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The opportunities to capitalize on the excess cargo insurance offerings made available through a TMS site are only increasing as more cargo carriers hit the roads and demand for coverage continues to grow.
We have all witnessed how the “need it now” consumer mentality has changed business models, increasing the already extensive pressure placed on optimizing supply chains. As such, more and more organizations are noticing the potential benefit of TMS, if not necessity. In addition, the availability of cloud-based TMS options has made it so that even smaller businesses can afford TMS solutions and can adopt a transportation management system into their supply chains. Further, the opportunities to capitalize on the offerings made available through TMS are only increasing as the market continues to grow.
It follows that, as the industry grows, so will the need for insurance solutions. Take the Global Marine Insurance Market for example. Size and share revenue alone are estimated to grow about 31.5 billion dollars by 2028, with a compound annual growth rate of approximately 2.90% between 2022 and 2028. In 202, the cargo transportation insurance market was valued at 53 billion dollars. The global cargo transportation insurance market size is estimated to grow at a compound annual growth rate of 3%.
The Demand for Excess Insurance Coverage
Not only is the overall market demand increasing, but so is the demand for variety and options regarding insurance solutions. One option gaining increasing traction and focus is excess cargo insurance. Excess cargo insurance is also commonly referred to as “spot insurance,” “single trip cargo insurance,” or “per-load cargo insurance.” Quite often, a shipper’s goods are not completely covered by the motor carrier’s primary cargo insurance policy. As such, many shippers, freight brokers, and motor carriers purchase a single load policy to boost coverage when they need it. Excess cargo insurance is the additional amount of coverage purchased to be paid out upon a successful claim, such as a damaged or lost shipment.
Brokers and Carriers are also Shopping for Excess Cargo Insurance
While the many ways a shipper can benefit from spot insurance are easy to list and come quickly to mind, less obvious are the opportunities that excess cargo insurance can provide to brokers and carriers. Excess cargo insurance provides brokers and motor carriers a way to satisfy threshold requirements for insurance minimums needed to obtain certain valuable loads.
For example, for freight brokers, when bidding on a load that requires above average insurance limits, their carrier pool shrinks, making it more difficult to provide a competitive quote. Excess cargo insurance allows brokers to win higher value loads by supplementing their carrier’s limits.
As it pertains to motor carriers, as premiums continue to increase, they are often forced to lower their limits in order to manage costs. Unfortunately, a consequence is that motor carriers are not able to bid on higher value loads if they do not have enough insurance. Excess cargo insurance allows carriers to instantly boost their limits on a per load basis, giving them access to loads that require higher limits.
In overview, having access to excess cargo insurance allows brokers and motor carriers to bid on jobs that otherwise would be out of reach.
Access is a Problem for the User, but an Opportunity for TMS Companies
Purchasing excess cargo insurance has traditionally been a cumbersome process. Many clients have to search outside of their TMS services website for an insurance agent who can quote and provide this type of specialty insurance. Especially for clients with high volumes of higher value shipments, this process can be incredibly tedious and time-consuming. In addition, when a deal becomes available, brokers and carriers need to act fast in order to beat out the competition.
With the current dynamic and rapidly increasing pace of business, brokers and carriers often feel discouraged when it comes to pursuing single trip cargo insurance. As a result, many brokers and carriers won’t bid on shipments outside the normal value range, costing them valuable opportunities for growth.
TMS companies can capitalize on this issue by providing excess cargo insurance to their customers through their TMS platform. This opportunity provides low-maintenance revenue and a competitive advantage. By offering an excess cargo insurance solution that is integrated into their platform, TMS companies can offer their clients a one-stop-shop, giving them everything they need within their ecosystem. Further, a TMS company would be providing a solution to its customers that is available at the moment of transaction, enabling critical transactional convenience.
Moving freight is a highly commoditized business, with most competitors battling on the basis of time and cost. Offering additional insurance solutions gives TMS companies a competitive advantage over the competition and helps strengthen their business relationships with existing customers.
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Yes, the market is booming. As a TMS you need to be prepared to grow along with it and continue offering a multitude of coverage options. Contact Us today or download our Free Guide to learn more about how LogistIQ’s Freight Insurance Fast for TMS program has everything your organization needs to provide spot insurance on-site.
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