Time For A More Power Efficient Truck Insurance Model

Time For A More Power Efficient Truck Insurance Model

A trucker friend of mine once remarked that for you to deregulation you could funds in the trucking business despite yourself. Back in those "good ole days" government protected routes bequeathed an industry with LTL powerhouses, high paying Teamster jobs, and healthy profits. Today the trucking industry operates largely beneath a free wheeling TL and increasingly intermodal template with nonunion drivers and owner operators. Profit margins when exist at all generally come down to pennies on the dollar. It goes without saying that only the most productive trucking companies have survived this transformation - painful, but a net plus for consumers.

Now contrast the competitive untidiness in trucking with the inert if not orderly nature in the truck insurance agency. Life pretty much continues as it always has: same structure, same production model, same economics. Where convention breeds productivity, it certainly makes sense, but with truck insurance, convention has only meant unnecessarily high expenses.

Broadly speaking the structure of the truck insurance business fails into two segments: agents (including brokers) and insurance groups. Agents solicit and service business, while insurers underwrite, issue policies and pay advises. Agents make money on commissions. Insurance companies make money on favorable underwriting results and investment pay packet.

Contrary to the perception of truckers, operating profit margins for insurers possess a tendency to mirror those of most trucking companies. Where truckers have their operating ratio, insurers have their combined ratio. Both measures quantify operating profit as a number of revenue. In good years, both industries typically generate ratios between 90 and 100%, yielding operating profit margins all the way to 10%.

By way of comparison, margins for the most successful truck insurance agents run as tall as 20 to 40% in good times and bad: a nice return considering agents bare no underwriting risk.

But let's not judge these economics too hastily. Your truck agent has done an exceedingly splendid job of establishing himself as operating purveyor of value for both trucking company and insurance provider alike. Here's the perception. From the insurance company's viewpoint, the18 wheeler insurance agent offers an invaluable service have to address producing business and servicing clients. Therefore, the insurance company feels quite justified in paying healthy commissions particularly on business that generates a combined ratio of less than 100%. Correspondingly around the trucking company's angle the agent is an invaluable service existing position . his knowledge in the insurance market and his ability to match a trucking company's coverage needs with more capable and affordable insurer. Why begrudge the man an income? Besides he always picks up the tab for lunch and golf.

However, with advances in technology, greater numbers of only the insurance agency matters. The Internet increasingly has relegated the agent into the status of tag along. He more time serves as the conduit for exchange between trucker and insurer. Rather at a time of instant information, he increasingly gets in the much. Need a quote? Google it. Looking for accident statistics? Go to Safersys. Curious about some insurance company's rating? Pull up A.M. Best. Intrigued by the type of freight a company hauls and the place of its devices? Check out their website. Concerned about whatever is lost ratio? E-mail the underwriter. Fender bender? Snap a picture from your cell then fire off a text message to the claims department. It's so much more efficient than leaving a voice mail message with a brokerage.

Just as you don't need a travel agent to book travel, you no longer need an broker to buy insurance packages. Strangely, both trucker and truck insurer seem unwilling to acknowledge this fact. In order to degree, custom plays a role. Historically, most contracts between agent and insurer specify that the agent owns buyer list. Thus, insurance providers generally remain often unwilling to communicate directly with their insured's. Also truckers are in the habit of smoking of dealing with agents not underwriters.

A simple step toward efficiency hold all truckers insisting that neither agent nor insurer can claim ownership of these account. This variation in practice would set the stage for direct negotiations between trucker and truck insurer, and by extension create lower premiums.

Il Comitato Processione Venerdì Santo

ringrazia la famiglia Aviani e la famiglia Centoscudi, per la disponibilità dei terreni senza i quali la Sacra Rappresentazione non sarebbe così suggestiva.
Un ringraziamento allo Studio GSG di Bagnoregio e a Mario Mecarelli per le fotografie utilizzate.
Si ringrazia inoltre chi direttamente o indirettamente contribuisce alla realizzazione dell'evento ed un grazie particolare va a tutta la comunità di Vetriolo che da anni partecipa sentitamente alla Rappresentazione del Venerdì Santo.

 

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