Truck crashes are not only becoming more frequent, but their costs are also climbing sharply. Add widespread fraud, double brokering, higher truck prices and labor costs — along with a growing number of so-called nuclear verdicts — and the result is rising insurance costs across the industry.

Insurers say the financial consequences of truck crashes — known in the insurance industry as “claims severity” — have climbed sharply over the past decade.

During recent hearings before the House of Commons transport committee studying the changing landscape of the trucking industry, representatives from the Insurance Bureau of Canada (IBC) told MPs that commercial auto insurers have paid out more in claims and expenses than they have collected in premiums for several consecutive years.

“The insurance market for commercial trucking has seen a significant increase in the size and severity of insurance claims resulting from accidents on roadways,” Maximilien Roy, interim vice president of strategy at IBC, told the committee.

Data presented by IBC shows that claim counts and costs have both increased significantly in recent years. Between 2015 and 2023, trucking claim counts rose 83% in Ontario, 88% in Alberta and 86% across Atlantic Canada. Over the same period, claim costs climbed even faster, including a 166% increase in Alberta.

That, in a nutshell, is claims severity.

Claims severity defined

“When we look at claim severity, we’re talking about the increase in the dollar value of each claim,” said Lee Sherback, national transportation practice leader for Canada at Hub International.

That increase reflects changes across multiple parts of trucking’s risk profile. On the liability side, plaintiffs are increasingly seeking larger compensatory and punitive damages following serious crashes, and insurers are watching closely as U.S. court awards grow larger.

“We see a lot of nuclear verdicts in the U.S., and it doesn’t take long for that to trickle across the border,” Sherback said. “The awareness is there that if trucking is involved, higher insurance limits are available, and lawyers are well educated about that.”

At the same time, the cost of equipment and repairs has climbed sharply, meaning even relatively minor collisions can generate much larger claims than they once did.

Rising costs translate to rising premiums

Modern tractors can approach $250,000 in value, compared to a fraction of that cost even a decade ago. At the same time, higher labor rates, more complex vehicle technology and expensive replacement parts are driving up repair bills for every collision.

“Trucks are exponentially more expensive than they were 10 or 20 years ago,” Sherback said. “Parts are more expensive, mechanics are more expensive and cargo is more valuable.”

Insurers say the industry is also facing higher litigation costs and growing fraud concerns. Staged collisions and cargo theft have expanded in recent years, particularly in major cities.

“Cargo theft is still a big headache for trucking companies and continues pushing up claims costs,” said Rupinder Hayer, assistant vice president of longhaul trucking and commercial auto at Echelon Insurance. “On top of that, the industry is being hit with more nuclear verdicts, making the situation even tougher financially for insurers.”

“Insurance fraud has catastrophic negative effects,” added Sherback. “Organized crime is involved, and it’s spreading to more jurisdictions.”

Insurers assessing fleets’ training, safety programs

Insurers are also closely watching driver experience levels. Past labor shortages have forced some fleets to bring less experienced drivers into the industry more quickly, which can increase the risk of collisions.

“The commercial trucking market has really felt the effects of increased frequency and severity of claims,” said Hayer. “When drivers don’t have the necessary training, accidents are more likely to happen, which means higher accident rates and bigger claims.”

Yet rising insurance costs are not spread equally among the trucking industry. Brokers say the pricing environment today depends heavily on the fleet insured.

Jean-Sébastien Larocque, executive vice president of brokerage Assurancia Nexia, said well-managed fleets with strong safety records are currently benefiting from a competitive market among insurers.

“For well-structured fleets, we’re clearly operating in a soft market environment,” Larocque said. “We’re renewing a lot of risks with premium decreases in the range of 5-15% or even more.”

At the same time, fleets with weaker safety records face a much tougher environment.

‘Increasingly segmented’ market

Sherback described the current market as increasingly segmented.

“For the premier fleet it continues to be soft,” he said. “As fleet proficiency degrades, it becomes more difficult and more hard.”

Insurers are increasingly relying on detailed operational data to evaluate fleets. Underwriters now closely examine inspection results, driver hiring practices, safety programs and geographic exposure, particularly operations in high-litigation U.S. jurisdictions.

Technology is also becoming an important tool for both insurers and fleets.

Telematics systems and onboard cameras allow carriers to monitor driver behavior and collect detailed operational data. While these tools do not necessarily generate immediate premium discounts, brokers say they can help reduce claims and strengthen a fleet’s risk profile over time.

Dashcam footage and telematics data are also playing a growing role in defending claims following collisions. Insurers want access to such data, even if it can be incriminating in some instances.

“We can determine much more quickly whether we should settle a claim or fight it,” Sherback said of dashcams. “In the past, we often had to fight and hope for the best.”

Beyond claims defence, insurers are increasingly using telematics data to better understand overall fleet performance and risk patterns. Cameras and driver monitoring systems can reveal whether drivers are distracted, following too closely or engaging in risky behavior behind the wheel. That information can help fleets address problems earlier through coaching and training before a serious crash occurs.

Sherback said many fleets have installed telematics systems but are not yet using them to their full potential. Companies that actively analyze the data and respond to safety alerts tend to see better long-term results, both in operational performance and insurance outcomes.

Fleets are advised to work closely with their insurer or broker to take advantage of the tools and resources they have to offer. In the end, rising claims costs and severity are a burden shared across the industry, leaving trucking companies to differentiate themselves from bad actors.

“Insurance companies don’t pay claims,” Sherback said. “They finance them. Over time, the cost of those claims always finds its way back into the price of insurance.”