Why Transportation Insurance Costs Keep Climbing

by Sam Watts | Jun 5, 2025

The transportation industry is grappling with a persistently tough insurance market, with premiums on the rise and no immediate relief in sight. A recent report by Risk Strategies highlights how these escalating costs are impacting carriers across the board—physical damage coverage has risen by 20% to 25%, umbrella liability by 10% to 30%, and auto liability by 10% to 20%. These hikes are hitting fleets of all sizes and operational structures, making cost containment a top priority.

Carriers Under Pressure

During J.B. Hunt’s Q4 2024 earnings call, EVP and CFO John Kuhlow painted a stark picture of the company’s insurance burden. The carrier has seen its annual insurance costs more than double in recent years, from $165 million in 2021 to over $300 million annually for the past three years. Kuhlow emphasized that premiums will likely remain under significant inflationary pressure moving forward.

J.B. Hunt is not alone. Other major carriers are feeling the pinch:

Saia reported a 16.6% year-over-year increase in claims and insurance expenses due to more claims activity and adverse developments in existing cases.
Werner cited higher-than-normal insurance costs, with $19 million stemming from the unfavorable development of prior period claims.

This trend is no longer an anomaly, it’s the new normal.

Why Premiums Are Soaring

One of the biggest drivers behind rising premiums is the changing composition of the driver workforce. According to Risk Strategies, a growing number of less-experienced drivers are contributing to more frequent and severe auto liability claims. Over the last two years, the average claim cost has nearly tripled, rising from $13,000 to $38,000. This increase is fueled by both social inflation and an uptick in large legal settlements and jury verdicts.

Scott Holeman, Director of Media Relations at the Insurance Information Institute, says that while some indicators are improving, it will take time for that to translate into stable or lower rates. In 2023, the industry’s combined ratio, a measure of profitability, improved to 104.9, a 7.3-point gain over 2022. Additionally, direct premiums written (DPW) jumped 14.3%, the largest increase in over 15 years.

But, as Holeman points out, these gains follow a dismal period. In 2020, insurers issued $14 million in rebates due to expected pandemic-related claim reductions. While claims initially dipped, riskier driving behavior returned quickly, bringing with it more severe accidents and legal involvement.

“The number of drivers on the road has returned to pre-pandemic levels,” Holeman said. “But the driving behavior that led to high losses hasn’t improved. Severe accidents, increased attorney involvement, and litigation have all continued to drive up costs.”

What Carriers Can Do

According to Nick Saeger, Assistant VP of Products and Pricing at Sentry Insurance, many variables go into calculating insurance premiums. Location, route length, vehicle size, safety records, and a driver’s motor vehicle history all factor into a carrier’s risk profile.

“Loss history is a significant piece of the puzzle,” Saeger said. “Motor carriers that have had accidents in the past are more likely to have accidents in the future.”

So what can fleets do to reduce their exposure?

Build a strong safety culture. This starts at the top and should filter down through every level of the organization.
Prioritize hiring safe drivers. It’s not just about filling seats, it’s about filling them with professionals who put safety first.
Engage with your insurer’s safety consultants. According to Steve Bojan, Director of Safety Services at Sentry, these consultants can help fleets with prior violations or claims clean up their operations.

Saeger noted that despite the challenges, carriers that invest in reducing risk can still influence their premium trends. However, the market’s unprofitability adds complexity. In 2023, the commercial auto insurance sector posted a projected 111% combined ratio, meaning insurers paid out $1.11 for every dollar of premium collected. This financial imbalance means rate hikes are not only likely, they’re necessary.

The Role of Technology

Technology is proving to be one of the most effective tools in helping fleets improve safety and manage risk.

“Buying safety technology is a good start, but real value comes from using it consistently,” Saeger explained. “Data should be used to coach drivers, inform training, and identify risks before they become incidents.”

Bojan emphasized the power of dashcams and telematics. Not only do these tools support proactive safety management, but they also serve as critical evidence in the case of accidents, helping to determine fault and protect fleets from false claims.

Pam Jones, Director of Strategic Accounts at Fusable’s Central Analysis Bureau, added that telematics also improve how underwriters evaluate risk. Fleets that opt into data-sharing programs often gain access to premium discounts, while those who opt out may face higher rates.

“Sharing telematics and dashcam data signals to insurers that a fleet is confident in its safety program and serious about driver oversight,” Jones said.

Looking Ahead

While the outlook for insurance costs in the transportation industry remains challenging, there are clear paths to improvement. Carriers that prioritize safety, embrace technology, and collaborate closely with their insurance partners will be best positioned to manage premiums and weather market volatility.

“The most progress comes from consistent effort,” Saeger said. In an environment where costs are climbing and margins are tight, that effort can make all the difference.

Rising insurance premiums aren’t going away any time soon. But carriers that double down on safety, lean into data, and build strong partnerships with insurers can take control of their future.