As the federal mandate for electronic logging devices (ELDs) settles into permanence, insurers and fleet operators are grappling with a new set of economic and operational challenges – ones that are disproportionately affecting smaller carriers.
“There’s equipment that you need to have installed and have monitored,” said Rick Smith Jr. (pictured), vice president and transportation broker lead at Jencap. “Just additional costs that... especially these smaller fleets, some of them are having trouble. In addition, some insured’s prefer not to have ‘Big Brother’ overlooking them.”
The mandate, intended to ensure drivers adhere to hours-of-service rules, requires fleets to outfit vehicles with tracking hardware and bear the burden of ongoing monitoring. But this added layer of compliance doesn’t exist in a vacuum. It sits atop a swelling stack of liabilities, including mounting legal judgments that are reshaping how insurers write coverage.
In New Jersey, for example, new minimum limit thresholds kick in for vehicles exceeding 26,000 pounds in gross vehicle weight, prompting carriers to revise coverage strategies. “Some carriers want to limit their capacity to a million,” Smith said, referencing the growing concern over so-called nuclear verdicts – jury awards that reach well into seven or eight figures. “Because if you're offering $1.5 million, if you have a claim over $1 million, chances are, you're probably paying limits for that one.”
Insurers are increasingly unwilling to shoulder that risk alone, a trend that’s choking capacity in certain coverage layers and forcing underwriters to stack policies using multiple carriers to get the job done. “Carrier might only be willing to come in at two mil,” Smith said. “So then you need somebody to come in excess of that, that primary access layer. You might need two or three carriers.”
This contraction in capacity has collided with an explosion in submission volume. According to Smith, underwriting desks are now seeing a deluge of business as policyholders dissatisfied with pricing shop around more aggressively, not waiting for a renewal.
“I think right now we’re averaging 40 [submissions] per underwriter per week,” he said. “Giving people a fair shake on every submission but also trying to vet those as quick as possible.”
The pressure to process quickly is compounded by inconsistencies in the marketplace. While some carriers retreat from risk, others remain in the game, although new markets entering the marketplace are offering ultra-competitive rates – but only time will tell for how long.
“There’s still carriers out there undercutting the majority of the marketplace,” Smith said. “How long that can last... some carriers have come and gone, others tightening their underwriting guidelines to justify their low rates.”
Technological disruption adds another layer of uncertainty. Autonomous vehicles, though still far from widespread adoption, are looming in strategic conversations. Smith said that while most firms are not yet pricing policies for driverless trucks, the questions are already taking shape.
“Is that a product exposure versus an auto liability exposure?” he said. “Obviously, both may be intertwined, but what the solution looks like for an insurance perspective remains to be seen.”
Meanwhile, telematics – the use of real-time driving data to assess risk – is beginning to change how premiums are calculated. At least one new carrier to Jencap, Smith said, uses telematics as the primary tool for pricing policies, marking a sharp departure from traditional inputs like garaging addresses as the sole pure rate determinator.
“What does the garaging address tell you for a long-haul trucker out of Jersey?” he said. “They could be spending, literally, 5% of their time in Jersey, but yet you're rating that auto exposure based on a part-time garaging address.”
The allure of telematics isn’t just on the pricing side. Smith sees it as a tool for empowering clients, offering them an opportunity to lower premiums and incentivize safer driving behavior. “If insureds are able to embrace it and use telematics to empower themselves... not being a hazard on the road,” he said, “you might be able to pay drivers or incentivize them for more favorable driving habits.”
But full-scale adoption remains distant. “I haven’t really gotten into that yet,” Smith admitted. “Or seeing carriers... ready to dump their expenses into figuring that all out.”
Nowhere are the financial stakes clearer than in liability coverage. Carriers once willing to offer generous terms are scaling back. Progressive, for instance, has capped cargo coverage at $250,000 – well below what’s required for firms hauling luxury vehicles.
“Some of these high-end auto haulers need to require either 500 or 750,” Smith said. “We do have capacity in the excess space for that... but you need to layer it.”
Even in cargo, where exposures are easier to quantify, Smith said the industry is feeling the long reach of inflation – legal, economic, and otherwise. “A million dollars... theories don’t see a million dollars being, setting someone up for life like you might have a decade ago or two decades ago.”
Those shifting perceptions have created an environment in which insurers are chasing a moving target, revisiting their exposure assumptions as verdicts balloon and claims severity ratchets up. The days of simple, single-carrier placement are fading. “Things that we were able to get done... three, four years ago, five years ago,” he said, “you might need two or three carriers [now].”
For Smith, the core issue isn’t just about premiums or capacity. It’s about predictability – an increasingly scarce commodity in an industry dependent on it. The intersection of rising costs, courtroom volatility, and slow-moving regulatory shifts has left insurers recalibrating their risk models while the ground shifts beneath them.
“Time will tell,” he said. But for now, both carriers and clients are being asked to adapt in real time, with no guarantee the market will stabilize anytime soon.
