NIP Group Inc. has published the results of a survey it commissioned to benchmark changes in the availability and rates in the transportation insurance marketplace.Conducted by Focal Point Marketing, the first ever Transportation Insurance Pricing Survey (TIPS™) was issued last month to the nation’s leading transportation insurance brokers, wholesalers and underwriters representing thousands of account placements.
The survey confirms what market participants have known for a while now, that prices are generally falling between 10 to 20% across the board, even for the most difficult to place risks. All transportation market segments have excess underwriting capacity with the availability of insurance significantly increasing in the last year. In addition, the softening of the market has resulted in underwriting standards being relaxed.
The survey revealed that excess capacity and intensifying competition has been partly fueled by the entry of standard insurers into the transportation market in pursuit of premium volume. These insurers are seeking above average transportation risks and charging rates significantly below specialty transportation insurers to gain market share. Historically, this “generalist rotation” has occurred in the middle to late stages of the soft market cycle.
For small accounts (those with premiums of $75K or less), 60% of brokers responded that premiums are down as much as 20%. Results were similar for medium (premiums of $75-250K) and large size accounts (premiums greater than $250K), though some larger accounts experienced premiums drop up to 40%.
The survey also measured premium changes across 10 different transportation segments including:
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The largest decreases in rates were seen by brokers insuring general trucking operations. With the current market conditions, it seems that intense competition among carriers is driving down rate levels.
Participants were also asked to comment on premiums by coverage type including Auto Liability, Auto Physical Damage, Motor Truck Cargo and Warehousemans’ Legal, Workers’ Compensation, Umbrella Liability and Owner/Operator programs. The vast majority report premium decreases for these coverage lines of between 10-20%, though some have indicated that they have experienced slight increases for select lines of coverage.
“We intend to repeat the survey quarterly to track the movement in the TIPS™ index over time,” said Richard Augustyn, CEO of NIP Group Inc. “We believe that TIPS™ serves a dual purpose first to track rate movements for the large transportation insurance market and second to offer a leading indicator of the direction of rates in the general commercial insurance marketplace.”
“NIP Group possesses an unequaled depth of knowledge in a number of key specialty markets, particularly transportation related exposures. This survey is yet another example of how we leverage our expertise to deliver value added services,” said Lawrence Dunn, CFO of the company.
Detailed results can be downloaded online at: http://www.nipgroup.com/programs_home.html.
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