In a time of flux, survey finds split on pricing opinions: some see a
hardening, others say rates are flat—or still soft
By CHAD HEMENWAY
Is the specialty-transportation market hard, flat or soft? It depends on whom you ask as opinions vary widely—
generally a sure sign of a line whose
pricing is in a time of transition.
In a recent survey, 28. 6 percent
of respondents say the overall specialty-transportation market is hard
or hardening, while 32.65 percent
say it is flat.
And 38.8 percent say the
market is soft or softer, according to those taking part in the
Transportation Insurance Pricing
Survey (TIPS) for the 2011 second
quarter, conducted by specialized
business-insurance and risk-management intermediary NIP Group
Inc. of Woodbridge, N.J.
For its part, NIP interprets this
split in opinion as a sign that, overall, pricing has probably begun to
find a point of equilibrium.
“There appears to be stabili-
zation in rates—a lot of flat rate,”
says Richard Augustyn, CEO of
NIP Group. “Whether this positive
trend continues—we’ll have to wait
and see.”
The TIPS survey is issued to
brokers, wholesalers and under-
writers, which represent thousands
of account placements, says NIP.
It measures premium changes
across the following segments:
trucking operations, messenger/
courier services, school-bus contractors, airport ground transportation, specialized carriers
and riggers, intermodal carriers,
ambulance/paratransit, bulk transportation, charter/tour bus, and
limousines.
UPwarD BoUnD, SLowLY
In the view of Michael S.
Oliver, senior vice president of
5Star Specialty Programs, a divi-
sion of Crump Insurance Services,
“We’re bumping along the bottom.
Rates are not going down. Over the
long term, rate levels will increase
But the pendulum swing to
a harder specialty-transportation
insurance market, if that is indeed
what is occurring, has been a
“very slow process,” adds Rebecca
McNabb, transportation under-
writing manager for independent
wholesale broker and underwriting
manager Burns & Wilcox.
TigHTer UnDerwri Ting
PUSHing riSK in To SPeCiaLTY
MarKeT
Underwriting guidelines of
non-specialty carriers have tightened across the transportation-insurance segment, pushing some
more risk into the specialty marketplace, says McNabb.
“Carriers are now holding
on pricing where they might have
reached for premium,” says McNabb.
“They’ve looked at the results and
seen losses—pushing these risks
back into the specialty realm.”
For instance, two years ago
carriers may have thrown in GAP
(guaranteed automobile protec-
tion) coverage or waived certain
deductibles for physical-damage
insurance.
But carriers have now seen
deterioration in physical-damage
loss history, leading them to
“go back to the drawing board,”
McNabb says.
CHar Ter BUSeS: riSing ra TeS
& reinSUranCe
One of the segments within
transportation seeing the most
upward premium movement is
charter buses. About 30.8 percent
in the NIP Group survey say premiums are up 1-10 percent and
another 30.8 percent say premiums
are up 10-20 percent.
Augustyn says some headline
accidents have likely contributed to
this increase, while McNabb wonders if reinsurance is playing a role
in the rise.
The charter-bus segment has a
limited number of players due to a
liability limit of $5 million, which
leads to dealing with the reinsurance market to spread the risk.
“You have to wonder how catastrophe losses in the reinsurance market have trickled down to accounts
with higher limits,” McNabb says.
