While the premiums generated from writing transportation risks may seem tempting to insurers, experts in the field warn that a certain level of expertise is required to turn those premiums into profit.
David Dunn, president of RLI's Transportation Division in Atlanta, said while customers pay sizable premiums, the risks also have potentially sizable losses. He noted that a carrier may have one individual account that may not have a loss, and on that risk, the carrier can make money at any price. But he said if a carrier prices its entire book of business under that premise, money will be lost.
Companies underpricing risks because they don't understand the full value of claims remains a challenge in the transportation insurance sector, he said.
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