Truck News


Let’s Talk Insurance: How Stable Is Your Insurance Provider?

One of your trucks is involved in an accident involving multiple third-party injuries and damages, resulting in a multi-million dollar lawsuit against you.

One of your trucks is involved in an accident involving multiple third-party injuries and damages, resulting in a multi-million dollar lawsuit against you.

The good news is you have insurance. The bad news is your insurance provider recently went under.

Just as you’re realizing that this crisis might bankrupt you (and it very well may), you wonder whether there was anything you could have done to avoid this mess.

The answer is yes.

Selecting a solid and reliable insurance provider is one of the most important business decisions you can make.

Insurance is a sizeable expense and a crucial part of the survival of most trucking companies, so you can’t afford not to know all you can about the company you choose to insure your livelihood. Where else do you spend so much money, yet know so little about the company you’re buying from?

Too many carriers assume all insurance companies are the same, so they select their insurance provider on price alone, failing to consider another important factor: financial stability. In other words, will that insurer be around when you need them to handle a high-cost accident and keep you in business?

Over the past 20 years, over two dozen insurance providers have come and gone from Canadian trucking, and some have gone bankrupt. If history is any indication, this pattern is sure to repeat itself. All the more reason to do your due diligence when considering who you will trust to insure your business in the event of a catastrophic loss.

Now, you might think that learning about the financial health of various insurance companies means having to pour over a mountain of balance sheets. The good news is you don’t have to. There’s an easier way to determine whether an insurer is stable: Simply check out the company’s insurance rating. The rating tells you how well the insurer can meet its financial obligations to its policyholders. That means you.

The oldest and most comprehensive insurance ratings agency is AM Best. This company analyzes and reports on over 7,500 insurance companies in approximately 65 countries, including Canada.

By examining balance sheet strength, operating performance and risk exposure, AM Best uses a simple letter grade system to compare insurance companies. Just like your old high school grades, AM Best’s grades range from A to F. Ratings are divided into two broad categories – “secure” and “vulnerable.” Where should you be concerned? Letter ratings of “B” and below are definitely considered vulnerable. It’s as simple as that.

And while insurers are given a letter grade on their current health, they also receive an “outlook,” which is a measurement that provides insight into the possible future direction their ratings face.

For example, an “A-” rating with a “stable” outlook means that the insurer’s financial health is deemed excellent (the “A-” portion) and will likely remain so (the “stable” outlook). In contrast, a rating of “B” with a “negative” outlook tells insurance buyers that the insurer’s financial stability is considered vulnerable (the “B” part) and that the “negative” outlook indicates the company “is experiencing unfavourable financial and market trends … and … the company has a good possibility of having its rating downgraded,” according to AM Best.

Many of North America’s best companies will consider only those insurance companies that have a minimum rating in the “A” range (any rating with an “A” as the letter, from “A- ” to “A++”).

“AM Best’s ranking system makes it easy for me to make a confident insurance purchasing decision,” says Pat Costello, corporate controller for Schneider National.

“We don’t even see quotes from insurance carriers rated less than the ‘A’ range. This way, we quickly weed out companies that do not meet our criterion and focus on those solid performers that make the short list.”

So how do you get your hands on an AM Best rating and outlook? Simply ask your insurance broker for a copy of the insurer’s rating, or ask the insurance companies themselves. They should be happy to provide it to you. If you prefer to get a rating report on your own, simply go to the AM Best Web site at You can get any insurer’s rating right on your computer screen – for free.

You pay a lot of money for your insurance coverage, and are placing your company’s livelihood in their hands. Don’t take for granted that the insurance provider you choose will be around when you need it. Finding an insurer’s rating before choosing a provider is one of the easiest things you can do for your business and for your peace of mind.

Knowing the strength of your insurance provider can make all the difference between your company staying in business after a bad accident – or going out of business because you don’t have the insurance coverage you paid for.

– Mark J. Ram is president and CEO of Markel Insurance Company of Canada. Please send your questions, feedback and commentary about this column to For more information about Markel visit

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