Trucking insurance was one of the first segments to feel the brunt of the tightening underwriting conditions in commercial insurance in Canada, a trend seen in the past two years.
In a report on commercial lines underwriting for mid-year 2021 in Canada, Aon notes that insurers are cautious and suspicious of truckers with high-risk operations or that engage in cross-border trade. Underwriting these classes remains challenging, the Aon brokers say.
Although these factors are driving up premiums, the increases are smaller than before, Aon notes. Higher minimum deductibles on physical damage are being imposed on renewals to offset the increased cost of vehicle repairs, the brokers explain say.
“Despite seeing some improvement, insurers are still careful and cautious when approaching new risks. Liability capacity has reduced due to reduced reinsurance availability. Any operations relating to hauling hazardous goods, trucking, and fuel hauling remain challenging classes. Many insurers have exited writing these operations,” the Aon report reads.
Many excess and umbrella insurance carriers are setting minimum automobile liability limits of $2 million and sometimes $5 million. In some high hazard segments, the limit can reach $10 million, Aon points out.
Underwriters more demanding
Underwriters are also more stringent in their risk assessment. For example, they may require a driver to have a minimum of three to five years of driving experience, with no major accidents. Policyholders are being asked for increasing information, Aon brokers add, reflecting underwriters’ appropriate risk control and safety measures.
“Having loss control checks to ensure good practices are in place can make a big difference on poor-performing accounts that have had incurred losses. Insurers are now wanting to do risk surveys over phone calls; having good loss control practices will result in the client being more desirable,” Aon brokers point out.
The tech advantage
In a report released earlier this year on the industry outlook, Hub points out that in-cab technology is being adopted by more and more carriers and increasingly required by underwriters. “When data is collected and used appropriately, it can help drive operational efficiencies across your fleet by optimizing routes, reducing accidents, digitizing training and onboarding and providing more targeted support to drivers,” their report reads.
Trending accident statistics is key to leveraging the data, Hub continues. “For example, is there an intersection that experiences more accidents than others? If so, change routes,” the brokerage suggests.
For Hub, the ultimate goal of this increased use of technology is to improve overall management and compliance. It also provides a better understanding of a fleet’s costs per mile, the report points out. “An increased reliance on technology in 2021 will help transportation businesses monitor drivers, track and onboard them better and with more direction and purpose.”
All the same, the expanded use of technology heightens the cybersecurity risk. “Any business that has a fleet and mines data to optimize operations will want to ramp up their cyber security and risk transfer efforts,” Hub says. It thus recommends that trucking companies check whether their cyber insurance policy covers their fleet for any and all use of in-cab technologies, along with comprehensive technology use.
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