. Will not write brokerage operations or logging. Can offer auto liability, EPLI, excess/umbrella, cargo, GL, non-trucking liability, occupational accident coverage, physical damage, UM/UIM, PIP, and workers comp. Carriers are Lincoln General (A-), Lloyd’s, Adriatic (A), Great American (A), and ACE (A+). Brecht & Associates An MGA that operates in TX and the contiguous states with primary CSL limits of $1 million and $5 million, excess or umbrella. Will consider all classes except hazardous commodities and trailer toters. Home State County Mutual is the carrier. Burns & Wilcox of Colorado An MGA that operates in AZ, CO, ID, MT, NE, NM, NV, UT and WY through Canal Insurance Co., and CO, NM, and WY through National Indemnity. Target market is all long-haul classes except explosive haulers and hazardous materials haulers. Can offer auto liability, physical damage, cargo and truckers GL. Canal and National Indemnity are the A+ rated carriers. Casualty & Surety, Inc. An MGA/E&S broker that operates nationwide. Target market is long-haul trucking. Can offer motor truck cargo, truck physical damage, and excess/umbrella auto. All carriers are A rated. Creative Underwriters Corp. An MGA that operates primarily in IL, IN, KY, MI and OH with limits of $750,000 - $10 million. Target class is short- to long-haul, including gas haulers, flatbed, towing trucks, drive-away and toters. Can offer liability, cargo, physical damage, and trailer interchange. Scottsdale, National Casualty, Empire, Carolina Casualty, Great American, Hartford, Great Lakes UK, Lloyd’s, General Star and AIG are the carriers. Evolution Insurance Brokers (EIB International) An E&S broker that operates in all states with all limits available. Will consider all risks. Can offer monoline liquor, assault and battery, and after 3 a.m. closing time. Prime is the B rated carrier. Freberg Environmental Insurance An MGA that operates in all states except AK, LA and MA with limits of $5 million. Target classes are hazardous materials and hazardous waste trucking. Will not consider high-level radioactive material. Can offer CGL, cargo and pollution. The carriers are Arch (A-) and Gotham (A). International Brokerage and Surplus Lines, Inc. An MGA that operates in all states plus Mexico with unlimited physical damage limits, cargo limits of $250,000, GL limits of $1 million/$2 million (auto limits vary). Target classes are owner/operators; small, medium and large trucking risks. Will not write hazardous. Can underwrite brokers contingent cargo. Lloyd’s, Markel, and AIG are the A rated or better carriers. Izzo Insurance Services, Inc. An MGA/wholesaler that operates in all states except AK and HI with limits of $1 million EL. Target class is long-haul trucking. Will offer monoline workers comp and EPLI only. Carriers include AIG, Wausaw, and Liberty Mutual. Jimcor Agencies An MGA/E&S wholesaler that operates in CA, CT, DE, FL, IL, IN, MD, MI, NH, NJ, NY, OH, PA, RI, VA and VT with motor truck cargo limits of $250,000, primary auto liability of $1 million, and excess of $5 million. Target classes are local, intermediate, long-haul, and hauling for hire—most hazardous commodities. Will not write dump trucks/dumping operations, Haz-mat or trash/refuse. Can offer auto liability, physical damage, motor truck cargo, GL, hired/non-owned, trailer interchange, excess auto liability, contingent motor truck cargo, and nontrucking liability/bobtail. Lincoln General (A-), AIG (A+), Chubb (A++), and other A rated nonadmitted carriers are used to place coverage. J.M. Wilson An MGA that operates in IL, IN, KS, KY, MI, MO, OH, PA, WI and WV with limits of $1 million CSL; up to $2 million CSL on some risks. Target classes are primary liability, physical damage, cargo, GL for truckers for hire. Can offer excess coverage. Carriers are Northland (A), Carolina Casualty (A) and Empire Fire & Marine (A). Lancer Insurance Company A specialty transportation insurer that operates in all states except AK, HI, LA, MA, TX and WV with cargo limits of up to $250,000; physical damage limits of $150,000; auto and GL up to $1 million (no deductibles for auto liability and other liability coverages; maximum physical damage deductibles at $5,000). Target class is intermediate and long-haul trucking risks, involving owner-operators and small fleets with up to nine power units, traveling distances greater than 100 miles. Will not write sand/gravel haulers, transporters of hazardous materials and certain other kinds of trucking risks. Can offer packaging coverages, but monoline policies are available except for GL. Lancer is an A- rated company. Metcom Excess An MGA/E&S broker that operates in CT, DE, MD, NJ, NY and PA with limits of $1 million plus $4 million excess. Can offer cargo and bobtail. All carriers are rated A or better. Midlands Management