The COVID-19 outbreak has roiled transportation insurance markets as trucking continues to drive rates higher in the sector, according to a report released Tuesday by Risk Placement Services.
“The jarring impact of COVID-19 has caused disruption across the transportation industry. Various segments have adapted and repurposed their business models, while others have been forced to halt operations,” said the report from the managing general agent/underwriting manager and wholesale insurance broker.
Years of underperforming combined ratios have forced insurance carriers to pass on double-digit premium rate increases, with rates rising 10% to 15% year-over-year since 2010, RPS said in a statement issued with the report.
“As the commercial auto insurance industry continues to struggle with a myriad of challenges that have influenced premium rates over the last decade, plus the impact of the current pandemic, the current market firming is expected to continue during the second half of 2020,” RPS said.
As part of the response to the impact of coronavirus, insurance carriers have reduced premiums, deleted units and waived monthly minimum reporting for mileage, receipts or units, it said.
This comes in the face of a commercial auto sector that has struggled for years to achieve profitability, it said.
“Inadequate pricing and reserving has led to premiums that have not kept up with losses for several years,” the report said, adding that “insurance carriers have had underperforming combined ratios that have steadily increased since 2014.”
The last year for which data is provided, 2018, showed a combined ratio of 112.9%, up from 111.0% in 2017 and 110.4% in 2016, the report said.
Trucking continues to see challenges against this background.
“Trucking is a difficult class of business for insurance carriers,” Mike Mitchell, area president of RPS’ transportation practice, Southeast region, said in the report. “Truckers are on the road every day, so the exposure is always there.”