The commercial trucking insurance market continues its tumultuous trajectory, with motor carriers facing mounting pressures from skyrocketing premiums, nuclear verdicts, and increasingly stringent underwriting requirements. Jackson Alexander, Executive Vice President of Sales at Reliance Partners sat down with FreightWaves to talk about how the industry is adapting to these challenges and what strategies are proving effective for carriers navigating this difficult landscape.
The insurance industry has witnessed a dramatic shift in litigation outcomes over the past decade, fundamentally altering the risk calculus for motor carriers and their insurers. The industry has experienced a staggering 235% increase in verdicts exceeding $1 million since 2012. A single accident can threaten the financial viability of an entire operation.
Alexander says that preparation and prevention are key to mitigating exposure to these potentially catastrophic outcomes. “Reliance Partners has our own in-house safety team comprised of former state patrol officers, DOT inspectors, and insurance loss control professionals,” he said. “We make this team of folks available for our clients to assist with implementation of safety procedures, improve CSA scores, and enforce best practices when it comes to risk management.”
The distinction between proactive and reactive approaches to safety management has become increasingly critical in defending against nuclear verdicts. Preparedness, according to Alexander, can influence both the likelihood of incidents and the outcomes of resulting litigation.
“Motor carriers that prove to be more proactive rather than reactive once an issue arises are much more well positioned to defend against nuclear verdicts,” Alexander said.
The emergence of insurtech companies in the commercial trucking space has accelerated a broader transformation in how insurance providers approach underwriting. While these technology-focused entrants initially disrupted the market with aggressive pricing models, their influence has fundamentally changed the criteria traditional insurers use to evaluate risk.
“Insurtechs have been in the space for a few years now and many of the traditional providers are starting to implement technology into their underwriting process,” Alexander said. This integration of technology into underwriting, he said, is much more than an incremental improvement.
The evolution has been particularly pronounced in the realm of telematics and in-cab technology. “A lot of providers that historically never factored any sort of technology into their underwriting are now offering discounts for motor carriers to share their telematics data, install cameras in their trucks, etc.,” Alexander said. “The use of underwriting telematics is becoming more and more prevalent and will only increase in the future.”
What began as optional programs offering modest discounts have rapidly transformed into hard requirements for many carriers. The speed at which market standards are evolving is unprecedented.
“Some insurance companies that used to have telematic sharing be optional are now requiring it in order to receive a quote,” Alexander explained.
The shift toward mandatory technology adoption extends beyond telematics, though.
“Most trucking companies use some sort of telematics because of the ELD mandate that was implemented several years ago,” Alexander said. “More and more fleets are going beyond that to install cameras and other collision avoidance technology.”
The consequences are becoming severe for any carriers that resist adopting these technologies.
“Fleets that are refusing to do this cannot receive insurance quotes from many insurance companies who in the last 6-18 months have started to mandate this,” Alexander said.
As market conditions have deteriorated, insurance carriers have become increasingly selective about which risks they’re willing to underwrite, which creates a narrow corridor of requirements that motor carriers have to navigate to secure competitive coverage.
“There’s limited capacity in the marketplace right now, especially for auto liability coverage,” Alexander said. “Insurers are being pickier on who they want to insure and raising their rates for the ones they do offer coverage to.”
The requirements for accessing preferred markets have become more comprehensive and demanding. According to Alexander, trucking companies must check all of an underwriter’s boxes (profitable loss history, preferred driver pool, good CSA scores, quality safety practices in place, use of technology, etc.).
The margin for error has effectively disappeared.
“Even not hitting one of these marks could completely rule a motor carrier out from being able to get a quote from a preferred market,” Alexander said.
Faced with relentless premium increases driven by persistent unprofitability in the commercial auto liability sector, many motor carriers are exploring alternative risk transfer mechanisms. The numbers are stark: commercial auto liability insurance has been unprofitable for insurance companies for 14 consecutive years, creating sustained upward pressure on pricing.
According to Alexander, commercial auto liability insurance has been unprofitable for insurance companies 14 years in a row. “Insurance companies are being forced to raise their rates across the board as a result,” he said.
In response, an increasing number of fleets are turning to captive insurance programs as a means of insulating themselves from broader market volatility.
“Joining a group captive is one way many motor carriers are able to remove themselves from the effects of the insurance marketplace as a whole and instead have their rates be much more dependent just on the performance of the members within the captive,” Alexander explained.
Captive insurance arrangements allow carriers with strong safety records to benefit more directly from their risk management investments, rather than subsidizing the losses of poorly performing operators through traditional insurance pools. The alignment of incentives has made captives particularly attractive to safety-conscious fleets.
Well-managed fleets are making a calculated bet that their safety investments will pay dividends when they self-insure a larger portion of risk.
“If you’re not interested in a captive, many fleets have started to increase the deductibles and retentions they take just to help offset the rate increases insurance companies have taken year over year,” Alexander said. “Motor carriers that invest resources into safety and have good loss history are choosing to gamble on themselves by increasing their retentions.”
While commercial auto liability continues its historic unprofitability streak, the insurance market for motor carriers presents a more nuanced picture across different coverage lines.
Excess liability coverage, which provides protection above primary auto liability limits, has experienced dramatic premium increases driven by the proliferation of nuclear verdicts. Meanwhile, auto physical damage coverage has demonstrated relative stability, remaining profitable for insurers in five of the past six years.
Cargo insurance, historically a profitable and stable line for insurance companies, has encountered new challenges. “Cargo insurance has historically been a very profitable line for insurance companies, but with the massive spike in theft and fraud in the last couple of years, cargo rates are increasing as well,” Alexander said.
Conversely, workers’ compensation and occupational accident coverage for independent contractors continue to generate strong returns for insurers. This sustained profitability has created a rare bright spot for motor carriers, with many experiencing flat renewals or even decreases in pricing for these coverages. “Unfortunately, the total cost for these policies is a relatively small percentage of a motor carrier’s overall insurance premiums,” Alexander said.
Right now, the insurance environment for motor carriers is the result of a convergence of long-term trends. Nuclear verdicts continue to reshape liability exposure, technology has become non-negotiable for accessing competitive coverage, and alternative risk transfer mechanisms are gaining traction with safety-focused fleets.
For motor carriers, Alexander says, the path forward requires a comprehensive approach that addresses every dimension of insurability: investing in safety infrastructure and personnel, adopting required technologies, maintaining strong CSA scores, cultivating a qualified driver pool, and carefully managing loss history.
“The margin between success and struggle often comes down to execution across all these fronts simultaneously,” Alexander said.
Survival in this market demands excellence across all dimensions that insurers evaluate. Increasingly, that excellence must be demonstrable through technology and data.
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