In the last couple of years, insurance premiums for transportation firms have been skyrocketing, and there’s no end in sight. The best trucking companies with the best CSA scores see a 20 to 30 percent increase, while other companies can see a double and even triple increase. Why are we seeing rising insurance premiums for transportation firms and what are the causes?
Causes and Effects of Rising Insurance Premiums for Transporation Firms
Rising insurance premiums for transportation firms can potentially affect the nationwide economy, as costs are passed from insurance companies to trucking companies, and down the line to consumers. A big part of these rising premiums is litigation and the increased frequency of nuclear verdicts.
Nuclear verdicts are settlements for $10 million and up, and 2019 was a record year for them, topping out at nearly $300 million for the record-breaker. With that kind of money going out the door on a regular basis, insurance companies are having a harder time insuring trucking companies. In fact, many insurance providers have completely exited the trucking business altogether. These rising costs impact the insurance companies’ loss ratio, which then results in rising insurance premiums for transportation firms.
How is a loss ratio calculated?
Insurance companies calculate loss ratios to determine profitability. They calculate money lost in claims vs. money paid in premiums to determine their loss ratio. When the ratio gets narrow, premiums increase.
By being in the trucking industry, you accept a certain amount of risk. However, every trucking business owner should take an honest inventory of what risks they can actually control, then develop a strategy to address those risks.
Insurance companies are looking for reasons to increase your premium, so you need a tool to help mitigate that risk and demonstrate to your insurance provider that you are insurable and maintain a culture of safety.
With insurance premiums rising so sharply, there is an opportunity to lighten the risk exposure with quality safety training for drivers. Safety programs have been shown to help mitigate the rising costs of insurance premiums and reduce the instance of nuclear verdicts.
A high-quality safety program must be accessible for drivers and have flawless, immediate reporting. Driver scores completed modules, and ongoing engagement go a long way toward proving to an insurance company or a courtroom that you have an airtight culture of safety.
Infinit-I Workforce Solutions is a customizable, cloud-based tool that helps you create and enforce your unique safety program. With short, engaging videos, drivers can engage on their phones without impacting drive or rest time. Each module has a quiz, and scores are recorded in real-time.
In an environment of high risk and low profit margins, you need to do all you can to mitigate rising insurance premiums and litigation. Our safety training solution can help.
What do I need to know now? | Rising Insurance Premiums for Transportation Firms
- Insurance premiums for transportation firms are rising rapidly, sometimes doubling or tripling year over year.
- Your transportation firm can mitigate rising costs by implementing our customizable training solution.
- Documentation could save your company in the courtroom and make you more insurable.