Insurance rates are among carriers’ biggest expenses, alongside fuel and maintenance. According to recent analysis from MarketScout, in 2023, the transportation industry was the sector with the largest rate increase: 7.26%. The increase across all industry groups hit 4.56% in the year.
On this episode of WHAT THE TRUCK?!?, Reliance Partners’ Jackson Alexander, executive vice president of sales at Reliance Partners, joins Dooner to break down what is causing rising insurance costs and what some options are to help carriers ease the burden.
“Insurance companies are incorporating something new into the underwriting process, and that is the use of telematics,” Alexander said. “The insurance company and the motor carrier are connecting via API to their ELD provider, their camera providers or both and transmitting the data back to the insurance providers for review.”
Insurers unfortunately don’t have much interest in the rates that carriers get for loads. They tend to focus on the exposure that comes with the value of what is on the road: the equipment, the value of the load and everything in between. In regard to implementing telematics for insurance purposes, the providers are looking for a few major things.
According to Alexander, the things providers look at the most are speeding, harsh braking, sharp turns, quick accelerations and other factors that lead to truck claims. They want to know how often these things are happening.
As for the type of insurance provider, there are options. There are traditional insurance companies, which are what motor carriers have been using for decades. Then there are some newer insurance companies that come under the banner of “insurtech.”
Insurtech means the use of technology in insurance, just like fintech is the use of technology in finance.
The main difference between traditional insurance providers and insurtechs is that the newer insurtechs require connectivity to a motor carrier’s telematics before providing a quote. These companies provide rates based on a carrier’s driving history and the data pulled from telematics.
Alexander notes that traditional insurance providers are still looking for and incentivizing the use of telematics, but it’s not a requirement, whereas most insurtechs will not provide a quote without API connectivity and a review of the past 90 days of driving history. If carriers don’t meet their threshold, they will not get coverage.
When it comes to mitigating insurance costs, some insurtechs can provide competitive pricing for carriers that have excellent histories of safe driving backed up by telematics data. For those carriers with impeccable driving records, it’s a great option to cut down on ever-increasing insurance rates, especially when the freight market is still down.
Small carriers that don’t historically have the most opportunities in the telematics space have an option now as some insurtechs have started rolling out programs for smaller carriers that will send them dashcams to begin their telematics journey.
As for shopping for a new insurance policy, Alexander says: “You can start the insurance renewal process 90-120 days before your renewal date. You might not get your renewal quote from your current carrier until 30 days or maybe even 14 days before your actual renewal date. You should expect a 10-15% increase in rates, but don’t wait for that quote to shop, because then your hands are tied. Some markets won’t even release a quote unless they receive a submission at least 30 days before the renewal date.”