Trucking is the over-the-road transportation of cargo via motor vehicles, typically for distances of short to medium length. According to the American Trucking Associations’ (ATA) American Trucking Trends 2017 report, trucking generated $676.2 billion, or 79.8% of the nation’s freight bill in 2016. The trucking industry often reflects and even influences the state of the economy, transporting billions of dollars worth of goods across the country each year, yet many trucking companies struggle to remain profitable.
Trucking is an industry that is mainly composed by small businesses. In fact, 91% of trucking companies operate six or fewer trucks and over 97% operate less than 20. However, the cost to run an independent trucking company may outweigh the profits, in some cases. The ATA study also reported that the nation’s commercial trucks paid $41.3 billion in state and federal highway user fees and taxes, and the average five-axle tractor trailer pays more than $5,600 in taxes annually.
On top of the regular operating costs, rising insurance costs also present a challenge for trucking firms. According to the 2017 study by the American Transportation Research Institute (ATRI). An Analysis of the Operational Costs of Trucking, the trucking industry has seen four straight years of insurance cost increases. Trucking insurance rates have risen by as much as 30 percent and are expected to continue the trend.
An increase in fatal accidents involving large trucks is one of the main reasons that insurance rates are climbing. According to the most recent reporting from the U.S. Transportation Department, the number of these types of fatalities rose by 20% between 2009 and 2015. This increase in fatalities has resulted in some major insurance payouts which have prompted some insurers to exit the market completely.
The high cost of trucking coverage can put a strain on smaller trucking firms. As trucking companies adapt to attempt to stay profitable, they may cut corners elsewhere to save costs, which often causes safety issues and continues the cycle of trucking accidents and insurance hikes.
Regardless of the challenges, the trucking insurance market isn’t all bad, and agents, wholesalers and trucking firms can work together to encourage profitability on both sides. One solution is through insurance specialization. Agents can partner with wholesalers to provide specialized coverage, such as American Team Managers Insurance Services United Specialty Program, a trucking liability insurance program that offers a portfolio of coverages for truckers in Western states. Additionally, safety and risk management programs such as the installation of cameras in the cabs of trucks and apps to reduce the use of phone use while driving can go a long way in mitigating risk and reducing insurance rates.
About American Team Managers Insurance Services
Founded in 1998 by Chris C. Michaels, American Team Managers Insurance Services (ATM) has provided wholesale and MGA services to more than 5,000 independent insurance agents throughout the United States. Our goal is to establish close, long-term relationships with our agency partners and insurance carriers and provide competitive products for the Exclusive and Non-Exclusive markets that we serve. For more information on our products and services, give us a call at (714) 414-1200 to speak to a representative.