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The big news in this week’s Trucking Market Update is an alarming development in an area we don’t discuss that much in the podcast: trucking insurance premiums. Specifically, we’re talking about the Producer Price Index (PPI) for commercial auto insurance, which has spiked since the end of 2024. It’s certainly bad news for many trucking firms experiencing the issue, but for the broader truck freight market, this could have some welcome consequences.
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What's Going On with Insurance Costs?
The PPI for commercial auto insurance premiums – essentially the closest proxy we have for tracking what motor carriers are paying – is showing an unusual and steep upward trend:
- January–March: Revised data now shows monthly increases of at least 1%.
- May alone: A 2.5% month-over-month increase, the highest on record.
- Year-over-year: Up 6.4%, also a record.
For context, we previously thought of month-over-month increases in this index of 0.4% to 0.8% as being large. These new numbers? The increases in four of the five months of 2025 so far are among the top 10 largest monthly gains since 1998.
There are two sets of commercial auto insurance data in the PPI:
- Premiums: Reflect policies purchased through agents or brokers.
- Direct insurance: Bought straight from insurers.
Both metrics are flashing red. In addition to the PPI developments in premiums discussed above, the PPI for direct commercial insurance rose 2.6% m/m in May (3rd highest increase ever) and the y/y comparison was a massive increase of 8.2% – second only to March’s 8.5% y/y comparison.
Why This Matters for the Market
Sharp increases in insurance costs can have ripple effects – especially when combined with weak spot rates and sluggish freight demand:
- In 2019, similar dynamics led to a noticeable exit of small carriers.
- This time? The potential shakeout could be even bigger, thanks to the sheer number of new entrants since 2020.
A surge in insurance premiums alone could be enough to remove tens of thousands of small carriers from the market, but the trend is especially significant given the recent increase in diesel prices due to the conflict in the Middle East.
The situation is not without potential winners – or other potential losers. A drop in capacity would be welcome news for many trucking companies and unwelcome news for many shippers hoping for a continued soft truck freight market.
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Don’t panic – or rejoice – just yet
Understand that substantial revisions of the Producer Price Index figures are common. In fact, until the Bureau of Labor Statistics (BLS) released its May numbers, the index estimates for January through April were not all that alarming. The latest release dramatically changed estimates for the whole year. So it’s also possible that the latest numbers, too, are not completely accurate.
That said, even if subsequent BLS data shows softer gains, it seems almost certain that rising insurance costs are a reality.
🎧 For more context, listen to FTR’s Trucking Market Update – Episode 318, where Avery Vise walks through what this could mean for the road ahead.
