TANK TRUCK carriers were facing extraordinary insurance costs before the September 11 terrorist attacks on New York City and Washington DC, but now the situation has only worsened, according to Jeff Magner of Premiere Transportation Insurance Agency, Indianapolis, Indiana.
Although the industry has about $3 trillion in total assets, claims from the recent tragedies are expected to total at least $25 billion and some estimates are as high as $40 billion; and those are initial estimates and do not include life insurance claims, he said.
“There is appropriate capital to pay despite staggering losses from the World Trade Center,” said Magner.
However, he added that the cost of insurance will continue to escalate because of the anticipated drain on the insurance companies.
“Premiums will be going up, especially on the reinsurance side (umbrella coverage),” he predicted.
Magner discussed the state of the insurance agency at a meeting of the National Tank Truck Carriers Western Safety Council meeting October 5 in Houston, Texas.
“Safety is more critical now than it ever was,” he said, advising carriers to evaluate and enhance their safety programs to lower risks. Although tank truck carriers have a relatively low risk rating, they are bundled into the category that includes all types of trucking companies, many of which have higher ratings. That also boosts premiums.
To contend with the expected rising insurance premiums, and to be sure their insurers are financially sound, he recommended that carriers evaluate insurers' ratings.
“Be sure that the insurance company has the capacity to pay the bills,” he said, noting the expenses an insurance company may face from extraordinary claims and lawsuits that may follow the attacks on the United States. “Some of the insurance companies may be hit too hard.”
Carriers can check ratings through several avenues, including A M Best Company and Standards & Poor's, Magner said. More information can be found on their Web sites at www.ambest.com and www.standardpoor.com, respectively.
Another source of information can be found by visiting the National Underwriters Web site at www.nationalunderwriters.com.