The commercial auto market has become a minefield of risks for transportation companies. Rising auto liability claims, increasing operational costs, and massive jury awards — the kind that can wipe out a business overnight — are creating immense challenges. Effective transportation risk management is now more critical than ever. Insurance brokers are at the forefront of helping their clients navigate these turbulent waters, offering the specialized solutions necessary to mitigate these evolving threats.
Top Risks Facing Commercial Transportation
The commercial transportation industry is facing increasingly complex risks, with financial strain at the forefront. Underwriting losses in U.S. commercial auto insurance spiked to $3.3 billion in 2022, after nearly breaking even in 2021, according to AM Best. This massive shift in the combined ratio reflects the rising severity of auto liability claims, further burdened by the increasing frequency of large settlements and jury verdicts that can financially devastate a company.
Spike in Auto Liability Claims
Auto liability claims are on the rise, both in frequency and severity. A significant driver of this increase is the trend toward sky-high jury awards, where accident claims reach astronomical amounts.
One notable case occurred in 2020 when a jury awarded $411+ million in damages against a single trucking company in Florida. These oversized verdicts are not isolated cases — they’re part of a growing trend. The combination of social inflation and aggressive plaintiff strategies is making it harder for transportation companies to survive financially after a lawsuit.
Impact of Driver Shortages
The commercial transportation industry continues to grapple with a severe driver shortage, with estimates suggesting a need for 60,000 more drivers in the United States alone. This shortage has led to intense competition for qualified drivers, often pushing companies to lower hiring standards or leave positions unfilled.
Lower hiring standards increase the risk of accidents, while unfilled positions strain existing employees, leading to fatigue and mistakes behind the wheel. These factors combine to make transportation companies more vulnerable to claims, further driving up their operational risks and insurance costs.
Rising Costs of Property Damage
In addition to liability claims, the cost of property damage in transportation is skyrocketing, thanks to the advanced technology built into modern vehicles. Features like autonomous systems and collision-avoidance technology, while improving safety, come with steep repair costs.
A recent study by CCC Intelligent Solutions found that the average repair cost for vehicles with advanced driver-assistance systems (ADAS) was 15% to 19% higher than for those without, primarily due to longer repair times and the higher cost of parts. The complexity and expense of repairing these technologies after accidents increase the financial burden on transportation companies, which is reflected in their premiums.
How Transportation Risk Specialists Help Manage Complex Risks
Given the complexity of modern transportation risks, partnering with a transportation risk specialist is critical. These specialists provide a deeper understanding of the industry, identifying risks and offering targeted solutions to reduce exposure. For companies transporting hazardous materials, risk specialists offer valuable guidance on the safest transportation methods, ensuring compliance with regulations and minimizing potential liabilities.
Imagine a trucking company facing frequent accidents. After consulting with a risk management specialist, they discover that an outdated driver training program is a major contributing factor. By implementing an updated defensive driving program and ensuring compliance with current regulations, the company could potentially realize a 20% reduction in accidents within the first year. In this scenario, their proactive approach to risk management has the potential to not only lower the frequency of claims but also lead to reduced insurance premiums at renewal.
Specialists also help companies navigate the complexities of modern technology. They assess the risks associated with advanced vehicle systems, providing recommendations on maintenance schedules and ensuring that drivers are trained to operate these systems safely. Through comprehensive risk assessments and tailored recommendations, transportation risk specialists enable companies to manage their risks more effectively.
The Role of Insurance Brokers in Reducing Transportation Risk
Insurance brokers play a pivotal role in helping clients understand how to mitigate transportation risk by guiding them through the process of selecting the right coverage and implementing robust risk management practices. Encouraging clients to perform regular risk assessments and policy reviews ensures their coverage stays aligned with current operational needs. As the risks facing transportation companies evolve, their insurance policies must adapt to keep pace.
For instance, brokers can recommend telematics systems that allow transportation companies to track driver behavior in real-time, identifying risky behaviors such as speeding or harsh braking. By leveraging this technology, companies can take corrective actions before an accident occurs, reducing their liability exposure.
Brokers who position themselves as trusted advisors by working closely with managing general agents like Cochrane & Co. have a vital role to play in today’s commercial insurance market. With access to tailored solutions specifically designed for the transportation sector, brokers help ensure companies have coverage that addresses their unique risks. This partnership empowers brokers to provide clients with the specialized support needed to navigate the complexities of today’s market.
Why Cochrane & Co. Is Your Go-To Partner for Transportation Risk Management
Cochrane & Co. has built its reputation on understanding the unique challenges of the transportation industry. As specialists in managing complex transportation risks, we work closely with brokers to deliver customized insurance solutions that safeguard clients from significant financial losses.
By offering access to expert guidance, tailored policies, and comprehensive risk management support, Cochrane & Co. empowers brokers to protect their clients from the most pressing risks in today’s market. From coverage for advanced vehicle technologies to protection against catastrophic claims, Cochrane & Co. ensures that transportation businesses are equipped to thrive.
About Cochrane & Company
For more than six decades, Cochrane & Company has been proudly at the forefront of the insurance industry. Our experience has enabled us to innovate in powerful ways, reimagining the E&S market, and providing technology solutions that make it easy to do business with us. Licensed in all 50 states, we proudly serve clients across the nation, providing personalized and powerful solutions to help you become an even better partner for your clients. Speak to one of our experienced professionals today by calling (855) 967-0069.
