Trucking bankruptcies fuel 'hyper-competitive' insurance marketplace

Insurers grapple with growth misses while entrants laser in on 'low hanging fruit'

Trucking bankruptcies fuel 'hyper-competitive' insurance marketplace

Motor & Fleet

By Jen Frost

Rising insurance costs have been one of a slew of mounting pressures fueling a boom in trucking company exits. Now, insurers and managing general agents (MGAs) are experiencing a hyper competitive marketplace in some segments after freight carrier bankruptcies and layoffs deflated insurance underwriters’ aggressive growth plans.

Bankrupt trucking transportation giant Yellow Corp shut its doors last year, and the $5.2 billion revenue-driving business was far from alone.

Combine insured exits with incoming insurance capacity targeting trucking firms that have struggled to access cover, and the result has been heightened insurer competition and missed growth targets.

“The tightening of the freight market caused tens of thousands of trucking authorities to be deactivated over the last year, which meant that many insurance carriers and MGAs looking for double digit growth were not able to meet or exceed their goals,” Jennifer Nuest, Amwins SVP, transportation practice leader, told Insurance Business. “This has led to a hyper competitive marketplace in certain segments of trucking.”

The freight industry has struggled in recent years to cope with staffing shortages, rising wage demands and cost spikes across necessities like fuel and insurance.

America is undergoing a freight recession, though, as per Morgan Stanley, there is some room for optimism that the prognosis could be improving. 

What impact is this having on insurance rates?

Freight may have undergone an industry softening, but insurance rates have continued to rise. Trucking fleets of all sizes have felt the sear of rising costs, according to American Transportation Research Institute (ATRI) analysis.

Those with a history of severe claims have been particularly hard hit.

However, new insurance entrants are now looking to “aggressive” pricing strategies for below average risks identified as “low hanging fruit”, according to Amwins.

The caveat for motor carriers is that enhanced competition and insurer efforts in niche segments are unlikely to translate to a “significant price drop overall”, according to Nuest and others.

Rate rises are expected to temper somewhat into this year, with wholesale brokers pegging them as typically flat to 5% up for transportation insureds with favorable loss experiences. For transportation companies that have a recent history of claims, the picture is more nuanced. Many have been facing double-digit rate hikes as high as 20%, as per RPS, but some may find relief from new market entrants.

Broadly, there continues to be a “sustained cautious approach” towards distressed transportation pricing, Kevin Abramson, Cover Whale President, told Insurance Business.

“While the overall market dynamics are complex and can be influenced by several factors, we believe this cautionary trend underlines the continuing need for prudence in underwriting distressed risks,” Abramson said.

The road to commercial auto insurance profitability has been paved with woe. Just one year in the last 12 has seen the industry post a sub-100% combined ratio (CR), according to Fitch. 2021, which saw a 98.8% industry CR, has since proven a pandemic-driven blip.

Last year saw Nationwide exit the excess & surplus (E&S) primary commercial auto space, citing industry-wide challenges, however some players are making profits.


NWP ($B)

Market Share

Combined Ratio





Old Republic




W.R. Berkley Corp.




National Indemnity




















Liberty Mutual




State Farm




(Figures from Fitch Ratings, S&P)

Nuclear verdicts and court actions are piling loss pressure on for insurers. Accounting only for jury awards worth $1 million or more, ATRI found the average trucking verdict value spiked 867% from 2010 ($2.3 million) to 2018 ($22.3 million).

With transportation insureds already feeling the squeeze and peers shutting up shop, retail agents and brokers have been battling to justify pricing and arrange cover for those with more problematic risk profiles.

“It’s very hard on the insureds, and that’s not lost on any of us from the brokerage space,” said Risk Strategies VP Brian Jungeberg. “A lot of times, the insureds probably feel like we don’t care, but it is the worst thing to feel like you can’t deliver a solution to a client of yours based on their situation – there’s a lot of discussions that happen in the background with the insurers as we go through the underwriting process, to try and figure out a solution creatively to help them to get things turned around.”

Greater competition, then, will at least to some extent be welcomed by retail agents and those clients that, having put in the hard yards to improve their safety records, may be set to benefit from niche rate cuts.

Trucking companies have looked to technology in a bid to shore up cover, improve safety and demonstrate progress. Telematics advancements and other data harvesting is a likely culprit behind interest in distressed freight risks, as specialty insurers unencumbered by the admitted market’s red tape look to zone in on niche opportunities.

Jungeberg likened recent insurance carrier efforts to “overturning rocks” in a bid to find underwriting questions that matter most amid more than a decade of profitability pressure. The transportation insurance specialist described new distressed entries as a “very calculated gamble”.

“There’s always a disagreement between insurance carriers as to what they should look at, and how they can do better than the last guy,” Jungeberg said. “Whether that bears fruit, it’s hard to tell. But it changes the competitive dynamic, for sure.”

Got a view on transportation insurance? Drop a comment below.

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