The appropriate description for the current transportation primary and excess marketplace is “in a state of flux.” There is no question that the exit of Zurich and Lexington from the trucking space has had the following impact at a minimum:
- Reduction in overall capacity serving the primary auto liability trucking space (Zurich). Especially in the loss sensitive, large account niche with intermediate deductible ranges on the primary auto liability.
- Significant capacity reduction in the buffer layer excess market (Lexington).
- Opportunistic pricing response by remaining competitors in this space, including Lexington’s sister company, AIG.
- Upward pressure on pricing for the primary auto liability, buffer excess and higher excess layers.
- Pricing flat to small increases for the worker’s compensation line if losses are average or better.
Overall, things are a bit unpredictable. There are new entrants testing the marketplace for large, loss sensitive trucking risks (e.g. Travelers, C&F, and Avant), but their distribution strategies are narrow and they have not impacted the marketplace significantly.
What should you do? Our message to clients continues to be these three, key tactics:
- Start the renewal process early
- Meet with and foster relationships with a variety of markets
- Have a backup plan on both primary and excess layers
While the transportation market might be currently unpredictable, following this sound strategy will help ensure your risk management strategy provides some stability amidst the insecurity.