Get Ready For A 30% Insurance Rate Increase

Posted on November 1, 2008

Like much of Wall Street, the insurance industry has hit volatile times. Even before AIG, the world’s largest insurance company, entered an emergency federal loan to avoid bankruptcy, the insurance industry was planning on raising rates by the end of the year.


Lee Martinez, president of Transpo Insurance, public transportation specialists based in Las Vegas, says limousine operators can expect to see insurance rates increase by about 30% by January 2009. Since the insurance industry is government regulated, rate structuring has to be filed and approved before it can be implemented, but this process is moving forward, he says.


Martinez has been in the insurance business since the 1980s and has seen rate increases happen during other turbulent times, including the savings and loan debacle of the late 1980s, and more recently right before the Sept. 11, 2001 attacks, when the stock market downfall increased rates by 35%.


Insurance rates have been good for operators this year, with several insurance agencies offering reduced, competitive rates to build up their business, Martinez says. And although prices will rise, operators should do business with stable, established insurance companies to get through tough times.


“Instead of going to someone who will sell you an insurance policy of $1,200 per car, but you don’t know who the company is, you need to go to established providers,” he says.


Working with Established Insurers

BECAUSE OF ITS SIZE (compared to other industries) and the potential cost of collisions, the limousine industry has limited appeal to insurance underwriters, Martinez says.


“The limousine industry doesn’t pay a lot of premiums, but has huge liability coverage,” he says. Physical damage for a crashed sedan or limousine is clearly covered; the problem is liability coverage, which is decided mainly by the number of passengers injured in the collision, which can be quite large, he says.  


Martinez advises operators to do business with established insurance providers, which is much more important now than getting a great deal. London American, Lancer Insurance, and Hartford Insurance are major providers to the insurance industry, and there are other insurers that operators also can consider.


“Go with name brand carriers that have been in business more than two years,” and build a strong working relationship with them, he says. “You need to stop dating and be married.”


Right after the AIG crisis received a great deal of media coverage in September, Martinez sent out an email to operator clients spelling out the significance of the AIG crisis, a company with more than $1 trillion in assets that pays more than $73 million per day in claims. “The ‘soft’ market is going to end as the investments for insurance companies are dwindling — premiums will need to offset this loss of income,” he wrote.


Stability should be the number one concern of operators, not price, he says. “Fine tuning your business practices during the coming lean times will be more imperative than ever,” he says. “Schedule a meeting with your agent to discuss coverage and ways to save money now. Trim the fat.”


Operators have appreciated spending less on auto insurance recently, but that cost will be increasing soon. The cost of insurance should be about 6% to 8% of a company’s gross revenue, but during the recent “soft” market, many operators have had a lower ratio due to decreased premiums, he says.


That percentage is rising, but operators must have auto insurance to stay in business. When he sent out the client email, Martinez received responses from nearly all of them worried about insurance rates, and for smaller operators, the ability to get coverage.


Be sure you make a careful, wise decision about your provider, he says. “There are still some great, solid, and stable insurance companies doing business in our industry.”



View comments or post a comment on this story. (0 Comments)

More News

Prevost Offers Online ABA Driver Training Courses

The luxury motorcoach OEM and trade group address one of the industry's biggest challenges.

Luxury Line Run Motorcoach Service Adds Another Texas Route

Vonlane, which calls itself a private jet on wheels, now connects Austin and Fort Worth.

Uber Loses License To Operate In London

The TNC's license will expire Sept. 30 as it claims to have some 3.5 million users and about 40,000 drivers in the city.

Transportation Future, Driverless Vehicles Hot Topics At BusCon 2017

The show featured nearly 135 exhibitors and close to 60 vehicles, and some of the latest technologies available to operators.

Taxi Drivers, Chauffeurs More Likely To Die From Violence

CDC data shows they are the most likely workers to die on the job because of violent crime risks.

See More News

Facebook Comments ()

Comments (0)

Post a Comment



See More

LCT Store

LCT Magazine - September 2017 $12.95 MOTORCOACH / BUS ISSUE COVER STORY: * Irizar Racks Up A Good Rookie Year * *


Experience the three annual industry events for networking for business, showcasing vehicles and products, and getting the tools for success.

Read About Your Region

What’s Happening Near You?
Click on any state to see the latest industry news and events in that region.

More From The World's Largest Fleet Publisher

Automotive Fleet

The Car and truck fleet and leasing management magazine

Business Fleet

managing 10-50 company vehicles

Fleet Financials

Executive vehicle management

Government Fleet

managing public sector vehicles & equipment



Work Truck Magazine

The number 1 resource for vocational truck fleets

Metro Magazine

Serving the bus and passenger rail industries for more than a century

Schoolbus Fleet

Serving school transportation professionals in the U.S. and Canada

Please sign in or register to .    Close