Insurance

guessing insurance companies know mile rates are high so they too will want to make more money off us

 

It's not really spin. Lawsuits costs us all a lot of money every year in every kind of insurance we buy. Restricting settlements on lawsuits is called tort reform. Lawyers and judges make their livings on lawsuits and most of the people who make our laws in Washington are lawyers. They aren't interested in making new laws that will limit their ability to make money.

 

Yup... I know it... I’m just a philosophical guy... in a deeply rooted reality where things don’t seem to change in the favor of common sense, common decency or practicality... at least not on a mainstream level

 

What State are you in? If you are in Florida I might be able to help

 

OK.......from an Insurance Carrier Branch Manager who does 80% trucking for hire business.

The reality is that over the last 4-5 years MOST insurance carriers that do heavy commercial auto have gotten their head handed to them.

There are many reasons why the premiums are escalating, from inflation in health care costs to the increase cost associated with damage repair, but the reason is because they have not been making an underwriting profit.....point of fact, for 2017 the "combined" (combined means losses paid or reserved, PLUS loss adjustment expense....adjusters and attorneys....and PLUS underwriting expense) loss ratio for commercial auto was 111%......so for every $ 1.00 of premium written, the industry paid out $ 1.11. Not every carrier had these results....this is just the industry average. Some carrier were worse (lost more money) and others either lost less or possibly made an underwriting profit.

Typically most commercial auto carriers have a "break even" point of 60-65% for loss and loss adjustment expense....which means that when underwriting expense (commissions paid, HO staff and "office" expenses, TAXES & Fees) are added to the loss and LAE the total is around 100%.

No doubt investment income is a contributor to the "overall" profit or loss a carrier has, but take a look at your own investments since the beginning of the year......not making a lot there.

The industry hasn't offset the underwriting loss on commercial auto over the last 5 years or so with investment income......so the industry starts increasing pricing where they can, getting out of certain exposures, like trucking for hire as an example.....so as the market for a given line of business constricts, the marginal (read those that weren't charging enough all along) carriers.....Risk Retention Groups.....small specialized carriers etc exit the market and those of US that are left, are charging what we pretty much have for a while, it's just that everyone else has gone away and our current pricing is selling.

I daily see new business here in CA being presented.......mostly along 99 Highway it seems.....and it's absolutely crazy how many "new ventures" there are out there.....and a lot really are new ventures, not re-boots of some other failed authority.....and how many have drivers with less than 24 months Class A experience.....and a LOT under 12 months.....so there is some crazy pricing out there, on some really difficult business, like the above.

Depending on the age of operator, radius of operations, cdl experience, length of active authority, and ACV of the equipment we are putting out trucking quotes for $ 1MM; $ 60K UM; Phys Dam/TI & Cargo anywhere from $ 9,500 or so.....upwards to crazy numbers....like $ 50,000 or so PER POWER UNIT.

 

Ok

 

Well done spelling it out. I was a broker for 30 years, and most people fail to recognize that insurance carriers are "for profit" businesses. If they don't make money, they raise the rates, and if they lose enough money, they stop selling insurance in areas where they are losing the most. Then the remaining insurance carriers raise their rates because there are fewer companies to spread out the risk. It's a very convoluted field and it's something every business entity in the world needs to operate. Just like truckers, without insurance, everything stops.

 

It is pretty simple to understand insurance rates in today's trucking industry.

Take a look at what is driving trucks these days. And the beat up #### they are riding around in.