The Progressive Insurance Group will analyze the trucking industry by market segment to properly price its new motor carrier insurance coverage, the head of the company's commercial division said.
The insurance industry in the past hasn't recognized the differences between trucking firms, said Bruce Marlow, president of that division.If you think of all trucking firms as being alike, then you price them all alike, he added.
National Continental Insurance Co., a member of the Progressive Group, signed an agreement last week with American Trucking Associations to provide insurance coverage for its members.
Although many longtime trucking insurers have dropped out of the motor carrier market, Mr. Marlow said opportunities remain for underwriters that can examine the industry more critically.
We see an opportunity to segment the market, he said. Trucking companies have very different types of loss characteristics. We want to look at how each trucking company is different...and set prices based on our experience in that area.
American Trucking Associations spent nearly a year searching for a major underwriter to provide insurance coverage for its members at stable prices. Earl Dove, the association's chairman, recently called the unavailability of reasonably priced insurance the industry's most significant problem.
Motor carriers participating in the association's program with National Continental, which took effect last Monday, will be assembled into safety groups in each state.
Those groups will allow trucking companies, along with the insurance company, to receive a share of the program's profits if premiums exceed claims paid out.
The emphasis on safety is expected to help stabilize insurance premiums and check the skyrocketing increases that have hit the industry over the last two years.
The rates won't fluctuate with (the insurance company's) investment earnings...or from 747s going down, Stephen Saine, ATA's vice president for finance and administration, said last week in announcing the program.
Mr. Marlow said National Continental will try hard to influence the loss characteristics of each company...
Except for a few carriers, most don't have strong loss control programs, (careful) driver selection or good claims services, he said. We see an opportunity to manage the business with the carrier.
To become a member of a safety group under the National Continental/ATA program, a carrier will be expected to develop and maintain a rigid safety program.
This is no flim-flam, Mr. Marlow said. Carriers will have to have a certain level of operating practices.
National Continental said it cannot promise its insurance premiums will be any lower than other underwriters'.
We work hard on understanding what the true price should be for a trucking firm, Mr. Marlow said. But we don't price below true cost...
If a carrier can find someone to quote a lower price, he added, God love them. But someday the (insurance) company will realize that price is not adequate.