Nationwide E&S Exits U.S. Commercial Trucking Insurance Market, Leaving Transportation Businesses with Fewer Options
Nationwide Mutual Insurance, a major U.S. carrier in the commercial transportation sector, announced internally to its broker clients that on July 15, it will no longer write commercial transportation business.
According to the announcement, until the company can better manage its commercial lines exposure and claims frequency, the moratorium will remain in effect. The insurer went on to note that all in-force policies will be non-renewed beginning Sept. 1 and that current quotes will be honored for the next 60 days. Nationwide E&S cited catastrophic weather-related losses, inflation and spikes in nuclear verdicts as the catalysts behind exiting the wholesale-driven commercial auto risk market and primary brokerage auto.
“[Unfortunately], strong headwinds brought on by the economic environment, catastrophic weather events and the impacts of inflation continue to impact the entire insurance industry. As a result, Nationwide has announced specific business actions it is taking to mitigate risk and manage the personal and commercial lines portfolios in the current environment.” Nationwide.
The exposures that the commercial trucking industry has grappled with over the past few years have made it incredibly difficult for businesses to remain in control of their risk exposures and frequency of claims. It is expected that carriers who will continue to remain in the commercial transportation space and that are located in states where they are unable to raise rates to sustainable levels, will begin to further reduce policy limits and coverages to better control costs. However, if current market conditions continue to put a financial strain on these carriers, experts predict that other major U.S. insurers will join Nationwide and also begin pulling out of the transportation insurance market.
What does this mean for rates? The latest Willis Tower’s Watson Commercial Lines Pricing Survey released in June showed that the commercial auto sector has reported price increases near or above double digits for the twenty-second consecutive quarter. As more carriers exit the market, experts anticipate that rates will continue to escalate and carrier appetites will become even slimmer, while policy limits, restrictions and coverage options decrease.
“As the trucking industry navigates this shrinking insurance market, it is increasingly important for brokers to partner with a wholesaler that specializes in transportation and that has extensive market availability to assist them in securing replacement coverage that meets the individual needs of their clients,” said Colby Waltenburg, president at Transatlantic Underwriters. “An experienced wholesaler in the commercial trucking sector has the flexibility and wide market reach that can be a huge benefit to brokers who find themselves forced into a corner by today’s current transportation insurance environment – especially when it comes to hard-to-place risks.”
About Transatlantic Underwriters
Transatlantic Underwriters is an innovative transportation wholesaler specializing in the placement of commercial auto liability, auto physical damage and motor truck cargo insurance coverage.
At TAU, transportation is our sole focus — and has been for over 30 years. Our principals and underwriters have over 80 years of combined experience dedicated to the automotive industry, which has earned us a well-respected reputation in the transportation market. This recognition has opened global channels with leading transportation insurance carriers, allowing us to deliver competitive options from a wide variety of markets for North American commercial auto liability, auto physical damage and motor truck cargo insurance.
If you have questions or want to learn more about our products and services, please contact Colby Waltenburg at email@example.com.
Understanding the Challenges of Refrigerated Transport Trucking
More transportation companies and independent drivers are switching to refrigerated transportation, also known as reefer trucking. Not only can refrigerated trucks transport products that must be kept cool, but they can also haul dry goods, providing drivers with more flexibility regarding routes and pickup locations. In addition, return trips after delivering a load (back-hauling/tri-hauling) by these trucks create an opportunity for companies to transport a wide variety of products with fewer partial and empty loads, according to DAT Freight & Analytics. However, along with the benefits, there are risks.
A white paper published by Blue Tree Systems, a temperature management technology company, examined the following key challenges and potential risk exposures in refrigerated transport trucking:
- Avoiding hot loads. Analysts estimate that 32% of cargo that is left to remain too long on the loading dock is kept at the wrong temperature. Cargo that is warmer than required runs the risk of being rejected by the receiver.
- Equipment failure. Refrigerated transportation units are not immune to breaking down. When equipment fails, the temperature-sensitive cargo is put at risk.
- Late notification. A driver has limited visibility to the controller of the transport refrigeration unit or drawbar trailer while transporting goods. As a result, it could be hours until the driver stops and has an opportunity to inspect the unit and make necessary adjustments.
- Driver error. Drivers must understand the operation of the controller of the refrigeration unit and perform basic configurations. At the very minimum, drivers must know how to set the mode of operation of the unit to continuous run or start/stop mode and to manually defrost the unit when needed. Without this knowledge, companies are exposed to risks associated with driver errors when operating vital equipment.
- Immediate proof of delivery. Carriers are often considered at fault when cargo fails to arrive in the condition it was expected to be in at the time of delivery. As a result, the burden of proof may be up to the carrier to prove that the conditions in which the cargo was transported and delivered were optimum.
- Complying with regulations. Rules and regulations for transportation companies that are aimed at keeping the food supply safe are in a constant state of flux. Drivers must be trained in current regulatory reporting requirements and how to maintain accurate temperature records for each shipment as documentation.
