The commercial auto insurance market has encountered significant underwriting losses and plummeting profitability for more than a decade. Although the segment continues to face challenging market conditions, rate increases mostly remained in the single digits in 2022, demonstrating signs of stagnation compared to double-digit rate hikes in prior years.
The first half of 2023 reflected a similar trend; most policyholders experienced moderate rate increases ranging between 7% and 8% during the first quarter of the year, according to industry research. However, several cost-driving developments have become pressing concerns in the segment, pushing claims frequency to pre-pandemic levels and increasing overall loss severity. As a result, policyholders with large commercial fleets and additional auto exposures have had greater difficulty securing excess layers of coverage alongside elevated program pricing.
Altogether, insureds across industries and vehicle classes can still expect to experience rate jumps and coverage restrictions going forward.
Tips for Insurance Buyers Developments and Trends to Watch
Social Inflation and Nuclear Verdict Concerns
Background:
Social inflation, characterized by increased litigation and larger settlements, has particularly impacted the commercial auto insurance market. The trucking industry has seen a surge in costly lawsuits, with nuclear verdicts (jury awards exceeding $10 million) becoming more frequent.
Statistics
Trucking verdicts have grown by over 50% annually for a decade, with nuclear verdicts nearly doubling during this period. Social inflation has led to a $30 billion surge in commercial auto claim costs since 2012.
For more information on social inflation and nuclear verdicts, Read https://content.naic.org/cipr-topics/social-inflation
Driver Shortage Challenges
Current State
The driver shortage in the U.S. remained at 78,000 open positions in 2022, with expectations of a substantial increase by the end of the decade.
Tactics
Businesses are adapting their recruitment strategies, including tapping into underrepresented demographics, such as hiring more women drivers.
For more Information on Truck Driver shortage in the US, Read this article from American Journal of Transportation.
Evolving Technology Solutions
Technology’s Role
Advancements in vehicle technology, including blind-spot cameras, GPS devices, and telematics software, offer opportunities to enhance driver safety and operational efficiency in commercial fleets.
Safety Features
Automatic braking technology and advanced driver-assistance systems, with features like lane departure warnings and blind-spot detection, are gaining popularity.
Potential Risks
While technology can improve safety, it also carries risks, especially if implemented poorly and creating distractions for drivers.
For more information on which high tech car safety solutions you can use to improve your road safety protocols, have a look at this great article.
Tips for Insurance Buyers
For insurance buyers navigating the commercial auto insurance market, here are some valuable tips:
Assess Your Coverage Needs
Understand your specific coverage requirements based on your industry, vehicle classes, and operations.
Risk Management
Implement robust risk management practices to mitigate losses and improve insurability.
Review and Adapt
Regularly review your insurance policy to ensure it aligns with changing business needs and market conditions.
Consult an Expert
Seek guidance from an insurance expert or broker who specializes in commercial auto insurance.
Stay Informed
Keep abreast of industry trends and market developments to make informed decisions.
In a challenging commercial auto insurance market, proactive measures and staying informed are key to securing suitable coverage at competitive rates.
For consultation and information on quotes visit now: https://carlsoninsurancegroup.com/business-insurance/business-auto-insurance/
