What’s behind rising insurance costs?

When carriers think of operational costs, what comes to mind is typically driver wages and benefits, fuel costs, repairs and lease payments. Trucking insurance costs, however, have crept higher over the better part of the last decade and are a growing, yet controllable, expense for carriers. 

According to the American Transportation Research Institute’s (ATRI) Operational Cost of Trucking report, truck insurance premiums have risen from 6.4 cents per mile in 2013 to 8.8 cents per mile in 2022. In the context of costs per hour, that is $2.57 in 2013 and $3.57 in 2022.

Andrew Haun, senior VP of sales and strategic accounts at Reliance Partners, a Tennessee-based trucking insurance agency, attributes this rise partly to rising costs of equipment and medical expenses and litigation abuse.

Small carriers are especially impacted by the rising costs. 

According to ATRI, per-mile truck insurance premiums for small carriers rose from 10.2 cents in 2021 to 13.6 cents in 2022. Meanwhile, for large carriers, premiums decreased from 8.2 cents in 2021 to 7.2 cents in 2022.

Carriers with riskier safety practices see a rise in insurance prices, Haun said. Because of the freight boom in recent years, many smaller carriers, especially those that were new entrants to the industry, fell into unsafe habits.

The Federal Motor Carrier Safety Administration’s Roadside Inspection Visualization tool can quantify the severity of the issue. For fleets with one to 20 power units, the number of violations grew by 338,311 from 2021 to 2022. Fleets with 21 to 100 or more power units, however, only saw an increase of 91,737 violations from 2021 to 2022.

“[Small fleets] were running over hours, they were hiring drivers with less experience. Insurance companies view that as a risk. … All you’re doing is transferring the risk [to the insurance company],” Haun explained.

Controlling insurance costs requires having solid safety practices, keeping Compliance, Safety, Accountability (CSA) scores in good standing and hiring experienced drivers. Haun recommends carriers take advantage of all the safety tools and data at their disposal, including electronic logging devices and dashcams.

“The data is there to show that [dashcams] help in litigation. … If you can prove that you weren’t negligent, your driver wasn’t negligent, for someone who hired an attorney off of a billboard and made those claims, that’s more power in your pocket,” Haun explained. “That will reduce your claims better than anything, and if you can reduce your claims, then your loss ratios are better. If your loss ratios are better, then insurance companies want to insure you.”

Carriers can also control costs by working with an insurance agent that shops for their insurance each year. As agents, Reliance Partners aims to educate trucking companies and help them find and procure better insurance coverage at a better price. Reliance Partners has access to a significant part of the insurance marketplace. It helps find the best insurance for their businesses and explains the reasons behind their premiums.

To learn more about Reliance Partners, click here.

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