Dive Brief:
- Carriers J.B. Hunt Transport Services, Knight-Swift Transportation Holdings and Werner Enterprises saw insurance costs jump in Q1, according to filings. That collectively increased their expenses by $73 million compared to a year ago.
- Under an insurance and claims category for the carriers, Werner had costs increase nearly 33% to $36 million during the quarter YoY; Knight-Swift’s costs rose nearly 41% to $138 million; and J.B. Hunt’s costs spiked over 52% to $70 million.
- Claim frequency and a jury verdict contributed to the increase for Knight-Swift, while J.B. Hunt cited a higher insurance policy premium as one factor. Meanwhile, Werner CFO John Steele said in May on an earnings call, “We are seeing an elevated cost per claim.”
Dive Insight:
Even one bad outcome can upend carriers’ efforts to improve safety and lower its claims costs, Werner President, Chairman and CEO Derek Leathers said on an earnings call last month.
Despite the increased costs, Werner executives highlighted improvement in certain aspects of insurance and claims issues.
“We continue to be encouraged by our recent quarterly low in both the number and frequency of claims and our 10-year record low last year for DOT preventable accidents,” outgoing Chief Financial Officer John Steele said.
Carriers including Werner have noted how safety can help.
“Over time, the thing that we can most control in that line,” Leathers said, “is simply being safer.”
Problems can even affect carriers indirectly. Knight-Swift had a nearly $23 million operating loss in its third-party insurance business in Q1 amid unfavorable claims, causing it to reduce exposure there, according to a Q1 earnings report and presentation.
Small carriers have struggled to pay premiums and their risk profiles have shifted amid a drop in spot rates and high inflation, causing Knight-Swift’s insurance business to suffer, CEO and President Dave Jackson said in April on an earnings call.
“Beyond this decision, we are already taking steps to enhance our insurance program,” Jackson said, “which include higher pricing, improved collections and more timely cancellations.”
