Trucking represents a $6 billion market
Other transportation firms boost that total significantly
The trucking market (NAICS 484) accounted for some $6.13 billion in direct written premium in 2011, according to data compiled by MarketStance, Middletown, Connecticut. The market is dominated by small- and mid-sized accounts, which account for $4.56 billion of the total premium. There are some 2.2 million vehicles in this market operated by some 595,000 firms.
Owner-operators represent the vast majority of the firms, accounting for more than 509,000 firms operating 564,000 vehicles. However, these self-employed firms account for only $854.5 million in premium. The nearly 82,800 small firms (1-49 employees) operate some 590,000 vehicles and account for $2.63 billion in premium. The 2,600 mid-size firms (50-499 employees) own some 499,000 vehicles and represent $1.93 billion in premium. The 135 national accounts operate some 540,000 vehicles and account for only $713.3 million in premiums written as a large number of the companies utilize alternative market mechanisms to provide coverage.
Of the 2.2 million vehicles operated by all these companies, more than 1.6 million are heavy or extra-heavy trucks, tractors and trailers.
Inland marine represents the largest line of coverage for this industry, accounting for $1.93 billion in premium (31.5% of the total), followed by workers compensation ($1.78 billion, 29.1%); commercial auto liability ($1.21 billion, 19.8%); and commercial auto physical damage ($511 million, 8.3%). All other lines provide the balance of $697 million (11.4% of the total).
The trucking market was hard hit by the economic downturn, but is making a nice recovery in most areas of the country, with MarketStance projecting revenue growth of 3.5% annually for 2014 through 2015. However, the recovery in New England continues to lag behind the rest of the country, accounting for revenue growth projections of only 2.0% in the Rough Notes Northeast region. At the other end of the spectrum, the Rough Notes Southwest region is expected to outperform other areas with a 4.5% growth rate.
While the trucking transportation segment represented by NAICS 484 is a significant portion of the market, trucking is much broader, spanning all productive industries that ship or receive tangible goods. A quick look at the inland marine premiums for motor cargo liability and transit coverages shows just how significant those other areas are. The total direct premiums written for those inland marine coverages was $4.6 billion in 2011 or more than double the inland marine premium for NAICS 484. In addition, the forecast revenue growth for the inland marine transportation coverages is expected to outpace the forecast growth for NAICS 484, indicating that inland marine transportation coverages may be a target for insurance companies in the upcoming years.
Five of the top 10 inland marine transportation lines are in NAICS 484, including the top four: general freight trucking, long-distance, truckload; general freight trucking, local; specialized freight trucking, local; and general freight trucking, long-distance, less than truckload. Couriers and express delivery services (NAICS 492110) is the next largest segment and accounts for some $227 million in inland marine premium.
Overall, there is an estimated $10.3 billion written in the inland marine market. However, this is significantly below estimates for the market primarily because a great deal of the coverages are included in packages likes BOPs and are not underwritten as inland marine exposures. As the market begins to harden, there are a number of industry solons who predict that this practice may not continue, as more careful underwriting forces companies to begin to look more closely at the individual risks being insured.
It will be interesting to see how this plays out and certainly could offer plenty of opportunities for agents who understand the nature of the inland marine risks and can help their insurance companies achieve their underwriting goals.