State of the Insurance Market Report
2025 Initial Outlook and 2024 Wrap-Up
Transportation
Commercial transportation continues to grow, but challenges have arisen due to an increased demand for last-mile deliveries during a labor shortage.
Coverage Considerations
The transportation industry remains a hard market. Specific risk factors continue to fuel recent premium increases with physical damage hitting +20% to 25% and umbrella liability +10% to 30%, as well as auto liability 10% to 20%.
Less experienced drivers have contributed to an increase in the frequency and severity of auto liability insurance claims. The severity of auto claims has increased over the last two years from an average of $13k to $38k, all in tandem with social inflation, driving premium and umbrella rates higher.
Physical damage, increased thefts, and the rising cost of auto parts continue to affect auto liability and property damage rates. With rising inflation and the impacts of supply chain challenges of the past year, costs have risen on physical damage for transportation vehicles.
Inherent risks in the industry are also contributing to higher umbrella liability rates. The significant growth of claims and resulting nuclear verdicts contribute to higher liability coverage rates as insurance carriers deal with the overall risk scenario of the transportation industry. Generally, we see the umbrella rate increase following the same increases in primary auto liability. The industry awaits a significant positive impact once there is widespread implementation of new technologies such as high-end GPS and monitoring software.
Transportation Rate Forecast |
||
| Auto Liability: |  |
+10% to +20% |
| Physical Damage: | |
+20% to +25% (However, we are seeing increased deductibles to reduce the rate increase) |
| Umbrella Liability: | |
+10% to +30% (Mainly following the primary auto increase) |
Maintain strict safety standards and procedures to minimize potential losses since motor vehicle records (MVRs) are being scrutinized more than ever before by underwriters.
Implementing and enforcing better hiring practices, in addition to safety technology such as collision avoidance systems, telematics, and cameras, can help protect against future liabilities.
Ensure Federal Motor Carrier Safety Administration (SAFER) scores are below the national average.
If not, work with your broker or a third-party consulting service to achieve better results.
Avoid reducing coverage to reduce costs.
Instead, explore alternative options such as captives, risk retention groups, and higher deductible programs to stabilize the total cost of risk.
With transportation business insurance solutions that cover virtually every risk, we can create a plan using our vast network of carrier partners and products.
Download the Report
Our industry and product line specialists have collaborated to provide an update on current trends and market conditions. We invite you to explore their insights by downloading our latest State of the Insurance Market Report.