Economy drives commercial auto market to excess

There is a lot of fresh demand in the insurance marketplace for commercial auto and excess products.

By Samantha Wright

The marketplace for commercial auto insurance and related umbrella products is directly tied to the economy. As economic conditions have picked up following the Great Recession, so has the demand for goods that must be hauled from one place to another.

Last year, the U.S. trucking industry generated $700.4 billion, according to American Trucking Trends, making 2014 the first year in history the industry topped $700 billion in total revenue. And it is expected to grow another 21 percent in the next 10 years.

That means there is also a lot of fresh demand in the insurance marketplace for Commercial Auto and excess products, as new players enter the for-hire trucking business and established players expand their operations.

The federal government has tightened up its requirements for commercial driver qualifications, just at the time when there is a huge new demand, ultimately leading to a shortage of qualified drivers.

The ATA pegs the current shortage at roughly 25,000, and says that it’s due to a multitude of reasons ranging from demographic and regulatory factors to workplace hazards and the fact that over-the-road truck driving jobs can take drivers away from home for lengthy periods of time.

“It’s a significant issue,” said Lou Welch, Vice President of the Motor Carrier Group at Scottsdale Insurance Company, part of Nationwide. “Pretty much everyone in the commercial auto sector is facing the question of ‘Where do I find drivers that meet the government standards and that my insurance carrier will be enthused about underwriting?’”

For better or for worse, the primary commercial insurance market is placing more and more emphasis on safety scores in its underwriting process.

“I hope the human element and decision making process isn’t lost solely based on safer scores, even though I think that they are important,” said Matt Domitrovich, Vice President - Broker at Worldwide Facilities, LLC, who specializes in excess auto, with a niche in the excess transportation business.

“That’s what makes this part of the industry so great, is working with the insured and understanding transportation, understanding the trucker’s needs and challenges, and determining – ‘Is this an account that we want to write and have on our books, and if so, what type of limits does this insured actually need?’”

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