All of these factors caused the transportation insurance loss ratio to deteriorate dramatically – which, in turn, prompted insurers to raise rates for both primary and additional/umbrella coverage, while limiting capacity and more stringent risk selection. and prompted the introduction of underwriting norms.
IBA Recently spoke to a panel of experts Where the transport segment is headed, the impact of the pandemic, and the challenges it is facing in a post-COVID world.
According to Justin Wenzelman, vice president of transport at Cottingham and Butler Insurance, the COVID-19 pandemic caused a drop in claim frequency due to less congestion on the roads, but no concomitant reduction in claim severity.
“It’s almost the reverse of what we’ve always heard in the industry, which is the frequency breeds severity,” he said. “We are waiting to see what happens in the next 12 to 24 months that the roads are open again, everyone is traveling again, and [courts can clear their case backlog],
And with traffic returning to pre-pandemic levels, the challenges facing the sector before COVID have made an unwelcome return, according to Mark Gallagher, national transportation practice leader for Risk Placement Services.
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“There are a lot of programs entering the space with private equity [backing], and it allows carriers and reinsurers to enter a segment of the business they wouldn’t normally jump into,” Gallagher said. “Ultimately, the feedback we provide to our customers is that drivers and fleet managers who keep track of their safety scores and driving records will end up with preferential insurance rates.”
One of the effects of the pandemic on fleet operators and trucking companies was that many firms opted to shift their supply-chain acquisition strategies to more local sources. Many shifted their operations from “just-in-time” delivery to a “just-in-case” model, which means that the size of the order has changed to address issues caused by supply-chain disruptions. To increase.
“What we’re seeing is the need for higher-limit values on transit,” said Jack Falvey, chief operating officer at Falway Insurance Group. “We saw an increase in the frequency of cargo claims during the pandemic, which was primarily driven by cargo being abandoned at ports, or by congestion or delays. We are now seeing greater focus from customers on ensuring that they get extended coverage for delays or malfunctions in their cargo policies.