Trucking firms looking for 2016 insurance rates may be excited or disappointed depending on which reports they review and believe. The good news for Commercial Fleet businesses is that rate increases, if experienced, will likely be moderate. The better news is that others are reporting rate decreases, and if actually experienced, decreases will be moderate also. When rates go down, even in a moderate fashion, the good news is always welcome.
Currently, there are several research firms who consistently report rate forecasts for the insurance industry and lately there is some disagreement about overall findings. Certainly, it's important for large transportation firms to know what the year will hold when it comes to insurance pricing. Even a small tick in rates in either direction can affect the bottom line and send a clear signal to CEOs on whether to react in one way or the other. Knowing this, large-firm CEOs scramble during an expiring year in hopes of learning how the market will react for the ensuing year.
American Transportation Research Institute (ATRI)
In business since 1954, ATRI has continually been engaged in transportation studies and operational tests. Although ATRI studies and reports on all aspects of the transportation industry, they offer significant insights on how insurance costs affect the industry. ATRI's "Analysis of the Operational Costs of Trucking for 2015" revealed a year-over-year increase of 11% in truck insurance premiums for 2013 to 2014 when considered on a per-mile basis. For the fourth quarter of 2015, Marsh data showed rates for auto liability to be flat or increasing on a moderate basis.
The rate increases are primarily attributed to increases in the cost of vehicles due to new technologies, stricter emissions controls, and mandated higher efficiency standards. The increase in tractor costs always translates into increased physical damage premiums. Liability rates, although historically under-priced, began trending upward in mid-2015 and are expected to continue in 2016. The industry can attribute increased liability rates to the severity of jury awards against transportation firms, despite a moderate drop in the frequency of claims.
2016 Marketplace Forecasts
2016 Marketplace forecasts credits consolidation among the largest carriers and a soft marketplace for a moderate decrease in rates for 2016.
Although single digit decreases are expected for large auto fleets with good loss experience, large firms with unfavorable losses can expect pressure on rates and deductibles. Also expected for 2016 is a more moderate rate decrease for smaller firms as they tend to be insured on a guaranteed cost basis.
The report's "The One Thing" recommendation is as follows: "Insureds with large auto fleets should explore restructuring their programs with higher primaries, facultative reinsurance, and shorter lead to umbrellas to find the optimal match of exposure to underwriting appetites and achieve pricing efficiencies."
In conclusion, depending on which report larger transportation firms choose to base their forecasts upon, the pricing prediction for 2016 will be somewhere between - 10% and + 5%. If you have questions about commercial fleet coverage contact Skyline Risk Management, Inc. at (718) 267-6600 to discuss your concerns.