Top Provider of Trucking Insurance "J.D. Tanner & Associates" Expects Rising Premiums, Fewer Choices, Toward End of 2009

    COLLEYVILLE, TX, March 07, 2009 /24-7PressRelease/ -- Jon Tanner, President of J.D. Tanner & Associates Insurance Services, is doubtful that the low insurance rates which are being seen by trucking companies will continue through 2010. "Everything points to a hardening of the market," Tanner said. "In the meantime though, insurance carriers almost appear frantic in their efforts to grab premium right now, and this is resulting in some tremendous buys for trucking companies. As a matter of fact, I cannot think of a single motor carrier who hasn't seen their premiums fall 20-percent to 30-percent over the past two years," he said. "In some cases we have seen a client's premiums fall up to 50-percent from what they paid in 2005."

"Many of my clients tell me that they are not afraid of the market hardening, due to the fact that they are seeing lower premiums on this renewal than what they paid during the past year," Tanner said. "I tell them to enjoy it now, and to not be lulled into a false sense of security when it comes to what to expect next year."

According to Tanner, the reason insurance companies are so frantic in their efforts to write premium is because of the fact that returns on investment income have all but disappeared over the past year. "These insurance companies have to create cash somewhere, and the easiest, quickest solution seems to be the aggressive writing of insurance premium," said Tanner.

"As we all know, when one or two insurance carriers get aggressive toward pricing, it forces other carriers to follow suit or face the prospect of surrendering premium dollars to the more aggressive players," Tanner said. "Losing premium to competitors is not such an attractive prospect, however, when you know that you are losing your shirt on the investment side," Tanner continued. "Hence, the push by so many companies to write new premium," he said.

"To the casual observer, the current soft market conditions may look just like those of years past," Tanner said. "However, when you look below the surface, what you see is an abundance of new carriers which have jumped head-first into the trucking insurance market during the past 6 months," he said. "What this indicates to many of us who have been doing this for a while is two things: First, the end of the soft-market is near. As more and more carriers delve into the mix, there is less trucking insurance premium to spread around. Hence, cheaper rates. However, expected losses stay the same which indicates higher loss ratios for everyone involved. But this time there isn't the investment income to help cushion the underwriting losses. Second, and more importantly, new carriers are jumping in at a rate faster than what we have seen in the past. This is unusual so late into the soft market cycle, and is indicative of an urgent need to generate cash by many different insurance companies," Tanner said.

"Generally, you see newer carriers enter into the picture toward the middle of the soft market cycle, and this time was no exception," said Tanner. "However, there was a whole new round of companies jumping in during the last quarter of 2008 and the first quarter of 2009," he said.

Compounding the problem is that many of these new carriers are throwing underwriting discipline to the wind, which will undoubtedly lead to even worse loss results, according to Tanner.

"I can't remember a time when there were so many different insurance companies writing trucking insurance," Tanner said. "The number of carriers claiming to be trucking insurance specialists has more than doubled since 2006," he said. According to Tanner, he receives 4 to 5 email marketing blasts each month announcing a new market for trucker's liability, physical damage coverage, motor truck cargo insurance and/or trucker's umbrella or excess liability insurance. "By last count, we came up with around 100 companies who claim to write various lines of trucking insurance coverage," Tanner said.

"It's funny though," says Tanner, "many of these companies are companies who I know have never written trucking insurance in any substantial amount; in fact, some of these insurance companies have never written trucking insurance at all - and now they are suddenly trucking insurance experts."

"It's really an interesting situation, a Catch-22, where companies need to generate cash because of a lack of cash. Yet, the best way to generate cash is to write a line of business with large premiums and large losses, for rates too low to sustain the losses which are inevitably going to come. And when those losses do come, there won't be any investment income there to cushion the blow, putting these insurance companies in a more precarious predicament than before," Tanner said. "At that point, rates will go back up. And I don't think they will go back up in a gradual fashion - I think they will skyrocket."

"There are some very big players out there who, from a financial standpoint, have simply been eaten alive by current market conditions. And I'm not talking about companies who didn't have a clue when it came to underwriting. These are companies who know how to underwrite, no matter whether the market is hard or soft, but they just weren't prepared for the complete collapse of their investment portfolios," states Tanner. "Combine these insurance companies with those companies who are failing due to imprudent underwriting, and you have a scenario where it is seemingly impossible for these low rates to continue."

"Everyone knows about American International Group and the troubles it has faced, but what a lot of people don't realize is that AIG isn't alone when it comes to being in a tough spot financially," Tanner said.

Tanner cites a January 19, 2009 article on InsuranceNewsNet.com by Carol J. Loomis, titled: AIG: The Company That Came to Dinner - A Fortune Profile, which states in part: "Many insurance companies that might normally have bid [on the purchase of various AIG insurance assets] have been crippled by investment losses, and acquirers in general can't rustle up financing."

"If major players in the insurance world couldn't put the cash together to buy what has been described by current AIG CEO Edward Liddy as 'incredibly world-class assets,' then that's a signal that there are some serious problems in the industry," Tanner said. "I don't think anyone expects the financial markets to bounce back anytime soon," Tanner says. "In fact many people are scared things are going to get worse."

"In my mind, that spells one thing - higher rates," Tanner said.

For trucking companies who are concerned about future increases in trucking insurance premiums, Mr. Tanner has a sound piece of advice: "Ask your agent or broker if you can lock in your premium for an extended period of time," he said.

"We are offering our larger, more preferred trucking companies the ability to lock rates in for a period of three years," Tanner said. "Not every company will qualify, because we are prudent in our underwriting," he said. "However, if a trucking company is doing the right things from a safety and compliance standpoint, and they have been watching their losses, we are going to give them piece of mind which is priceless when it comes to the uncertainty of the future insurance market," said Tanner.

J.D. Tanner & Associates is recognized as a trucking insurance specialist, and they are licensed in 50 states. Mr. Tanner holds a law degree and regularly works with some of the top trucking companies in the United States.

About J.D. Tanner & Associates

J.D. Tanner & Associates is an independent insurance agency specializing in insurance placement for the trucking and transportation industry. J.D. Tanner & Associates is licensed in 50 states and is recognized as a leader in liability, physical damage, cargo and worker's compensation insurance placement for companies with a single truck to companies with several hundred power units. For further information, please contact us at 1-800-609-1010.

Source: J.D. Tanner & Associates
Website: http://www.jdtannerinsurance.com

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