The Iron Insurance Disaster

It looked like a great idea on paper. Use a trucking giant’s scale and infrastructure to offer affordable insurance to small carriers, but tie the coverage to telematics, cameras, and a safety association membership. If you want a policy, put in the technology and prove you’re serious about safety. The data would manage the risk.

What followed was one of the most expensive experiments in trucking insurance history, a $130 million collapse that put dangerous carriers on American highways for years before anyone with a badge or a regulatory mandate noticed a thing. The Biden administration’s FMCSA didn’t catch it.

The Arizona Department of Insurance issued a consent order over missed phone calls. And tens of thousands of small carriers who never should have been on the road got insurance certificates, and kept rolling, long after the data said they shouldn’t have. This is the story of the Mohave deal.

The Setup In 2004, Knight-Swift quietly formed Mohave Transportation Insurance Company as an Arizona-domiciled captive insurer, NAIC CoCode 14349, domiciled at 2200 S. 75th Avenue in Phoenix. It sat on the shelf for years, used internally, until someone had a bigger idea. window. googletag = window. googletag || {cmd: []}; googletag. cmd.

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enableServices(); }); googletag. cmd. push(function() {googletag. display('div-gpt-ad-1709668545404-0'); }); By 2020, as the freight market entered its COVID-era explosion and a tsunami of new small carriers flooded into the industry, Knight-Swift initiated an insurance program for third-party carriers. In September 2021, they announced it publicly.

Their own press release described it: “An organization that brings together services essential to transportation carriers and includes insurance, equipment maintenance, fuel purchasing, and truck sales and rentals.

Iron Truck Services provides affordable solutions to truckload carriers by leveraging the scale and infrastructure of the nation’s largest carrier, Knight-Swift.”

Knight-Swift press release, September 14, 2021 (BusinessWire) The centerpiece, Iron Insurance, was writing commercial trucking policies on Chubb and Harco paper, with Mohave serving as the captive reinsurer, absorbing the risk. Harco is a Chubb subsidiary, making this exactly the Chubb/ACE paper arrangement that industry sources have described.

Distribution ran through the Independent Carrier Safety Association, a nonprofit formed in 2019. The mechanics were elegant on paper: join ICSA, install ICSA-approved in-cab event recorders, share your ELD data, submit to mandatory hair drug testing, and you qualified for affordable truck insurance through Mohave. Telematics for coverage.

Safety compliance for a policy. The concept was sound. The execution was about to become a textbook case in what happens when volume overwhelms infrastructure. The Boom The timing was perfect for selling insurance to small trucking companies, and disastrous for the risk math behind it.

In 2021 alone, 109,340 trucking companies opened for business, nearly triple the number that received authority in 2018. Most were single-truck operations, owner-operators who bought a truck during the freight boom because rates were high enough to make it look profitable. FMCSA audits lagged catastrophically behind the surge.

In 2021, only 45% of the 119,872 newly issued motor carrier authorities received the required safety audit. In 2022, only 44% of 108,019 new entrants were audited. That means over 100,000 new carriers entered the market during peak Mohave enrollment years without any formal federal safety review. Iron Insurance was writing policies on many of them.

The Biden Administration essentially allowed every barrier to the trucking industry to not only come down, but also to be replaced with the worst carriers possible. Insurers helped with bottom-dollar rates and no barriers to entry. window. googletag = window. googletag || {cmd: []}; googletag. cmd. push(function() {googletag.

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push(function() {googletag. display('div-gpt-ad-1665767553440-0'); }); The program’s own earnings filings from Q3 2022 showed it was working; Iron Insurance was generating a 96. 6% revenue increase and $18. 5 million in operating income. The program was printing money. The telematics data was there.

Whether anyone was actually using it to manage the book in real time is a differ