The commercial inland marine niche of the property-casualty insurance industry is never lacking for issues and challenges that confront underwriters of domestic transportation insurance. Currently, three issues come to mind: the shift in the balance of power in Washington, the widespread impact of the credit crisis on the economy, and the state and federal regulatory environment.
The economy is having the most immediate impact. Publicly traded and privately owned trucking companies, as well as package companies, continue to post declining earnings, warning that freight revenue could fall further. For the insurance industry, the decline in the financial well-being of motor carriers could negatively impact operations such as routine maintenance, driver training and retention, and normal equipment replacement. Further, increased bankruptcy filings and outright closures translate into insurance company concerns about the financial stability of motor carriers holding BMC filings made by insurance companies as financial backing required for interstate commerce carriers.
The known and unknown regulatory environment also will further strain available resources. Issues such as the latest attempt to codify hours-of-service requirements, new emission standards, attempts to comply with long-delayed Mexican truck operating guidelines, the recent National Association of Insurance Commissioners Schedule T insurance company premium reporting requirements, or the debate about state vs. federal regulation of insurance will compete for attention.
Finally, the U.S. infrastructure, in dramatic need of attention, and widely discussed as an underpinning to economic recovery, will need to get its funding from somewhere — higher tolls on potentially privatized roads and/or fuel surcharges, for example.
In summary, the often-used adage, “May you live in interesting times,” probably is the best way to sum up the transportation environment for 2009. Let’s hope that this is not a curse!