Commercial transportation is all Canadians can talk about as of late.
With convoys and strikes popping up across the country, the need for the insurance industry to assess the current landscape of the commercial transportation sector has naturally increased.
Scott Cober, national practice leader of transportation at BFL Canada, spoke to Insurance Business about the major pain points and market trends that brokers must consider as 2022 progresses.
“Our biggest challenge in 2021 was helping clients grow their operations while they struggled to find professional drivers with more than three years of experience as the commercial fleet underwriters continued to maintain strict on-boarding rules when adding new drivers,” he said. “Middle to large fleets had a major advantage over smaller trucking operations when hiring new drivers.”
Cober noted that the most effective strategy for brokers to facilitate business and help clients secure adequate insurance is to focus on fleet risk management and to encourage the use of in-cab telematics to monitor and improve driver behaviours.
“The growth of cloud-based video dashcams and Advanced Driver Assistance or Emergency Braking Systems has also been a proven strategy for a reduction in a fleet’s claim frequency and severity,” he added.
Working to find a solution between private insurance companies and the government to create another risk insurance pool to help small and medium size companies compete would also help to alleviate some stress in the marketplace, according to Cober.
“This would include more flexibility to add new drivers and for new trucking businesses to receive rate relief for the first two to three years. Presently, start-up trucking companies with less than three years in operation are forced to the Facility Association with premiums four to five times higher than their competitors,” he said.
The long-haul cross border commercial insurance market is still seeing rate increases of 6% to 10% for fleets with good loss ratios and strong risk management processes in place, according to Cober.
“Fleets with higher US exposure will see additional premium increases in their umbrella or excess liability towers,” he continued. “The last two quarters have seen the beginning of the market slowly transitioning and we are starting to see rate pressures abate on some lines where competition for new business is accelerating, and capacity in the excess layers is slowly returning.”
Cober mentioned that the market is seeing additional London capacity coming into play, which is a good sign because premiums will become more competitive as capacity increases.
“It is a slower transition here in Canada, we're not being bombarded with new capacity,” he continued. “We're hearing the discussions and having those negotiations now, which I think is a good sign for the market.”
Brokers need to be on their toes and pay attention to the market transition, as Cober explained that the positive trends being seen could always swing back in the other direction.
“It just takes a few events that we can foresee, and we're thrown back into the cycle of rising premiums,” he said.
Risk management analytics will be pivotal moving forward and Cober advised brokers to use that data in tandem with collision avoidance systems to help paint a full picture of their clients’ risk profiles.
“With recent trends of well-paying freight, we are seeing transportation companies look to haul higher value goods and expand their US reach,” Cober emphasized. “Helping our insureds to understand their new risk exposures and contractual obligations under new shipping contracts continues to remain an important service, especially in a time sensitive industry like transportation.”
