Commercial Auto Rates
If you have a fleet of trucks or automobiles you’ve undoubtedly seen your commercial auto rates increase. Whether you’re a contractor with a handful of trucks, or a trucker with a large fleet, commercial auto rates, and insurance costs have gone up dramatically over the past three years.
Why are Commercial auto rates trending higher, what can be done about it?
Well, commercial auto insurance has been a problem for about the past 10 years for most insurance companies. When I say problem, I mean that this line of business has been mostly unprofitable.
A recent report indicates that insurance companies have lost about $4 billion on commercial auto insurance underwriting over the past decade and the future doesn’t look too good.
What’s driving the poor underwriting performance in commercial auto rates?
Well, there are several issues including:
- Litigation trends – claims are more frequent and more expensive to settle.
- A wide range of safety failures by drivers
- Medical inflation costs
- Deterioration of highways and roadway infrastructure
The result is Commercial auto rates trending higher, which you may see going into the double digits.
Now, on top of premium increases, many employers are also reporting driver shortages which will only compound problems with commercial auto insurance.
Because many employers will need to or already have lowered their standards for drivers so they can fill these open positions. This means drivers with less experience and maybe not so clean driving records. In addition, employers may require experienced drivers to drive longer hours than normal And we know that driver fatigue is a major factor in accidents.
One of the greatest risk factors we’re seeing now leading to claims, serious claims are distracted driving. This includes eating, drinking, texting, or talking on the phone, and just being distracted from driving. The National Highway Traffic Safety Administration says that every year almost 400,000 people are injured, and 3,450 people are killed in crashes involving distracted driving. It’s clearly an epidemic.
So, we’ve got Commercial auto rates trending higher, an aging workforce creating a shortage of drivers, and distracted driving. What are you going to do to control risk and create better outcomes?
First, you can’t stick your head in the sand and hope it’s going to get better. If you’ve been lucky up to now and haven’t experienced these problems. Good for you, but it’s more than likely that your luck will run out so acting now makes sense.
First, have the right policies in place so drivers know what is acceptable and what is unacceptable behavior. Have drivers take a no-distracted driver pledge, and then have them refresh that pledge every 6 to 12 months.
Do you have a fleet safety manual that goes beyond distracted driving?
If not, ask your insurance company or insurance broker for help on this – that’s what they’re there for. Get them involved and if they can’t help you, it might be that you’ve outgrown your broker.
Depending on the size of your company implementing a driver training program may make sense or subcontracting this out to a firm that specializes in commercial driver training.
One of the newest and possibly most effective risk control measures for commercial auto insurance is equipping vehicles with telematics. Telematics can be independent devices installed in vehicles, or it can be an app deployed on a driver’s cell phone. What telematics does is help you manage your fleet and your drivers in the field by reporting to a central dashboard the data collected by the devices in each vehicle. Data includes vehicle speed, locations, hard braking, erratic swerving, or intense acceleration.
In fact, one of our insurers is including telematics devices for each vehicle they insure as a means of reducing claims and accidents. Which is a huge benefit for any trucker that signs up for that platform.
Here’s the bottom line.
Commercial auto rates are continuing to rise and are expected to do so in the near future. To get the best rate on commercial auto insurance you must demonstrate why you deserve better than just the average rate. That means you have a list of good drivers with good driving history, you need good loss history – if you’ve had a few years of bad claims, expect your rates to be higher than the average, but it’s never too late to start creating safer driving habits among your drivers. It takes a lot of conversations about safety and the promotion of a culture of safety. Telematics may be a good idea for your firm. A documented safety manual and process is also a good idea. Everything you can do to demonstrate your commitment to safety and accident avoidance is going to help.
Thanks for watching this video, my name is Gordon Coyle and if you’re looking for help on your commercial insurance, give me a call, let’s chat. No pressure, no sales gimmicks just some conversation to see if I can help you and if we might be a good fit for your business insurance needs. I work in all 50 states and love solving insurance and risk problems and issues for business owners. Click the button below to get started on better insurance. Thanks.