How Independent Agents Will Win in Final Mile Delivery
By: Safeco Insurance
Over the past few years, more customers have started seeking out local deliveries of food and goods. This has caused a shift in the commercial auto and trucking space, dramatically impacting the demand for delivery and driving growth in the gig-economy delivery market.
Final mile delivery – that last step to bring a product to the customer’s door – has unique risk exposures compared to traditional trucking. These delivery drivers need more flexible motor cargo insurance products to cover their risks. Independent agents are uniquely positioned to serve these customers by offering the ease, choice and advice to deliver comprehensive, affordable coverage.
Here are a few things independent agents should know about final mile delivery and how to better serve these customers:
- Final mile delivery is not the same as trucking
- While final mile delivery has some of the same risk exposures as traditional trucking, the scale is very different. These delivery drivers make frequent stops, putting them at increased risk of theft.
- The growth in delivery has also led to more inexperienced delivery drivers on the road. These less experienced drivers are more at risk of an accident, increasing the risk of damage to the cargo they are carrying.
- However, this space also has lower severity than the traditional trucking industry. These drivers drive fewer miles and haul smaller, less valuable loads.
- Agents are uniquely positioned to offer the best protection
- Purchasing insurance can be a big challenge for companies using final mile delivery. Most customers are not aware that there is a commercial use exclusion on their personal auto policy and that they need business insurance to protect them.
- Affordability is another challenge, especially when customers are shoehorned into policies that are designed for traditional trucking operations. In this case, drivers must either pay steep prices for limits and coverages that they don’t need or risk being liable for the theft and damage of goods in their care during the delivery process.
- Independent agents can serve a critical role in educating customers on the risks and the best coverage solutions. They are uniquely suited to recommend appropriate customized solutions through products like Liberty Mutual’s new motor cargo product.
- This is an opportunity for agents to grow their book
- Fast delivery is no longer a value-add, it is the standard expectation. Final mile delivery is a critical component in the e-commerce equation. In fact, according to the World Economic Forum, there are expected to be 36% more delivery vehicles on the roads by 2030.
- Increasing growth of the gig-economy in the delivery space means that more people are turning to a business lines policy when they realize that their personal auto policy does not offer adequate protection. With more customers needing the counsel, advice and education from independent agents in this area, agents have an opportunity to harness the momentum and serve clients in this growing industry.
Liberty Mutual’s new Motor Cargo product is available in most states and will become available to more states in 2022.
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We continue to see the ripple effects on our industry of economic instability wrought by the pandemic. Although we’ve been seeing indications of a hard market for some time, the state of the insurance industry shows no signs of reversing this trend and it continues to tighten from a risk perspective. Set yourself up to succeed amongst tightening restrictions and guidelines.