Truck insurance premiums rose as much as 29% in Q4 compared to the previous quarter, but the average uptick moderated throughout 2023, according to a report.
The highest upticks were in the Southwest region consisting of Southern California, Arizona, New Mexico, Oklahoma and Texas, where one in five insurance businesses reported that kind of surge, according to The Council of Insurance Agents & Brokers’ report.
But the report found that the average increases for commercial auto premiums softened, from an 8.8% average uptick in Q3 to a 7.3% rise in Q4, the report said.
Commercial auto insurance increases in 2023
| Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|
| 8.3% | 10.4% | 8.8% | 7.3% |
SOURCE: The Commercial P/C Market Index, where quarterly increases are based on consecutive quarters for premiums.
The rates are a significant factor in operating costs in a low-demand environment.
Trucker leaders say issues such as nuclear verdicts — lawsuits in which an award of $10 million or more is involved — contribute. Another factor includes rising costs for repairs.
For owner-operator Joel Boelman, chairman of the Trucking Solutions Group, a big increase can mean a bullet to bite in costs.
Knight-Swift Transportation Holdings experienced the challenges in underwriting firsthand amid a tough operating environment for freight. After quarterly losses repeated throughout 2023, the carrier announced in January it would shut down its third-party insurance businesses. Losses accrued amid more frequent and severe claims, the company said.
That more challenging environment included “some smaller carriers that are probably pressed to run more miles to make up for lower rates” and “challenged to make some of their payments on their insurance premiums,” Adam Miller, now the company’s CEO, once said for a Q1 2023 earnings call.
Multiple truckers Trucking Dive spoke with cited increases they have faced with Progressive. Owner-Operator Independent Drivers Association EVP Lewie Pugh said insurance companies must understand trucking, but it’s a market that some insurers are seeking to move out of. Progressive didn’t immediately return messages seeking comment.
The Q4 increases are also not as severe as other quarters in 2023, suggesting some improvement. In Q2, a Pacific Northwest region had over one in 10 insurance businesses report increases of 30% to 50% compared to the prior quarter.
The Southeast had a similar rate in that range in Q1, and also in that quarter, the Pacific Northwest had an even higher level of businesses reporting that kind of increase.
Correction: This story corrected the misspelling of Joel Boelman’s name.
