Canadian transportation insurance market:

The Canadian heavy commercial long haul insurance market will continue to face automobile insurance premium increases for the remainder of this year and into 2020. Fleet insurance companies’ tight underwriting guidelines and strict risk management minimum standards have seen less than average fleet risks facing non-renewals with limited options to find coverage in the traditional insurance pool. The Transportation Industry and many trucking companies are turning to the Facility Association as a last alternative to secure mandatory automobile liability insurance coverage.

The Facility Association is a residual insurance market to guarantee automobile insurance if the traditional insurance market declines to offer coverage. Until recently, the Facility Association was not insuring many heavy commercial long haul transportation companies, especially fleets with high U.S. exposures. Annual premiums in the Facility pool can be 3 to 4 times more than the traditional insurance market, making it difficult for trucking companies to stay in business. The Ontario Trucking Association is working closely with the insurance industry to help standardize commercial underwriting rules and close loopholes in the Facility Association, but these future changes may continue to further drive up the Facility commercial premiums.

To learn more visit the Ontario Trucking Association’s website:

How did the fleet insurance market hit this cycle again after 15+ years of abundant capacity and somewhat stabilized automobile premiums? Multiple factors helped to drive up loss costs:

  • Increased Provincial & US Litigation Settlements
  • Distracted Driving
  • Professional truck driver shortage
  • Increased vehicle damage repair costs
  • An underwriting model which continues to rely on statistical data to price risk

How can fleets control this market fluctuation?

Here are 3 strategies:

1. Strong Safety Culture

A fleet’s safety culture and documented risk management controls should always be a top priority to help get their drivers home safely no matter what insurance market conditions the industry is facing. Insurance companies are looking for continuous risk improvements to verify that their insureds are a best-in-class operation. Utilizing a specialized transportation insurance broker with loss control expertise to work with the insurance carrier is key to reducing a fleet’s total cost of risk.

2. Captives/Alternative Risk Transfer Models

Transportation captives have continued to grow since the last hard insurance market in 2002. When set up and managed effectively with a like-minded pool of transportation companies, captives have proven to reduce insurance costs and allow fleets to take control of the insurance process. Prior to joining a captive, fleets should have a clear and transparent understanding of the captive cell ownership, program structure, corporate by-laws, potential liabilities and the current fleet members they will be sharing risk with. This market will continue to see captive growth, along with fleets looking at creative, cost-effective retention/deductible products.

3. Predictive Analytics/Telematics

“An underwriting model which continues to rely on statistical data to price risk”

The traditional processes for using statistical data in fleet underwriting combined with an annual loss control visit from the insurance company can no longer provide optimal results. Looking backwards at five-year historical claims, MVR’s, Provincial & US commercial operating authorities, etc. will always be key indicators of risk. Looking at the in-cab behavioral telematics data and allowing your insurance company to have some visibility into the commercial vehicle helps to measure and change driver behaviour patterns as well as to price your risk. Using this data can be a valuable tool to reduce claims.

Telematics or Usage Based Insurance are not new models for personal automobile insurance in Canada: A vehicle owner plugs in a provided hardware device or downloads an approved insurance company App and agrees to share certain data in exchange for potential premium discounts based on good driving. This differs from the commercial transportation space, where companies with telematics currently installed in their vehicles own both the hardware and the data. In this scenario, owners choose what data they will share with their insurance company and broker to help reduce premiums. Usage Based Insurance has the potential to transform the traditional commercial insurance model, with premiums adjusted on a quarterly or month-to-month basis or in the future, an insurance cost per trip model.


The current underwriting model is a somewhat fractured and wishful strategy, relying on new “naïve” insurance capacity to hopefully enter the long haul transportation space to drive down premiums through competition. Insurance carriers, insurance brokers and transportation companies will need to work in closer partnerships to bring premiums back to normal and sustainable levels. Otherwise, the current commercial insurance market will be here for a few more years, as insurers continue to look to reduce their loss ratios by increasing annual premiums as the main strategy to profitability.


Tuesday, September 10th, 2019
8:45 a.m. to 11:30 a.m.
International Center, Hall A – Lyra Room
6900 Airport Rd, Mississauga, ON L4V 1E8

The BFL CANADA Transportation Seminar will provide insight into the topics covered above, including a discussion on autonomous/connected vehicles in the transportation industry. Mark Murrell and Jane Jazrawy from “Best Fleets to Drive For” will also be reviewing best fleet practices, trends and innovative ideas from this year’s winners.

For more information on “Best Fleets to Drive For”, visit their website:

Rui Fernandes from Fernandes Hearn LLP will be presenting on the Employee vs Owner Operator model, including the controversial “Driver Inc.” model, which the CRA is investigating as an unfair practice for hiring drivers.

For more information on Fernandes Hearn LLP, visit their website:

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