By keeping safety practices first and foremost in company culture and utilizing innovative safety technology, trucking carriers can mitigate the effects of rising insurance costs, according to a new American Transportation Research Institute report.

The report, entitled “The Impact of Rising Insurance Costs on the Trucking Industry,” was released in February and analyzed the data showing that the steep incline of insurance premiums between 2009 snd 2018 exceeds the overall rate of truck-involved crash number increases, although annual insurance costs are meant to take into account the company’s incident history.

“The largest percent increase in premium costs per mile was seen in very large fleets,” the report explained. “Even though very large fleets have the lowest premium cost per mile, this large percent increase poses significant challenges for operational planning.”

For its report, ATRI surveyed 82 motor carriers operating a total of 94,555 trucks, and found that per-mile insurance prices rose by 47% over the last 10 years–from 59 to 87 cents, and that small fleets had premiums that were twice as high per mile as those of larger fleets. Additionally, large fleets with between 101 and 1,000 trucks were found to be paying nearly double per mile as compared to very large fleets with more than 1,000 trucks.

90% of carriers also saw premiums rise between 2018 and 2020, although fewer than 13% of carriers actually increased their insurance coverage. 18.3% of large and very large fleets endured 50% increases in their premiums without increasing any coverage. Throughout the United States, the largest insurance premium increase was seen in the Southeast, while the Northeast continues to have the highest premiums overall.

According to ATRI, when insurance companies have to deal with litigation, those financial difficulties can end up affecting the motor carriers they cover. Additionally, insurance industry economic conditions have had a steady impact on premium rates, and commercial vehicle insurers saw a 50% increase in losses between 2015 and 2019. In states with higher frequencies of litigation involving truck registrations, loss ratios tended to be particularly high.

“External factors that go well beyond carrier safety force commercial trucking insurance costs to increase, which then requires carriers to redesign their business strategies,” explained chief insurance officer for the Insurance Information Institute, Dale Porfilio. “The higher premiums ultimately tend to be passed along to consumers in the form of higher prices for goods and services. ATRI’s study corroborates the Triple-I’s research on rising insurance costs and social inflation—that increased litigation and other factors dramatically raise insurers’ claim payouts.”

Many carriers have been working to make up for the losses incurred with insurance premium increases by reducing maintenance spending, equipment purchases, wages, and bonuses–in addition to attempting to rework their insurance policies. Still, cutting spending in these areas may bring about a major increase in risk costs and allow for a worsening of long-term problems, including low productivity and exacerbated driver shortage issues, ATRI warned.

Carriers should instead begin prioritizing any safety-centric actions, such as investments in safety technology, litigation liability, boosted driver training, and improved hiring processes, ATRI said. This will help them better assess their total potential risk costs–and lower them.

“This comprehensive approach enables carriers to organize costs more effectively for the long-term by emphasizing the impacts that all cost centers have on safety and the relationships between them,” ATRI noted in its report.

Out of 92% of motor carriers surveyed by ATRI, the implementation of driver-assist safety technology has been the most steady trend. ATRI found that the most commonly-used tech included road-facing cameras, which are “a strategic tool for insurers, carriers, and drivers, as they provide irrefutable safety documentation, thus lowering claims and defense costs,” ATRI said.

Other helpful safety tech includes forward-collision warning, electronic stability control, blindspot detection, and lane-departure warning. Utilizing a variety of these technologies may allow for the mitigation or prevention of around 28% of all reported large-truck involved crashes, according to the Insurance Institute for Highway Safety.

Each month, we take stock of the most popular posts on our blog. Invariably, one is more popular than all the others: “Here’s why your car insurance is going up in 2016.”

Granted we’re not living in 2016 anymore, but based on the evidence we can assume that people remain interested because the cost of auto insurance continues to rise each year.

Unfortunately, that means consumers make short-term decisions to save money, and that’s what brings us to the issue of substandard insurance policies.

We’ve written quite a bit about state mandates, which requires all drivers in Illinois to carry minimum liability coverage of $25,000. Substandard insurance is primarily defined as a policy that offers the bare minimum at relatively low premiums. The problem with that, however, is that substandard policies are designed to make you believe the minimum is enough to protect you when it isn’t.

One reason is bodily injury, which is practically impossible to predict. Depending on the severity of the injury, you could be looking at hundreds of thousands of dollars in medical bills, where $25,000 is barely a drop in the bucket. We’re talking the cost of an ambulance, emergency surgery, a long hospital stay to recover from injuries. Those costs can be significant and financially paralyzing.

Another reason is related to your long-term health, such as your ability to perform a job, whether you’ve lost work, whether you actively participate in the community, and whether you suffer from a terminal injury.

In situations like the one above, insurance is about the only thing protecting you and others from dire situations, both health-wise and financially. You’re also making it easy for insurance companies to simply walk away from the situation when it’s no longer a legal responsibility.

Take this example. A man with a substandard policy crashes into a minivan hauling three kids. Two of them become seriously injured. As the at-fault driver with the substandard policy, your insurance is responsible for picking up the medical bills. But based on your policy, only $25,000 is collectable. Now let’s imagine that the kids’ medical bills cost upwards of $200,000. If attorneys get involved, you could be responsible for the $175,000 difference (and possibly much more) depending on the circumstances of the crash.

Let’s say you lose that lawsuit. Then it’s a matter of duking it out with your insurance company to make up for the difference, which means you’re fighting two battles, both of which you could end up losing. Badly. The above is just one example of the pitfalls of opting for substandard insurance policy.

People often ask us what types of insurance policies we recommend and whether it’s enough to protect them in times of crisis. It’s hard to give a good answer because every person is working under different circumstances. But what we often recommend is that drivers take time to look at their policy, understand it and ask questions. Discovering where you might be vulnerable is worth the effort, as is the protection that comes with a quality insurance policy.

While Insurance Rates Skyrocket, Safety Tech Can Help, ATRI Says

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