Last year, the transportation market experienced freight rates plummeting for the majority of the year. However, an economic sluggishness hit the market hard toward the end of 2019, bleeding into 2020 as a warning sign for some challenges to come. From trucking companies having to permanently close to revenues falling consistently since the spring, 2020 has been an uphill battle for the transportation market as a whole.
But even though all signs point toward a downward trend there are still some things to be hopeful for in the transportation industry heading out of 2020. Here’s a look at where the transportation market stands right now and where it’s going the rest of the year.
Fleets in the trucking industry have advantages in pricing over non-fleets. While trucking fleets typically have more expansive insurance limits, they also take on more liability with higher deductibles and self-insured retentions than non-fleet companies. According to Insurance Business Magazine, medium fleets of 20-50 units had greater budgets to commit to safety and compliance than smaller trucking fleets.
Other movements in the market include:
- A spoilage endorsement for refrigerated trucks has a limited market due to its higher exposure.
- Dry vans are looked at more favorably by insurance carriers due to cargo stability. However, those hauling high-damage items, such as electronics, carry higher insurance limits.
- Intermodal truck drivers see high driver turnover, mainly caused by a steep concentration of trucking companies in major port sectors, all trying to attract the same driver pool.
Public Auto Trends
Ridesharing is a rapidly evolving class of business, according to the report. While insurance providers have been slow to provide coverage for this growing industry, it’s expected to change soon as insurance companies are poised to learn how to adapt to the trend. As they become more comfortable with these clients in this space, more markets are set to open.
Non-emergency medical transportation is also one of the fastest-growing classes of business in the public auto sector. However, due to the health risks of passengers amid the spread of COVID-19, it’s also harder to place, which results in stricter terms and conditions from insurance providers.
Insurance Coverage Gaps
Small profit margins are preventing many trucking companies from purchasing added insurance coverage, such as cyber and excess, even though trucking clients are aware of the financial exposures they face for refusing coverage. Trucking is increasingly being targeted by cyberattacks, including ransomware. Truck fleets are being hit by cyberattacks and other breaches as hackers take advantage of the distractions prompted by COVID-19.
Insurance in the industry should change the narrative for cyber insurance away from the data breaches and instead focus on business continuity. This tactic includes helping clients in the transportation industry understand their role in a new technological age of transportation, as well as the revenue that would be lost if a cyberattack hit their systems.
Trucking Safely Ahead
On the heels of the COVID-19 outbreak, insurance carriers are reducing premiums or waiving monthly minimum reporting for mileage, receipts, or units. While these changes help short-term, there are also measures in place to help transportation clients remain profitable moving forward.
This notion has put an emphasis on safety among trucking companies and their hired independent contractors. Higher safety scores determine pricing as poorer scores lead to a denial of coverage. In this case, it’s pertinent for transportation companies to invest in using telematics and hire quality drivers to make sure all safety measures are being followed and tracked.
About Genesee General
At Genesee, we strive to provide quality insurance solutions for the Commercial E & S sector, and we can help with your small, middle-market, and large excess and umbrella accounts. Our longstanding expertise has allowed us to successfully serve your clients for over three decades. Our specialized products include coverages for Transportation, Garage, P & C, Professional, Brokerage Property, Specialty Programs, and many more. For more information about our products, we invite you to contact us today at (800) 282-8755.