During the first week of October 2024, East and Gulf Coast port workers went on strike for the first time since 1977, in what analysts forecasted to be the most disruptive U.S. labor event in decades.
Although initially projected to last for weeks or even months, the port strike ended quietly after just three days. Shortly afterward, hundreds of independent intermodal truckers who transport shipping containers between warehouses and the 36 affected ports resumed operations. They worked quickly to clear the freight backlog, allowing them to resume earning revenue needed to maintain their auto-liability premiums.
But another port strike could occur if union members fail to ratify the tentative deal currently on the table, and other disruptive events can occur often.
The insurance industry can better prepare stakeholders for potential insurance and business impacts from future disruptions. This preparation can follow strategies that property and casualty insurers use for natural disasters like hurricanes — including Helene and Milton, which occurred on either side of the port strike.
Insurance consequences of strike that could have been
The port strike's insurance implications were relatively minor for many small and regional intermodal truckers that haul shipping containers. Equipment limitations make it difficult for these specialized carriers to pivot to hauling other types of freight when shipping containers are trapped on cargo ships, and when trucks don't run, paying monthly premiums becomes challenging.
Whether a company's primary auto-liability coverage is written on a stated vehicle or monthly reporting policy, pausing insurance coverage during idle periods isn't an option. Such pauses would jeopardize the companies' standing with the Federal Motor Carrier Safety Administration (FMCSA), which authorizes interstate operations. Additionally, stationary trucks remain exposed to weather damage and accident risks.
Truckers are left with minimum premiums to meet without incoming revenue. A longer work stoppage at the ports could result in business closures for many truckers, with ripple effects affecting the freight capacity market and broader economy.
While insurers cannot influence macroeconomic events, they can better anticipate their impacts. Treating market events like natural disasters enables better preparation and more effective communication about coverage options and policy requirements.
See also: Preparing for a Rough Hurricane Season
Applying hurricane preparation lessons
Property and casualty insurers follow established protocols during natural disasters. They issue operational guidance before and after events, including updates about new business moratoriums and claims processes.
Auto liability insurers can implement similar strategies for transportation sector disruptions through:
Access to Market Intelligence:
If you’re like me, your inbox is oversaturated with information from countless news sources and industry groups. It’s difficult to cut through the noise and zero in on the most important developments likely to affect your policyholders.
Case in point: The recent port strike had been signaled months in advance but got buried in the news cycle, leading some insurers to get caught on their back foot when the disruption finally materialized.
Access to reliable insights on evolving developments is essential for crafting an effective response strategy that keeps your partners and policyholders informed. State and national trucking associations, such as the Truckload Carriers Association, and market intelligence publications offer reliable and timely data and analysis to help you stay ahead of trends and anticipate potential challenges.
Anticipating that insureds may inquire about removing vehicles from their policy or canceling mid-term allows you and your partners to stay ahead of potential issues, ensuring you're prepared to offer timely solutions and maintain strong relationships. Proactively communicating policy and market information also demonstrates to insureds that their agents and insurers are in their corner, which is especially important for insureds that don’t have regular contact with their insurance carrier.
Data-Driven Policy Options:
Telematics devices providing real-time vehicle data help verify operational status and location. This information can support more flexible policy options, such as usage-based premiums rather than fixed monthly costs.
For example, one of the most favorable auto liability policies available offers a 0% minimum premium, allowing policyholders to pay only for the miles they run, rather than being locked into a fixed monthly cost, even when their vehicles are not in use. But taking advantage of this type of policy typically requires insureds to invest in advanced telematics systems that transmit data directly to their insurance carrier, allowing them to confirm when trucks are sitting idle.
Insureds can’t simply switch policies in the midst of a disruption. But we can use this moment to reiterate the options that are available to them and encourage insureds to consider policies that offer more flexibility during unexpected events. On the flip side, insurance carriers should take advantage of the opportunity to exchange more favorable policy terms for insureds’ valuable telematics data.
See also: The Cognitive Biases Hurting Risk Management
Clear Communication:
Ahead of Hurricanes Helene and Milton, I received a flurry of communication tracking how the storms were progressing and how insurance carriers planned to operate before and after the crisis. Treating other types of potential disruptions with the same sense of urgency is helpful for everyone.
Early and frequent updates about policy terms and available accommodations help businesses prepare for potential impacts. Setting clear expectations enables better decision-making during disruptions.
Market volatility requires anticipating disruptions and preparing accordingly. Whether facing labor strikes, supply chain issues or regulatory changes, having clear response plans and maintaining open communication helps preserve stability. Preparation enables better support for affected businesses during inevitable disruptions.
