Strong Tie Insurance December 20, 2021 Our Blog Contents hide 1 Changes to Federal Rule Might Drive Insurance Premium Prices 1.1 The Proposed Increase by Federal Motor Carrier Safety Association 1.2 The Role of the Economy 1.3 Driver Shortage Faced by the Trucking Industry 1.4 Overhead Costs to Offset Industry Innovation and Growth 1.5 How Trucking Companies Can Cope with the Rising Premiums 1.6 Find the Best Insurance Coverage for Your Trucking Company In the commercial transportation industry, cheap commercial insurance is a critical component of risk management. Insurance covers the loss of company assets, vehicles, and freight. Unfortunately, premium costs have risen in recent years, and new recommendations for federal regulatory changes may result in price rises. With deliveries of vaccines, medical supplies, and consumer items, the business has been a driving force in enabling the United States to adapt to these times. So, why are we witnessing increases in transportation insurance prices and even congressional mandates? Changes to Federal Rule Might Drive Insurance Premium Prices Businesses of all sizes and types have been impacted by the slow economic recovery following the COVID-19 outbreak. There is no exception in the transportation industry. Despite the critical significance of commercial trucking, efforts to raise insurance coverage minimums for the industry could undo any recent economic improvements. Proposals to expand minimum liability insurance coverages have been discussed among Cabinet officials, including newly-confirmed Transportation Secretary Peter Buttigieg. The Proposed Increase by Federal Motor Carrier Safety Association The Biden Administration is revisiting the prospect of raising certain trucking insurance minimum coverages, based on a request made by the Federal Motor Carrier Safety Administration (FMCSA) in 2014. However, this could jeopardize the transportation industry’s economic recovery. Increases in liability coverage minimums, which were set at $750,000 in the 1980s and have stayed fixed since then, have already been considered by the FMCSA. While the Federal Motor Carrier Safety Association said that minimum coverage levels have not kept pace with inflation or increased liability claim costs, the agency got little or no response from the sector before putting the proposal on the table in June 2017. While it is uncertain whether the Biden Administration would pursue legislation to change mandated minimums, the trucking industry is braced for cost increases, as premium rates from insurers have risen virtually every year for the past decade. The Role of the Economy In the United States, there is an increasing demand for trucking as the percentage of in-store transactions continues to decline in the face of increased competition from shipping goods. In 2021, the trucking economy grew by 15%, and according to a new FTR estimate, a further 4% to 6% growth is expected in 2022. The increase is due in part to e-commerce, but it is also due to rail transportation losing its dependability in recent years. Over the next ten years, trucking is predicted to surpass a major percentage of freight shipping, solidifying the industry’s position as the primary mode of distribution. According to the U.S. Freight Transportation Forecast through 2022, trucking will see a rise in tonnage and an overall revenue gain of 82.2%. This could be attributable in part to the country’s cargo ship crisis and huge port congestion. Driver Shortage Faced by the Trucking Industry Despite millions of job openings, the trucking industry continues to have driver shortages. The United States now has a nationwide driver shortage of 60,000, with highs of 85,000 in high-demand areas. To top it off, the number of violations and accidents in the business is skyrocketing. Numerous new truckers have little or no truck driving experience, which could be a contributing factor in claims. The need for commercial truck safety training is also a must for truckers, The rate of hiring has remained flat over the last year, which experts believe is due in part to an increased need to work from home. Many parents no longer have the luxury of kid supervision during school hours as more children attend virtual school. In other circumstances, truckers are retiring earlier or substituting office or remote work for their long hours. Overhead Costs to Offset Industry Innovation and Growth As the industry’s role in the economy grows in importance each year, it is seeing growth. Increased demand for trucking services necessitates new technology, new services, and a significant increase in overhead costs. Truck technology and models are improving, and corporations are required to pay for: Cargo tracking monitors Higher maintenance costs In-cab cameras Telematics Now some mandated laws are demanding $2 million in coverage per vehicle. With estimations being based on telematics and some technical requirements, it’s becoming more difficult to reduce insurance rates. How Trucking Companies Can Cope with the Rising Premiums Truckers and motor carriers should look around for insurance rates or negotiate them. They can also contact state lawmakers if rates are too high because insurance is governed at the state level. Before renewing a policy, transportation insurance specialists can assist in identifying any adjustments that are required. Specialists can advise on how to reduce the total cost of risk by utilizing various insurance program architectures. Technology can also play a role. In terms of accident reconstruction, installing 360-degree cameras in vehicles saves a lot of time. Find the Best Insurance Coverage for Your Trucking Company If you’re still on the fence about getting premium insurance, our team of experts can help you get the right coverage for your trucking needs. For the past 20 years, Strong Tie Insurance has been protecting people, their belongings, and their businesses. We’ve insured hundreds of thousands of people since then, with hundreds of different plans, pricing, and discounts. We have built excellent partnerships with businesses, contractors, body shops, hotels, vehicle dealers, car rental companies, and others to accomplish precisely what you’d expect an insurance company to do—to rapidly handle problems and surpass your expectations. Make sure you compare similar coverages from a variety of insurance companies. A lower rate may be offered by one provider, but it may not include as much coverage. To learn more about our owner operator insurance coverages, contact our team at Strong Tie Insurance today! Insurance for New Owner Operators: Are Higher Premiums Required in the Trucking Industry? was last modified: June 28th, 2023 by Strong Tie Insurance Related posts:Transporte de MueblesUnderstanding the Importance of Semi-Truck InsuranceWhy Get Semi-Truck Liability Insurance?