A Challenge Within the Transportation Insurance Industry

Although the transportation insurance industry continues to grow, there have been some challenges along the way.  Because there is more technology to consider and many more companies to insure, the cost of transportation units is much higher today than it was 2 decades ago.  

In the excess and surplus markets where much revenue can be made, (coverage needs can be more complex), some underwriters don’t necessarily have the expertise in transportation nor underwrite by the guidelines that the rest of the nation follows.  This has the potential to be problematic.

According to Mark Sullivan, commercial broker for Transport, Midlands, there is lack of control in MGA Authority.  Managing General Agentis a specialized type of insurance agent/broker who is vested with underwriting authority from an insurer.  MGAs perform certain functions ordinarily handled only by insurers, such as binding coverage, underwriting and pricing, appointing retail agents within a particular area and settling claims.  However, some individuals within companies misuse their underwriting authorities to challenge established rates when they haven’t been properly trained in the field.  Many times, errors occur and the insurance companies are left “holding the bag”; dealing with incorrect coverages and paying out for claims that should not have resulted.

According to Mark Sullivan, “They have killed some of the integrity of rates in the market, forcing others to adjust their rates to compete.  It’s a shame – we have distributors out there busting a gut to get clients, who are having to return to their clients a month later to cancel the agreed policies because they were underwritten incorrectly by a wholesale broker or MGA.”  

This competition-driven problem within the US transportation insurance market makes for poor client servicing.  Customer service, good relationships with the carriers and being honest about insurance expectations, are what all companies should pride themselves in.  Brokers and agents need to be realistic about rates and show clients that transportation is an evolving market with many insurance products developing alongside it.  Getting this business right all comes down to training and expertise.

Please contact us if you need to obtain transportation insurance.  As a division of World Insurance Associates, LLC, we have a department that specializes specifically in TRANSPORTATION and have the resources to get you the best coverages for the best rates.