When asked last year to rank the most pressing of critical issues facing the trucking industry, carriers rated insurance costs third, just behind the economy and lawsuit abuse reform. A new study provides some of the reasons for the high spot on their list.
The American Transportation Research Institute today released new research detailing the rising costs of federally mandated commercial auto liability insurance in the trucking industry and the risk management strategies that motor carriers use to mitigate these costs.
The report, Trucking’s Rising Insurance Costs: Issues and Opportunities, found from 2021 to 2024, liability insurance premium costs rose by 18.6 percent to 10.2 cents per mile – outpacing consumer inflation by 5.4 percentage points – at the same time that heavy-duty truck-involved crash rates fell by 2.6 percent industry-wide.
ATRI also said that in the decade from 2015 to 2024, the industry-average cost of liability premiums rose by 37.8 percent – outpacing inflation by 4.4 points – to a record high of $0.102 per mile.
ATRI said the research confirms that a sharp rise in crash claims expenses fueled this rise in insurance costs: among respondents, per-mile liability losses rose by an average of 33.1 percent over the same period.
Premium costs for excess coverage in particular rose at an even higher rate. From 2021 to 2024, per-mile premium costs for the $5-10 million insurance layer rose by 34 percent to 1.58 cents, and per-mile premium costs for the $10-15 million layer rose by 45 percent to 1.05 cents. These increases in excess coverage expenses point to the role of rampant litigation in inflating claims costs.
Several risk management approaches did yield positive outcomes during this period, however. Fleets with more retained risk in their primary coverage layer experienced lower combined liability losses and premium costs during this period, regardless of size. Furthermore, fleets that reduced total purchased coverage experienced an average reduction of 2.4 percent in combined liability losses and premium costs in the subsequent year when adjusted for inflation.
ATRI said these outcomes can be attributed to a combination of premium reductions and aggressive implementation of safety strategies by fleets. For example, the deployment of six safety technologies had a statistically significant correlation with lower per-mile liability losses.
Those six technologies were:
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forward collision warning
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lane departure warning
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collision mitigation systems
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blind spot detection
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adaptive cruise control
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automated emergency braking.
The report includes a variety of additional benchmarks for fleets to evaluate trends and assess their own risk management approach, such as coverage limits, percent of revenue spent on insurance, and deductible or self-insurance levels by fleet size.
“ATRI’s report gives us invaluable visibility on the changing liability insurance landscape and how fleets are navigating it,” said Lynette Woodie, ArcBest manager of Loss Prevention and Administration. “Good fleets don’t just react passively to rate increases each year: they take the initiative by analyzing data and working closely with their insurers to craft a holistic risk management plan that improves safety and reduces costs.”
The full report is available on ATRI’s website here.
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