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STRANGE DAYS INDEED We are experiencing some interesting times in the economy, employment and national security. The economy appears to be okay, contrary to the stock market. President Bush relentlessly addresses the nation with words of encouragement. Employment remains around 94%,
even with large layoffs and plant relocations. The president continues to push home-land security.
The insurance market is in the tank. Premiums continue to rise with no relief in sight. The insurance industry calls this a hard market. Those of you looking to purchase coverage for your truck and/or business are probably finding it hard just to get coverage.
The market is shrinking. Over the past two years we have witnessed numerous bankruptcies. Yes, insurance companies go broke too. Those companies surviving are having to make hard decisions. Some companies have stopped writing truck and truck related risks. Other companies are initiating moratoriums on new business. Those companies that continue to write trucking and truck related insurance products are taking large premium increases.
These actions are not just related to the trucking industry, but the insurance industry as a whole. Your personal coverages (i.e. auto and homeowners premiums) are also increasing. I am currently seeing homeowners policies non-renewed, and automobile
premiums are going up daily.
Your insurance costs will increase. All this is symptomatic of an industry recovering from or anticipating large financial loss. Not all of this can be blamed on 9/11. The reinsurance industry has been reeling in red ink for years. Loss ratios continue to climb. Bad underwriting decisions, in the name of competition, plague the industry. And, of course, investment income continues to shrink. Interest rates remain low and now, with the bottom falling out of the stock market, investment portfolios are declining.
With so few markets available, insurance companies are seeing multiple submissions. If you are shopping insurance coverages, pick out no more than two or three brokers that you might want to work with. Going to more is only going to stress those markets that are presently writing business. After a company sees a submission from more than one broker their interest fades. And if they are inundated with submissions, they may even pull the quote.
New ventures are becoming harder to place. Many of those companies that would take new ventures no longer exist. Those that will consider new ventures want driving history, usually three years worth, with no losses. Be prepared to prove your case - they'll want to see things like police reports.
Everyday I am receiving calls from throughout the state looking for Worker’s Compensation. The market has virtually dried up. My last article focused on those issues and the State Compensation Insurance Fund. The last renewal rate that I saw from The Fund was $28.00. This is obscene. If you are looking at worker’s compensation through The Fund, make sure that
they put you into a safety group.
For those of you that have put yourselves into the area of hard to insure, the California Assigned Risk Program remains a viable liability option, but only if you are considered to be a long haul driver (over 200 miles). Their rating, for local and intermediate drivers remains too high and unaffordable. Most likely, your only option for physical damage and cargo coverage remains with Lloyds of London.
At this point in time there is no simple solution. Look at your coverages that you need and only insure to those needs. Do not over insure. In the event of a loss, the insurance company will only pay out what it was worth. Your equipment values should be reviewed every six months. Ask your agent to make those changes to your policy if you haven't already.
If you have any insurance-related comments or questions, I can be reached through California Plus Insurance Service at 1-800-699-7101.
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