Auto liability insurance rates for many motorcoach operators have declined during the past year, but theres no telling how much longer the soft market will last.

Executives with the two largest insurers of motorcoaches say the price decrease has been in single digits, and the reduction has not been across the board.

They attribute the easing of liability rates, in large measure, to an influx of new insurers looking to expand their business.

Meanwhile, in the trucking industry, insurance premiums have plunged by up to 50 percent as new insurance companies have flooded that market due to the fact insurers capital base has strengthened during the past couple of years because there have been no catastrophic events, such as major hurricanes.

In 2005, there were a dozen truck insurers compared to 25 today.

Fran Walsh, vice president of Lancer Insurance Company, the nations largest insurer of motorcoaches, says bus industry rates have been coming down by low single digits for profitable accounts, but the marginal and unprofitable ones are still seeing price increases.

"It all depends on the loss history on an individual account," she says.

Michelle Silvestro of National Interstate Insurance, the No. 2 bus insurer, also reports single-digit price decreases in the past year or so.

"We are still individually underwriting accounts," says Silvestro. "If youve had an adverse experience, you shouldn't expect a decrease. The insurance companies that have been in this business for a long time will continue to maintain underwriting discipline."

According to Silvestro, a few new insurers have entered the motorcoach market, contributing to reduced rates. "I dont expect them to be around for long," she insists. "They usually aren't. Theyll be around as long as it takes them to figure out they don't really understand the business."

Silvestro said insurance follows "a supply and demand curve."

"There is all kinds of capacity in the market. Prices are low, so insurance companies come in, and once they see the losses we see in our business, they get out of the market," she noted.

Walsh agrees that insurance companies entering the coach market have tended to have a softening impact on rates.

"But the majority of motorcoach operators realize they are better off with the known quantities that have been insuring transportation risks for many years," she said. "While the new kid on the block may be cheaper, how can the new kid provide the same level of quality service, especially in the claims area, as companies that have been doing it for years?"

Adds Walsh: "This is a business of big claims. Adjusting claims in the transportation business is unlike any other business. When you are transporting people, not commodities, there is a whole different skill set required as a claims adjuster to make sure you keep the operators customers happy."

Whats more, she said, "Underwriters do not look favorably on the loss runs of lame duck insurance companies, which in turn affect their pricing."

Walsh declined to speculate on how long current market conditions will last, but said: "It certainly won't be nearly as long as the last soft market, which saw rates come down for close to 15 years."

Silvestro isnt sure, either. "My guess would be through 2009," she said. "As the insurance market is cyclical, it will change -- that you can count on."

National Interstate Corporation, parent company of National Interstate Insurance, reported its transportation component grew 11.2 percent during the second quarter of this year and 7.7 percent for the first six months of 2008, compared to the corresponding periods in 2007.

Dave Michelson, president and chief executive of National Interstate, said the growth is significant considering the soft market conditions. He said the company added new programs and insureds, and was able to avoid attracting business with under-priced policies.

Silvestro offered advice for motorcoach operators in the current market: "I would suggest they take advantage of the soft pricing and maybe look at buying excess limits as the pricing is low, but don't compromise their relationships with their current agent or insurance company for a cheap price. If it's too good to be true, it probably won't last very long.

"They should be looking at all options available and make sure they educate themselves on what's available in the market. Then, make the best decision, based on facts, for their company -- long term, not just for the moment."

Walsh agreed: "You get what you pay for."

Motorcoach operators that have been around a while can remember cases where a new insurer has became insolvent, forcing operators to pay for claims out of their own pockets.

"Imagine buying an insurance policy one day and then waking up two or three years later only to learn the insurance you thought you had was not there," Walsh said. "Its not a position anyone ever wants to be in, yet there are more than a few operators who can tell this story."