Post-Montgomery, focus grows on fate of 3PL insurance premiums

First, the size of insurance premiums paid by brokers and carriers–with the latter group now paying far more than the 3PLs–”should narrow significantly over the coming years between asset-based carriers and brokers,” the report said.

Big gap now in premiums

That gap in insurance costs between an asset-based carrier and a 3PL, according to the report, was put at about 90 percentage points by the TD Cowen panel. For every $1 spent by a carrier, the 3PL spends about 10 cents. 

There was no firm estimate given in the report about how much the gap might close. But TD Cown noted that “these inflationary headwinds in insurance are coming at a time when commercial auto price increases are still nominally high, albeit off peak growth rates. We believe this will eventually restrict brokers’ ability to gain share on price and likely raise the floor on trucking rates.”

Second, a percentage amount estimated by TD Cowen at mid- to high- single digits of trucking capacity “may be removed from the market as brokers look to distance themselves from potential liability by removing them from their platforms.” 

The report discusses what it called “conditional” rated carriers, which it defined as “those that have unresolved safety issues that have been reported to the Federal Motor Carrier Safety Administration (FMCSA).” One of the TD Cowen panelists said about 6-7% of trucking capacity is made up of conditional carriers.

Numbers out there in the discussion

A few numbers have begun to leak out into the market on what the cost increases might be.

Tyler Biddle, an independent attorney specializing in logistics, said in his first post-Montgomery discussions, “I’ve heard some instances of people who are in renewals and the underwriters are saying, ‘hold up, just give us a minute’” as they try to figure out the landscape.

But in one specific instance, Biddle said he has heard from an associate at a “good sized brokerage firm” that renewal discussions are talking about an increase of 300%–or as the industry refers to it, 3X–in current insurance rates.

Chris Burroughs, the president of the Transportation Intermediaries Association–which held an off-the-record call with its members Monday to brief them on a post-Montgomery world–said a rough estimate prevalent in the industry is that insurance costs for a brokerage have tended to be in the range of 1% to 3% of revenue. (Biddle said insurance rate pressures may lead to more companies tying their insurance prices to a number tied to miles driven rather than revenue, which could be seen as one way of mitigating higher premiums). 

The number Burroughs said he is hearing so far is that insurance costs might go up 5X, which is more than the estimate of Biddle’s associate.

The TD Cowen report did not weigh on the potential size of an increase beyond that narrowing of the gap between broker and carrier premiums. “It is too soon to quantify the impacts of insurance pricing for brokers, and will largely depend on many unique factors,” the report said.

What C.H. Robinson does now

But the report also discussed the structure of insurance at large carriers. It cited the 10-K report of industry giant C.H. Robinson (NASDAQ: CHRW) who was effectively a defendant in Montgomery and argued the case before the Supreme Court.

C.H. Robinson, according to the TD Cowen report citing the 10-K, “holds $135 million in auto liability limits subject to a $10 million per claim deductible.”

It added that is a “similar structure as the asset players, where large nuclear verdicts are insured but small claims are absorbed.”

Specific to that sort of structure, TD Cowen said that approach is a “mitigant to premium costs with coverage levels holding relatively steady, but rates moving up.”

The contrast to that, the report said, would be to “other brokers that might need to raise coverage as well.”

There’s an impact from that, the TD Cowen report acknowledged. “Potentially increased frequency of small/mid claims below the self-insured limit could likely add up and drive profit and loss volatility similar to (truckload carriers),” the report said.

TD Cowen’s report cites data from the Council of Insurance Agents & Brokers (CIAB) on the average annual price increases of commercial auto insurance, which includes trucking (despite the auto name). The chart shows that since the first quarter of 2018, that annual rate of increase  has never dipped below 6%. It fell in 2025 from an early-year peak of about 10% (the specific numbers are not disclosed, just a chart) to a little more than 6% by the end of the year.

Commercial auto insurance, the TD Cowen report said, was said by CIAB to be “the product line with the highest rate increase of the insurance lines they track, due to high claim frequency and severity, pressured by social inflation and nuclear verdicts.”

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