Why rig-handling analytics are now key for brokers insuring trucking firms

Supply chain challenges, shrinking capacity, electrification of vehicles and better data management are among the pressures facing transportation clients, said Canada’s largest insurer.

“You can’t be a specialist in transportation in the insurance field if you don’t really understand the pressures customers are feeling,” said Angelique Magi, national vice president of specialty auto and transportation with Intact Insurance Specialty Solutions.

Supply chain mobility is a longstanding challenge both pre- and post-COVID, Magi said. Pressures remain specifically related to moving goods, but it’s not just about driver shortages.

“The ability to move freight is expanding, which means you need to be able to have good, trained drivers in seats,” she said. “It’s very difficult for a lot of customers — to get properly trained drivers and then quickly get them proficient enough to keep up with demand.”

Part of the solution will come from enforcement of the electronic logging device mandate, which will take effect in Canada in January 2023. This will enable insurers to use data and analytics to better determine driver proficiency.

“The key is being able to manage and understand the data that comes from the vehicle,” Magi said. “There are data points — whether it’s speeding or harsh braking, [and] new technologies coming out — to analyze and monitor that. As far as being able to use that data to be able to make smarter decisions from a risk-exposure perspective, that’s where the industry needs to go.

“It’s not just about years in the seat anymore,” she added. “It’s about proficiency.”

Shrinking capacity for trucking insurance — or “anything high-risk auto on wheels,” is going to continue. The litigation environment in the United States is one contributing factor. Also, in Ontario, loss transfer provisions can be onerous for carriers who may have to absorb all the accident benefit costs if they are transferred from another insurer.

“Coupled with that, now we’re seeing on the excess liability side — and more importantly, the treaty reinsurance side — that those larger losses are putting pricing pressure on those particular layers,” Magi said.

Costs associated with vehicle electrification are another pressure. The whole industry must understand what electrification means, particularly from the physical-damage side, Magi added.

She noted the estimated cost of a fully electric truck and its components without charging stations is about $500,000. Charging stations increase those costs by $250,000.

Consumers need a better understanding of vehicle electrification. And the insurance industry needs to know it can provide proper coverage for new technologies and subsequent investments made by customers.

Overall, Magi said, the industry needs a shift in how high-risk auto transportation insurance is done.

“The traditional method of rating, pricing, and reviewing high-risk auto transportation business is administrative-heavy,” she said. “So, the ability to be able to work with a customer to transparently talk about what’s driving their risk exposure, using the vehicle data the risk professionals already have at their fingertips, is going to be the future state for how the industry is going to go on the insurance side.”

 

This article is excerpted from on that appeared in the August-September issue of Canadian Underwriter. Feature image by iStock.com/vitpho