Specialist transport and trucking insurance brokerage O’Connor Warren is warning heavy vehicle operators of rising costs in the sector.

Director Eamon O’Connor says the transport industry continues to grow but there are many new challenges ahead. One of these challenges is in insurance premiums which are rising fast for heavy vehicle operators.

The writing has been on the wall for some time now, he says. “Heavy motor vehicle insurance has been a loss leader for insurance companies for a number of years nowIt’s been too cheap and insurers are losing money … it’s unsustainable … for every dollar coming in they’re paying out more,” O’Connor says.

The loss ratio in the heavy vehicle sector has been propped up by other sectors such as property insurance,” he says. He’s even seen one major insurance company pull out of heavy vehicle insurance completely and warns other companies could follow.

O’Connor points to the 2016 Kaikoura earthquake as a key turning point. It’s after such natural disasters when the pressure really starts hitting the heavy vehicle insurance market. “When the property area of insurance started suffering … insurers turned around and said ‘we can’t keep propping you up, you need to stand on your own two feet ’cause we’re under pressure’. “

“And so there is becoming a hardening of the market and heavy motor insurers are zeroing in on portfolios and clients,” O’Connor says. “There have been regular trends of medium to larger-sized transport companies paying anywhere up to $100,000 in insurance premiums for a fleet of up to 20 trucks – yet annual attrition claims could easily fetch more than $120,000,” he says.

O’Connor gives the example of an operator involved in an accident which wrote-off an 8-wheeler truck last December. The insurance company paid out $600,000 in damages while the operator was only paying a $15,000 premium.

The challenge is in a hardening market … heavy vehicles are too high risk … one major accident could cost $500,000.” O’Connor says this opens up opportunities for insurance brokers to work closely with their clients and add value. Talking to clients about risk management and outlining how the market responds to changing trends ensures the best deals are made. “Put simply, if you are a transport business that shows trends of having accidents and claims, then your premiums will be under pressure to rise. “But we see an opportunity here.”

There are still deals to be done for businesses with this profile and facing increases. “You just have to know where and how to access the best terms from insurers and we work with our clients to achieve the best outcome. The opportunity for us is we understand the market and know who will do what on key days, we form key relationships and deals.”

“Whether it’s a logger, refrigerator, long haul or around town freight, we know who’s doing what and we’re accessing the right decision makers,” O’Connor says.


Truckers face rising insurance costs