Agents struggling to find coverage for Cali couriers

“It’s no way to do business. I’ve talked to four other brokers and they’re having the same problem.”

Agents struggling to find coverage for Cali couriers

Motor & Fleet

By Sam Boyer

An influx of poor and inexperienced courier drivers in California has commercial auto insurers running, says one Bay Area agent.

Ebrahim Jabaieh, owner of SaveGuard Insurance Agency in Hayward, CA, can barely place commercial auto policies for couriers anymore, he said. And when he can, what used to happen almost instantly now takes about two weeks.

“It’s getting harder and harder,” he said. “It’s getting very difficult.”

Policies have jumped more than 50% for commercial auto for renewals. And that’s if you can actually find a carrier to take on the risk. A policy that used to be $28,000 was renewed last week for $45,000, Jabaieh said.

“Now it takes us like a week to 15 days to get a quote,” he noted. “Last year, it was like car insurance – before the customer leaves he has the policy in his pocket and it’s done.”

Some carriers have pulled out of the commercial auto market in California while others have introduced additional screening, higher premiums, and more hoops to jump through, Jabaieh said. The problems, according to the agency owner, have largely been caused by Amazon’s new courier delivery model.

Amazon is hiring independent contractors to deliver its products. “Earn money by delivering packages to Amazon customers,” the web giant says online. “Whether you have one van or a fleet, our volume and your business could be a great match.”

In California, at least, the company’s delivery model has resulted in too many inexperienced drivers hitting the roads, which has led to the carriers’ fears, Jabaieh said.

“The main reason is that Amazon started doing its own deliveries,” he explained. “Where before they were counting on FedEx and UPS, but now they just opened hubs everywhere and they’re hiring subcontractors, owner-operators, to do their routes. And these people have no experience – they’re, like, ‘oh there’s new routes from Amazon, let’s go ahead and buy five vans and start a business.’

“So last year, we saw an increase in courier business. We were writing like four companies a day. And we were, like, ‘oh my god, that’s amazing.’ But this year, the companies [customers] started getting notices from [the carriers] saying they didn’t want to take this risk no more. And then, boom, it just went downhill.

“Now we’ve got nobody. We just sneak in a courier company here, there. It’s no way to do business. I’ve talked to four other brokers and they’re having the same problem.”

Though his company hadn’t yet begun to feel the bite of the reduced business – because premiums and commissions were so much higher – the development remained alarming, he said.

“Even though we’ve turned down a lot of people, because premiums went up extremely high it’s just making up right now for the loss of business.

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