Corp. An MGA that operates with limits of up to $1 million CSL. Will not write Haz-mat, petroleum, chemical or biological. Can offer auto physical damage and cargo. All carriers are rated A+. National Advantage Insurance Services, Inc. An MGA/E&S broker that operates in AL, AZ, CA, GA, TN and TX with liability limits of $1 million, physical damage limits of $250,000, cargo $1 million, bobtail $1 million, and GL limits of $1 million/$2 million. All carriers are A rated. Prime Insurance Syndicate Inc./I.E.B.S. An MGA (IEBS)/insurer (Prime) that operates in all states except AK, AZ, CA, CO, LA, NH, NY, RI, TX and VA with all limits. Will consider all classes. Can offer monoline liquor and assault and battery, and after 3 a.m. closing time. Prime is a B rated company. Roush Insurance Services, Inc. An MGA that operates in IL, IN and OH only with limits of $1 million. Target class is units to small fleets with operating radius of 300 miles. Will not write long-haul. Can offer environmental/Haz-mat, non-trucking (bobtail/deadhead), motor truck cargo, and excess auto liability. National Casualty, Scottsdale, and Markel are the A+ rated carriers. Russell Bond & Co., Inc. An MGA/E&S broker operating in CT, MA, NJ, NY, PA and VT with the following limits: primary auto liability limits of $1 million (excess up to $50 million), and motor truck cargo of $250,000 (excess up to $1 million). Target classes are auto haulers, hazardous auto, tow trucks, garbage haulers, and long-haul. Can offer auto liability, auto physical damage, excess auto liability, GL and property. All carriers are rated A- or better. Seaboard Underwriters, Inc. An MGA/program manager that operates with primary limits of $1 million and excess of $4 million. Target class is 1 - 100 power units. Will not write hazardous commodities. Can offer truckers physical damage, GL, motor truck cargo, and workers comp (in conjunction with other lines). Carriers are CNA (A), Carolina Casualty (A), Zurich/Empire (A), Crum & Forster (A-), Scottsdale (A+), Stratford (A+), Chubb (A++), ACE/Westchester (A+), Lloyd’s, St. Paul Travelers (A+), Aspen (A-), and National Interstate (A). Southern Insurance Underwriters, Inc. An MGA operating in AL, FL, GA, NC and SC with liability limits of up to $2 million, cargo of $250,000, and physical damage of $150,000 per unit, no cap. Target classes are general commodity trucking accounts—local, intermediate and long-haul. Will not write logging or Haz-mat. Can offer GL, physical damage and cargo. Occidental (A-), Stratford (A) and National Indemnity (A++) are the carriers. Swett & Crawford An MGA/E&S broker that operates in all states and parts of Canada with limits as needed. Will write all commercial transportation but will not write personal lines. Can offer cargo, GL, physical damage, property, excess liability/umbrella, buffer layers, EPLI and SIRs. All carriers are based upon geography and are rated A- or better. TranSpec, Inc. A wholesale broker that operates in most states with limits of $1 million. Target class is motor carriers with 15-plus owner operators under lease. Will not write primary liability, excess or cargo. Great American and Zurich NA are the carriers. Truckers Insurance Associates, Inc. An MGA operating in AR, CO, IA, IL, KS, MN, MO, ND, NE, OK, SD, WI and WY with liability limits of $5 million, cargo $500,000 and physical damage $250,000. Will consider most types of trucking risks. Can offer auto liability, GL, physical damage, cargo, workers comp, property, and inland marine. Northland (A), Carolina Casualty (A), Zurich (A), Maxum Casualty (A-), and AESIC (A) are the carriers. United Brokers, Inc. An MGA that operates in 28 states (Call for details or visit Web site) with limits of $1 million plus excess to $5 million. Target classes are long-haul and local radius. Will not write coal. Can offer GL, physical damage, property, cargo, bobtail and excess. Occidental Fire and Casualty (A-), Penn-America (A), Lincoln General (A-), Lloyd’s, and American Southern (A-) are the carriers. W.A. Schickedanz Agency, Inc. An MGA that operates in AR, IL, IN and MO with primary limits of $1 million and excess of $10 million. Target class is 1-50 units (can write specialty classes such as garbage, dumps, etc. Will not write Haz-mat. Can offer auto liability, physical damage, cargo, non-trucking liability, and workers comp (local operation only). Argonaut Midwest, Acceptance Casualty, National Indemnity, National Liability & Fire, Occidental Fire & Casualty, Lloyd’s, and Universal Casualty are the carriers. Yates & Associates Insurance Services, Inc. An MGA that operates in all states with various limits. Will consider all classes. Can offer UM, cargo, reefer, and pollution. All admitted and nonadmitted carriers are rated A++. * |
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