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A trucker friend of mine once remarked that to be able to deregulation you could utilizing in the trucking business despite yourself. Back in those "good ole days" government protected routes bequeathed an industry with LTL powerhouses, high paying Teamster jobs, and healthy returns. Today the trucking industry operates largely with a free wheeling TL and increasingly intermodal template with nonunion drivers and owner operators. Profit margins when they exist at all generally come down to pennies on the dollar. It goes without saying that only the most productive trucking companies have survived this transformation - painful, but a net plus for consumers.
Now contrast the competitive untidiness in trucking with the inert if not orderly nature of your truck insurance agency. Life pretty much continues as it always has: same structure, same production model, same economics. Where convention breeds productivity, it certainly makes sense, but with truck insurance, convention has only meant unnecessarily high costs.
Broadly speaking brand new of the truck insurance business metabolizes into two segments: agents (including brokers) and insurance companies. Agents solicit and service business, while corporations underwrite, issue policies and pay advises. Agents make money on commissions. Insurance companies make money on favorable underwriting results and investment benefit.
Contrary to the perception of truckers, operating profit margins for insurers are apt to mirror those in all trucking companies. Where truckers have their operating ratio, insurers have their combined ratio. Both measures quantify operating profit as a area of revenue. In good years, both industries typically generate ratios between 90 and 100%, yielding operating profit margins all the way to 10%.
By way of comparison, margins for the best successful truck insurance agents run - 20 to 40% in good times and bad: great return considering agents bare no underwriting risk.
But let's not judge these economics too hastily. The18 wheeler agent has done an exceedingly splendid job of establishing himself as cars purveyor of value for both trucking company and insurance underwriter alike. Here's the perception. From the company's viewpoint, your truck insurance agent offers invaluable service have to address producing business and servicing clients. Therefore, the insurance company feels quite justified in paying healthy commissions particularly on business that generates a combined ratio of less than 100%. Correspondingly through trucking company's angle the agent provides an invaluable service deal with his knowledge belonging to the insurance market as well as his ability to match a trucking company's coverage needs with the most capable and affordable insurer. Why begrudge the man an income? Besides he always picks up the tab for lunch and golf.
However, with advances in technology, greater numbers of only the insurer matters. The Internet increasingly has relegated the agent into the status of tag along. He a lot more serves as the conduit for exchange between trucker and insurer. Rather at a time of instant information, he increasingly gets in the manner for you. Need a quote? Google it. Looking for accident statistics? Visit Safersys. Curious about some insurance company's rating? Pull up A.M. Best. Curious about the type of freight a company hauls and the placement of its devices? Check out their website. Concerned about your loss ratio? E-mail the underwriter. Fender bender? Snap a picture from your cell then fire off a text message to the claims department. It's a whole lot more efficient than leaving a voice mail message with a financier.
Just as you no longer need a travel agent to book travel, you no longer need an ins . agent to buy auto insurance. Strangely, both trucker and truck insurer seem unwilling to acknowledge this fact. To a degree, custom plays a role. Historically, most contracts between agent and insurer specify that the agent owns client list. Thus, organizations generally remain reluctant to communicate directly with their insured's. Also truckers are in the habit of smoking of dealing with agents not underwriters.
A simple step toward efficiency possess all truckers insisting that neither agent nor insurer can claim ownership in their account. This change in practice would set the stage for direct negotiations between trucker and truck insurer, and by extension pave the way for lower monthly premiums.
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