Transportation Industry Continues to See Rate Increases
Transportation Industry Continues to See Rate Increases, Outlook Healthy for Sector
In early January, we published insurance rate findings from MarketScout for the month of December for the transportation industry indicating the rise in premiums in this sector. This has been further substantiated with recent findings for the entire fourth quarter 2012, as reported by the Transportation Insurance Pricing Survey (TIPS), which interviews insurance brokers, wholesalers and underwriters that represent thousands of account placements for this market.
The survey shows that the transportation industry is in a hardening market phase as a result of significant rate increases in auto liability rates and increased participation in this industry by generalist insurers. In fact, when asked about the overall direction of the transportation insurance market in terms of rates, 76.09% of those surveyed view it as hardening. In terms of small accounts (less than $75K), 59.6% of those surveyed saw increases between 1%-10% for the fourth quarter, and 23.4% saw between 10%-20%. Those who saw no change represent 6.4% of those surveyed. In the mid-market ($75-$250k), 14.9% so no change, 55.3% saw between a 1%-10% increase, and 12.8% saw between a 10%-20% change. For large accounts (more than 250k), the numbers indicate: 14.9% – no change, 44.7% – 1%-10% change, and 8.5% – up 10%-20% change.
The survey measures premium changes across 10 different transportation segments, including trucking operations, intermodal carriers, messenger/couriers services, ambulance/paratransit, school bus contractors, bulk transportation, airport ground transportation, charter/tour bus operators, specialized carriers and riggers, and limousine services. Within these niches, some survey participants experienced no or little change on select segments.
Trucking: Overall Outlook for 2013
Things are looking up for the transportation industry, especially in the trucking industry, according to a report commissioned by the American Trucking Associations (ATA). The study conducted by IHS Global Insight and Martin Labbe Associates revealed that truckers will take on a more prominent role in the transportation industry due to a significant improvement in the economy and projected rise in revenue, total freight tonnage and services needed. In fact, by 2023, the commercial trucking industry will see freight revenues increase to 81.7% from 80.9 % in 2011. In addition, overall freight tonnage will expand by 21% compared to last year, according to the report.
Moreover, in recently released figures, the ATA’s advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index rose 0.6% in February after increasing 1% in January. Tonnage has now increased for four straight months, which hasn’t occurred since late 2011, according to the ATA. Over the last four months, tonnage gained a total of 7.7%. In February, the SA index equaled 123.6 (2000=100) versus 123.0 in January. The highest level on record was in December 2011 at 124.3. Compared with February 2012, the SA index was up a solid 4.2%, just below January’s 4.6% year-over-year gain. Year-to-date, compared with the same period in 2012, the tonnage index is up 4.4%. In 2012, tonnage increased 2.3% from 2011.
“Fitting with several other key economic indicators, truck tonnage is up earlier than we anticipated this year,” ATA Chief Economist Bob Costello said. “While I think this is a good sign for the industry and the economy, I’m still concerned that freight tonnage will slow in the months ahead as the federal government sequester continues and households finish spending their tax returns. A little longer term, I think the economy and the industry are poised for a more robust recovery.”
As the industry improves and more jobs are added in the long-term, an increase in trucking services will be added. Caitlin-Morgan is positioned to help you insure the transportation industry, including trucking operations. Give us a call at 877.226.1027 for more information about our programs.
Posted in: Transportation Insurance