Present trends in the commercial insurance market indicate that premiums have jumped almost 15 percent over last year's level, and in some instances, as much as 40 to 100 percent, says the NAFC.
In addition, a few carriers with questionable safety records may not be able to find coverage regardless of cost.
The NAFC says premiums are rising because of several factors affecting the trucking insurance industry:
Claims costs exceed premiums collected. Intense pricing competition in the past years has led to lower policy premiums. However, a shortage of experienced drivers and the prevalence of cargo theft has led to increases in accident risk, which has resulted in rising claims settlements.
Traffic implications. Having more trucks on the road and the higher speed limits is causing the risk of accidents to increase. If the hours-of-service rule change proposed by the Department of Transportation is passed, even more trucks will be on the road.
Driver shortage. Complicating the situation even more is the impact of driver shortages. Trucking companies have a hard time trying to hire and retain qualified drivers. Putting inexperienced and untrained drivers behind the wheel increases the potential for accidents.
Track record. Rate increases are also based on an individual account's loss experience. Since so many insurance companies are sustaining heavy losses, fewer insurers want to compete in the trucking industry. Either that, or they become selective in choosing the trucking companies they cover.
Litigation. Higher lawsuit settlements have impacted the cost of premiums in the trucking industry. Commercial trucking insurance experts blame increasing rates on an increasing number of lawsuits. Stock investors see the amount of money awarded for settlements and are discouraged to invest in insurance companies, which then reduces the capital pool.
What can trucking companies do? Kate McGinn, vice-president of ECS Underwriting Inc., urges trucking companies to keep a closer eye on safety policies and to practice minimizing any future losses. Pay close attention to your driver selection process and commit to hiring only qualified drivers.