At ProgramBusiness.com, we're always looking to provide insight into the state of various industries and how changes in regulation, the economy, and other factors can present challenges and opportunities for our retail insurance agency members. Often, we turn to our Storefronts for their insight, as they are the ones looking to develop new programs, expand their current niches, and deliver revenue opportunities to agency partners.
In this issue, we turned to Jason Barlow, president of TUMI, Trinity Underwriting Managers, Inc, a premier program administrator specializing in transportation. We spoke to Jason about the Intermodal industry and the growing opportunities in this niche.
Located in Pooler, Georgia, TUMI offers a full line of products designed for specialty classes of haulers. Programs include: Towing & Recovery, Auto Repossesors, Auto Transport, and Intermodal Transportation risks. All programs are with A and A+ rated insurance companies. TUMI writes in 48 states, excluding Massachusetts and Alaska. Distribution is through appointed retail agencies.
Annie George (AG): Let's first discuss the transportation industry and what's been going in terms of insurance.
Jason Barlow (JB): "Generally, the transportation industry, like many others, over the last several years has continued to see a soft market trend, characterized by too much supply chasing too little demand. As a result, insurance rates have been depressed even though loss ratios have been higher. However, in the last few months, some insurance carriers have lost their tolerance for the marketplace and have either left, lost their ratings, or tightened their guidelines and terms. This has resulted in rate increases and opportunities for new business. And, although we still have pockets of a soft market, we're cautiously optimistic as some migration to higher rates is occurring on a national basis. And at TUMI, we're holding a pretty hard line on our pricing and still writing coverage."
AG: In the last year or so, you developed TRIP (Trinity Underwriting Managers' Intermodal Program) for a specific niche in transportation as you saw an opportunity here. Tell us about the intermodal industry.
JB: "We're in a community right outside of Savannah, Georgia, home to the Georgia Port Authority, one of three largest port facilities on the east coast. We began to see an increase in the way freight was being moved. Increasingly, more than one form of transportation was being used to move cargo - whether it is from water (a wet port) to motor to rail, or from rail to motor, etc. (intermodal transportation). We recognized an opportunity here and created a program specifically to insure this type of transportation, partnering with an insurer to write the business. In October 2011, we launched TRIP for intermodal haulers - trucking companies that haul freight in and out of port facilities, both wet and inland. Since the launch of the program, we have been steadily writing business. What's more, we are seeing in this class of business the same as in our other transportation niches increased pricing and a tightening market."
AG: What makes intermodal haulers different from traditional long-haul companies?
JB: "Intermodal haulers are primarily a local and intermediate class of business, usually characterized by owner/operators within the fleet - subcontractors that are basically on a long term lease with the motor carrier.. We're seeing a lot of companies adding owner/operators to their fleet recently. This tells us that more cargo is being transported, which is a good sign."
AG: Why is intermodal on the rise?
JB: "The increase in intermodal transportation is simple: cost and efficiency. Traditional line trucking becomes less economically viable with the high cost of diesel fuel. As higher diesel prices continue, the supply chain will look elsewhere and increasingly rely on the cheapest mode of transportation. So, for example, cargo that arrives at one of our seaports destined for Des Moines is going to be loaded onto a truck and delivered to the closest possible rail line to get it there. Transporting cargo is much cheaper on rail than using long-haul trucking. Eliminating the long-haul truck from the port to the final destination and relying on the intermodal supply chain is much more efficient and cost-effective than traditional trucking.
"What we're seeing and what we think is going to happen is that freight is going to be primarily delivered via intermodal transportation. You have local guys hauling it from the port to the container or the rail yard, and then picked up again for final delivery - similar to the hub-and- spoke system that the airlines adopted in the 60s and 70s.
"And, while there will always be a need for long-haul trucking, generally speaking, intermodal freight as a percentage of total freight is continuing to rise even in a depressed economy. Again, it's much more efficient and cheaper than taking cargo and putting it on a flatbed or drive van and shipping it cross country for $4-$4.50 per diesel gallon. You can put the cargo on a train for a tenth of the cost.
"Integrating truck, ship, and rail is the most efficient form of moving freight in the supply chain, which is why we wanted to position ourselves in the marketplace to insure this niche."
AG: Describe TRIP and what it includes.
JB: "We learned about the industry and developed TRIP to address its specific exposures, including incorporating enhanced coverages for intermodal haulers to get on and off the ports. We also made a point to understand the agents' needs that serve this market, and built a competitive product. Our goal was to bring to market a solid product and rate it the way it should be. If it's a local vehicle, we rated it local...if it's intermediate, it's rated that way. We do not lump intermodal into a general trucking marketplace. We understand this is a different animal all together."
TRIP includes a full package of coverages: Auto Liability, General Liability, Warehouseman's Liability, UIIA Trailer Interchange Agreement, Terminal and Container Yard, Broad Cargo Coverage, and Non Trucking Liability.
What's more, TUMI has a rating system they developed internally that allows for accurate rating and qualifying insureds related to their radius of operation. "The rating is on a schedule auto basis," explained Jason, "which keeps us in compliance to make sure all the vehicles on the fleet are covered properly, and that we have an accurate view of the fleet. We know what vehicles are on or off the policy all the time - this is good for both the insurer and the insured.
"We also provide exceptional service by being responsive and efficient, issuing policies the same day they're bound, and providing endorsed policies within a 72-hour window. It's critical that you're able to service these accounts by moving very smoothly and quickly."
If you would like more information about TRIP, or to learn about obtaining an agency appointment with TUMI, contact Jason at 888-554-8864, ext. 201, or via email at Jason@trinityunderwriting.biz.