- Lack of remote control. Frozen and refrigerated loads are becoming increasingly complex to control. As a result, new or inexperienced drivers may not have the skill set to monitor and analyze temperature problems as they occur. Many companies are considering the implementation of a two-way remote dispatch office that can alert drivers of situations that may require their attention.
According to the white paper, delivering cargo at an incorrect temperature can result in significant costs for the transporter that could outweigh the invoice value. If cargo is rejected, “The transporter has to compensate the shipper for the value of the spoiled cargo by direct financial payment or through an insurance claim. If an insurance claim is paid out, the transporter faces an increase in insurance premiums for years following the claim.”
About Transatlantic Underwriters
Transatlantic Underwriters is an innovative transportation wholesaler specializing in the placement of commercial auto liability, auto physical damage and motor truck cargo insurance coverage. If you have questions or want to learn more about our products and services, please contact Colby Waltenburg at firstname.lastname@example.org.
Nuclear Verdicts Increase Commercial Trucking Insurance Rates While Reducing Coverage
Over the past decade, the proliferation of nuclear verdicts in trucking has accelerated. According to a study by the American Transportation Research Institute (ATRI), verdict awards in the trucking industry have significantly increased over the past few years, with most exceeding the $1 million mark.
Simply put, a nuclear verdict is an exceptionally high jury award that far exceeds what would be considered a reasonable settlement. Nuclear verdicts typically occur when a jury determines that the defendant is willfully or purposely denying any responsibility for or involvement in an accident. Some describe a nuclear verdict as a settlement that exceeds $10 million, while others define it as being much higher.
Why the increase in high jury awards?
A primary catalyst behind the substantial increase in nuclear verdict settlements has to do with the high cost of medical care plaintiffs are seeking. Other reasons include the highly publicized nature of major trucking accidents, as well as the fact that lawyers are moving away from blaming the individual drivers and redirecting the blame at a “lack of systemic corporate oversight and adequate safety procedures and regulations.”
“[Unfortunately,] there is also the now widely accepted societal expectation implicit in nuclear verdicts that [these] verdicts should sustain plaintiffs and their dependents for the remainder of their lives, in addition to providing monetary compensation for suffering.” — Source: Freight Waves
The impact on insurance rates and coverage
In an article by The Wall Street Journal and reported on Freight Waves, there was a 300% increase in the frequency of $20 million-plus verdicts in 2019 from the annual average in 2001 to 2009. The report goes on to note that in the past five years there have been five times as many $20 million-plus verdicts compared with what was reported from 2010 to 2014.
Due to the high-risk exposures inherent to the industry, trucking and transportation companies typically rely on layers of insurance coverage – often from multiple insurance providers. However, in response to the increase in exceedingly high jury awards, many insurance companies are not only adjusting rates, but significantly decreasing limits to help reduce their overall loss exposure. As a result, companies could find themselves scrambling to secure the coverage they need to mitigate risks, which could mean having to move away from an admitted market and into excess and surplus lines.
“In response to changing conditions, businesses may now need to include several additional layers in order to obtain enough insurance coverage to protect themselves.” Source: Mehaffy Weber.
Increase in smaller awards also impacting insurance rates
In addition to nuclear verdicts, there has a steady increase in smaller awards, just under the $1 million mark, that are also impacting the trucking industry. The ATRI study shows that although less than $1 million, these verdicts and settlements are having a significant financial impact on smaller trucking operations and leading to an average 20%-25% increase in commercial insurance rates.
Examples of average settlement amounts for these somewhat smaller infractions include:
- Poor driver history: $680,733
- Phone use: $629,375
- Hours of service violation: $584,531
- Inadequate training: $388,464
- Poor driver hiring practices: $341,205
In 2020, there were there were 4,444 truck-involved fatal crashes and 101,000 others that involved injuries, according to data by the Federal Motor Carrier Safety Administration. In 2021, the National Highway Traffic Safety Administration reported that fatalities in crashes involving at least one large truck were up 13% compared to 2020.
It’s hard to say just how many of these crashes resulted in a nuclear verdict. However, the fact remains that it is impossible to eliminate large payouts completely in trucking injury-related accidents. These mega verdicts should be a catalyst for companies to be proactive in managing their own risks and to mitigate exposures with sufficient insurance.
“[Now, more than ever before], is paramount that carriers, brokers and shippers have the proper procedures and training in place that will help protect them to the greatest degree possible.” — Source: Freight Waves
About Transatlantic Underwriters
Transatlantic Underwriters (TAU) is an innovative transportation wholesaler specializing in the placement of commercial auto liability, auto physical damage and motor truck cargo coverage. For questions or to learn more about our products and services, please contact Colby Waltenburg at email@example.com.
 Case Glide.
 Freight Waves.
 Mehaffy Weber.