In a sign of renewed faith in the beleaguered economy, small businesses are beginning to open up their checkbooks to make purchases long put off. One such transportation-related splurge could spell big profits for commercial auto insurers and their agents.
According to Ward’s AutoInfoBank, commercial van sales rose 9% in January and are currently up more than 40% since 2010. The purchases are an indication that small businesses are ready to invest in newer delivery vans after hanging onto older models experiencing an increasing number of problems.
“A lot of these contractors have been trying to keep their old products as long as they can,” Peter Bedrosian, senior manager of product planning for Nissan North America, told the Associated Press. “The vehicles are really nearing the end of their useful life.”
The purchases are expected to continue. According to the consulting firm IHS Automotive, commercial van sales will grow 27% between now and 2015. At the same time, leading auto companies like Nissan and Chrysler are starting to enter a market previously dominated by manufacturers like Ford and General Motors.
All the optimism is likely to translate to increased commercial auto sales. Lana Myers, an agent with Northwest Insurance Brokers in Spokane, Wash., said commercial van sales are increasing for the agency and are now starting to compete with trucks and pickups in terms of policy sales.
“We mostly insure trucks as part of our overall small business packages, but we’re starting to see some businesses with new vans coming through our doors,” Myers said.
The commercial auto space continues to see rate increases, rising by an average 4% in February, according to a MarketScout report. However, MarketScout CEO Richard Kerr noted that an influx of capital into the commercial insurance
market may moderate rates and prices may even begin to decrease towards “the later part of 2014.”