Drivers of tow trucks engage in a world fraught with danger. When repossessing vehicles, they face angry drivers. The road conditions may be poor due to rain, snow and potholes. This results in dangerous driving. Circumstances which require the use of heavy equipment causes havoc and danger on US freeways.
Less and less insurance companies therefore are willing to write business for tow truckers. As a result the tow truck business is in a state of distress.
The American Transportation Insurance Group (ATIG) opened its doors in 2001. The president and CEO, Chip Thompson, stated that this speciality insurance is at its worse. Since 2001 ATIG has specialised in the higher risk transportation market. In particular, garage, towing, trucking and repossession market.
ATIG are losing one out of every four customers. Tow truck companies are closing down.
There is a constant increase in the costs of litigation and healthcare. Tow truck companies are facing these snags. Most of the U. S. commercial auto insurance market has faced difficulties in recent years.
This market has reflected underwriting losses for five consecutive years. According to Fitch ratings, it is the most under performing product segment in the U. S. property/casualty insurers market.
“It’s the perfect storm for garage and commercial auto in the last six months and I don’t see it letting up anytime soon,” Thompson said.
In September 2016, Progressive stopped writing insurance for the tow trucks. Others followed suit. Eight or nine carriers pulled out of this sector.
Reasons vary. Certain carriers made a profit and then pulled out. Other carriers lost money and thus exited. Some carriers decided they did not want this business any longer.
The industry was aware that Progressive is very technologically sharp. They understand the risks. For example, the rates per the ZIP code per the risk per street. Therefore most carriers felt that if Progressive does not forsee a profitable future in this sector, neither would they profit.
Progressive is upholding their duty to current policy holders. However, they are not writing new accounts. They expect to affect small changes to their current program. This will result in Progressive forging ahead once again in the new business arena.
Chip Thompson (ATIG) says that he has people putting cameras inside the trucks. They face outward and inward. Drivers eating or talking on the phone whilst driving are treated with zero tolerance.
He added that a focus must be put on driver training. In addition, he said, if you have insurance which is semi-affordable, protect it for all you are worth.