Commercial Trucking Companies - Insurance

Part
01
of two
Part
01

Commercial Trucking Yearly Insurance-Related Costs

US Xpress Enterprises, Landstar System and J.B. Hunt Transport Services spent $85.07 million, $75.68 million and $129.41 million in 2018 on insurance coverage respectively. These companies mainly purchase insurance for cargo damage, workers' compensation, employee injuries and accident costs.

Knight - Swift Transportation

US Xpress Enterprises Inc.

  • US Xpress Enterprises Inc. spent $85.07 million on insurance premiums and claims in 2018 or 4.7% of their total operating revenue which was $1.80 billion.
  • The insurance expenses increased from $69.72 million in 2016 to $77.43 million in 2017, or 4.8% and 5% of their revenue respectively.
  • The company has various types of insurance including commercial automobile liability, cargo damage, workers' compensation, fiduciary liability policy and others.

Werner Enterprises Inc.

Landstar System Inc.

J.B. Hunt Transport Services Inc.

Schneider National Inc.

  • The insurance and claims related costs for Schneider National were $102.2 million in 2018, while their revenue was $4.98 billion.
  • The company purchases insurance related to vehicular collisions, accidents, employee injuries and cargo damage.
  • These expenses grew from $89.1 million in 2016 to $90.3 million in 2017.

Research Strategy

We first started our search by looking for a precompiled list of commercial trucking companies in the United States. This approach provided us with a number of company names, which we then used to scan various news articles and industry publications such as Transport Topics, Supply Chain Digital, Truckers News, American Trucker and others. We hoped to find if any of these sources published the amounts that these companies spend on insurance. Since these pages mostly provided information about revenues and other financials we decided to change our strategy and try to find financial reports for the identified companies. Next, we identified which of these companies are public, since they are required to publish their financials. Then we searched each company's website and scanned their annual reports. We found information about insurance expenses for 6 commercial trucking companies, their revenues and also information about the type of insurance they have.
Part
02
of two
Part
02

Commercial Trucking Insurance Cost Factors

Factors that increase or decrease the insurance costs incurred by commercial trucking companies are the number of trucks owned by the company, the use of a broker, the frequency of claims, the driver experience/driving record, Compliance, Safety, Accountability (CSA) Scores, and the use of advanced safety technology. Detailed information is in the next section.

Number Of Trucks

  • Commercial trucking companies who have a fleet of vehicles could decrease their insurance costs by consolidating all their auto contracts into one fleet insurance contract.
  • The fleet insurance contract requires at least three vehicles to qualify, but many contracts require at least five vehicles to qualify. An advantage of this commercial truck insurance is the reduction-surcharge coefficient for drivers, where bad drivers don't affect the fleet bonus calculation, as the cost of insurance is arrived at by considering the number of vehicles and the loss ratio or overall premium.
  • The price for the fleet insurance contract is generally cheaper than individual contracts and this significantly decreases insurance costs incurred by commercial trucking companies.
  • According to FreightWaves, the cost per mile for truck insurance is 7.5 cents overall. However, the larger the fleet, the lower the cost, "with fleets operating over 1,000 power units paying just 4.4 cents per mile and fleets with between 5 and 25 power units paying 8.6 cents."

The Use of A Broker

  • Using a commercial truck insurance broker can decrease insurance costs. This is because brokers have a lot of experience negotiating with insurers and their arguments commonly bear fruits leading to a significant decrease in insurance premiums.
  • Decreased insurance premiums largely offset the broker’s fees and commercial trucking companies should use brokers, especially at the time they renew their insurance contract, to analyze and help in optimizing their commercial truck insurance.

Frequency of Claims

  • The frequency of insurance claims affects how much commercial trucking companies pay in insurance costs. When a trucking company frequently files insurance claims, this increases the price of insurance policies.
  • Commercial trucking companies can help to reduce the frequency of claims and reduce their insurance costs by assisting their employees to adopt responsible driving behavior through training.
  • Using effective communication and training has been proven to prevent accident risks and reduce insurance claims by 40%, thus significantly reducing the price of policies and overall insurance costs.

Driver Experience and Driving Records

  • Employing experienced commercial truck drivers with clean driving records decreases the insurance costs incurred by commercial trucking companies. This is because these drivers are more likely to drive without getting into accidents and this will decrease insurance premiums and costs.
  • Companies should use the pre-employment screening program when hiring drivers to get a snapshot of a driver’s past performance, which could indicate the future performance to expect from the driver. A driver with a bad driving record is more likely to continue with the same trend.

CSA Scores

Use of Advanced Safety Technology

Sources
Sources

From Part 02
Quotes
  • "To reduce the cost of insurance for your trucks, you can consider consolidating all your auto contracts into a single contract: fleet insurance. It often takes at least five vehicles to qualify for a fleet contract, but some companies agree to insure fleets with fewer vehicles (three, for example)."
Quotes
  • "ATRI determined that the cost per mile for truck insurance is 7.5 cents overall, but specialized carriers saw a rate of 9 cents per mile while LTL carriers paid 5.9 cents."
Quotes
  • "A CSA Score is used by the FMCSA to identify high-risk motor carriers and drivers may require interventions."
Quotes
  • "A wide range of commercial operators are installing cameras in the cabs of their vehicles, and cellphone applications to block use while a vehicle is in motion."