In 2023, the trucking industry faced rising costs, notably due to increasing insurance premiums, even as accident rates fell.
According to the American Transportation Research Institute (ATRI) in its 2023 cost of trucking report released on June 18, truck insurance premiums increased by 12.5% year-over-year, reaching $0.099 per mile—following three years of stable rates during the pandemic.
Higher insurance costs are particularly burdensome for smaller carriers, as noted by Alex Leslie, a senior research associate at ATRI, in a discussion with Equipment Finance News.
Leslie explained, “Several factors contribute to this issue, including litigation costs, nuclear verdicts, and the overall profitability of the industry. However, rising commercial insurance costs are a significant burden for motor carriers, especially smaller ones that may lack the resources to effectively manage these expenses.” He added that smaller fleets often operate older trucks, further impacting their insurance costs.
Impact of the Pandemic on Insurance
Between 2020 and 2022, premiums only increased slightly, but in 2023, they surged by 1.1 cents (12.5% per mile), as detailed in the ATRI report. The decrease in road traffic during the pandemic allowed insurance companies to maintain low rates and, consequently, make profits, Leslie indicated.
“The insurance landscape transformed during the pandemic, as fewer vehicles resulted in fewer accidents,” Leslie noted. “This period granted insurers an opportunity to recover financially, which had been a rare situation in the commercial auto insurance sector for nearly a decade.”
As traffic levels normalized in 2022 and 2023, premiums began to rise again. “The pandemic allowed for a recalibration in the commercial auto sector,” Leslie stated. “By 2023, that period of stability ended, and we witnessed increased insurance premiums, presenting a real challenge for the industry.”
Trends in Commercial Vehicle Accidents
Although rising premiums are a concern, some positive trends in accident rates have emerged. Data from the Federal Motor Carrier Safety Administration indicates that large truck accidents decreased to 174,711 in 2023, a 4.7% reduction from the previous year. Leslie expressed that if this decline continues, it could result in lower insurance premiums in 2024.
“There’s potential for hope as we observe a significant improvement in accident statistics, which may help stabilize premium prices moving forward,” Leslie noted. “Currently, costs are rising, partly due to the increasing expenses associated with trucking.”
