Why is trucking insurance losing money despite premiums rising every year?

Premiums have risen, but not fast enough to cover claims and expenses. The industry posted a $4.9 billion underwriting loss in 2024 alone—the 14th consecutive year of losses. The core problem is that insurers abandoned rigorous underwriting starting around 2015. They deployed instant-issue platforms that accept self-certified applications without verification of fleet size, driver qualifications, or safety records. Carriers declare three trucks but operate twenty, and insurers only collected premiums on three. When undeclared trucks cause crashes, the cumulative mismatch between actual exposure and premium collected produces massive losses. Additionally, the federal minimum liability of $750,000 is so low ($0.75M vs. median verdicts of $13M+) that the economics do not justify spending $3,000–$6,000 on a proper risk assessment for an $8,000–$15,000 premium.

How did the instant-issue insurance model create this crisis?

GEICO, Progressive, and other insurers introduced online platforms that offer instant pricing and coverage activation based entirely on self-reported data. A carrier enters information online, self-attests to compliance and qualifications, pays, and receives coverage—all without a human underwriter reviewing the file or verifying any details. According to the article, carriers can declare fewer trucks than they actually operate, pay premiums on the declared number, and run the undeclared vehicles until a crash occurs. In extreme cases, individuals with no license, no office, and no legitimate operation can enter false information online and obtain instant coverage. During the 2020–2021 freight boom, 109,000 new trucking companies opened in 2021 alone, and the instant-issue market wrote them all without questions. When the freight market collapsed in 2022–2023, these undercapitalized carriers started crashing at higher rates while also claiming insurance coverage they never actually funded properly.

What happens when a carrier misrepresents its fleet size on an insurance application?

Two equally problematic outcomes occur. First, if the insurer pays the claim on an undisclosed truck, the loss ratio blows up because the premium never reflected the actual exposure—multiply that across thousands of carriers and the industry's cumulative losses become inevitable. Second, if the insurer denies the claim citing misrepresentation, the crash victim is left with a judgment against a small, judgment-proof carrier, and the victim may recover nothing. The insurer, having advertised valid coverage via an MCS-90 endorsement (federal financial responsibility filing visible in FMCSA's database), created the appearance of legitimate insurance to brokers and downstream parties. This creates either massive claim losses or systemic moral hazard and victim exposure.

Why doesn't raising the federal minimum liability requirement solve this?

It would, but Congress has not acted. The $750,000 federal minimum for general freight carriers has been frozen since 1980. Adjusted for inflation alone, it would need to be approximately $2.8 million today; adjusted for medical cost inflation, closer to $5.5 million. If the minimum were $2M–$5M per policy, the financial exposure would be large enough that insurers could not rationally bind coverage without conducting a proper risk assessment. Higher minimums force underwriting discipline by making it economically justifiable to spend $3,000–$6,000 on due diligence. The Truck Safety Coalition argued for this change a decade ago; Congress ignored it, and the industry fought it. The current crisis is partly a direct consequence of that legislative inaction.

What are the supply chain implications of this insurance crisis?

Trucking insurance costs directly inflate freight rates and reduce carrier margins, increasing overall logistics costs. Many small carriers are undercapitalized and undercovered, meaning shippers and brokers who rely on certificates of insurance face hidden liability exposure if those certificates reflect fewer trucks or less real coverage than claimed. The instability of the small-carrier market (which accounts for a substantial share of freight capacity) creates volatility in freight availability and reliability. Additionally, as legitimate, well-vetted carriers struggle to compete with instant-issue competitors who undercut on price, quality carriers may exit the market or consolidate, further concentrating capacity risk. Until federal minimum liability requirements are raised and underwriting standards are restored, supply chain teams should expect continued premium inflation, carrier fragility, and the need to conduct deeper due diligence on counterparties.

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Trucking Insurance Crisis: 14 Years of Losses Threaten Freight Market

May 26, 2026

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9 billion. This crisis stems not from external factors alone, but from a fundamental breakdown in underwriting discipline within the insurance sector itself. Major insurers including GEICO and Progressive have adopted "instant issue" platforms that bypass traditional risk assessment, allowing carriers to self-certify their fleet size, safety records, and qualifications without verification. The result has been catastrophic: carriers declare three trucks to insurers but operate twenty, pay premiums on a fraction of their actual fleet exposure, and produce losses that insurers failed to anticipate or quantify. The structural drivers of this crisis extend beyond poor business practices.

The federal minimum liability requirement of $750,000, unchanged since 1980, has eroded to cover less than 4% of median nuclear verdicts. This artificially low ceiling eliminates the financial incentive for insurers to conduct rigorous risk control assessments—a $6,000 evaluation cannot be justified against an $8,000–$15,000 premium on a $750K policy. Consequently, insurers have shifted to a volume-driven cash flow model rather than disciplined underwriting. 6% from 2021 to 2024. The disconnection between claims experience and premium trajectory reveals a market pricing chaos rather than actuarial discipline.

For supply chain professionals, this crisis creates multiple operational and financial headwinds. Trucking insurance costs continue climbing, directly increasing freight rates and reducing carrier margins. Undercapitalized carriers with minimal insurance coverage pose liability exposure to brokers and shippers who rely on certificates that may not reflect actual fleet composition. The systemic fragility of small-carrier insurance creates volatility in freight capacity and reliability. Long-term resolution requires federal legislative action on minimum liability requirements and renewed commitment to underwriting standards—developments unlikely to materialize quickly, meaning supply chain teams must treat this as a persistent structural risk factor rather than a temporary market correction.

#trucking-insurance

#commercial-auto-insurance

#carrier-underwriting

#freight-rates

#risk-management

#supply-chain-disruption

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What if trucking insurance premiums increase another 15% over the next 12 months?

Simulate the impact of a 15% increase in commercial trucking insurance costs across your carrier network over the next 12 months, reflecting ongoing industry losses and premium adjustments. Model the cost pass-through to freight rates, carrier margin compression, and potential carrier exits or consolidation. Assess how this affects your total landed cost for freight-dependent supply chains.

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What if 20% of small carriers (under 10 trucks) exit the market due to insurance insolvency?

Simulate the withdrawal of 20% of small-carrier capacity from your freight network due to inability to renew insurance or pay rising premiums. Model the impact on freight availability, spot rates, lead times, and the need to shift volume to larger, better-capitalized carriers. Assess service level impact and cost implications.

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What if federal minimum liability increases to $2 million, raising underwriting standards?

Simulate the long-term impact of a federal increase in minimum liability from $750K to $2M, forcing stricter underwriting and potentially eliminating or consolidating weak carriers. Model the shift toward a smaller pool of better-capitalized, properly underwritten carriers. Assess the impact on freight rate stability, carrier reliability, and overall supply chain risk reduction.

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