White Paper

5 Factors Driving Commercial Auto Loss Costs and How Fleet Managers Can Reduce Their Risk

Risk managers can bring down claim frequency and severity by focusing on what they can control — driver behavior.

White Paper Summary

The commercial auto insurance market caught a bit of a break in 2020, when the COVID-19 pandemic forced people to stay home and off the roads, resulting in fewer accidents. According to a Fitch Ratings report, the sector achieved a combined ratio of 101.6% for 2020, a nearly 8% improvement over 2019.

But the change also results from an ongoing commitment to more disciplined underwriting. Rates continue to rise in an effort to catch up with years of unsustainable losses. And despite the modest reprieve of 2020, loss costs will continue their upward trajectory as life and business return to normal. At the same time, carriers are pulling back capacity, especially in the reinsurance market. Insureds looking for large limits will be hard-pressed to find them from a single carrier.

Ultimately, the best way to contend with this hardening market is through loss control. Risk managers who implement strategies to reduce crash frequency and severity can better protect their drivers and their vehicles, improve renewal prospects, and reduce total cost of risk.

“Results for commercial auto were better in 2020, but it doesn’t change the overall pattern of rising loss costs. Currently, it remains a double-digit rate environment. At Philadelphia, the way we underwrite all our accounts is based on experience. An account with minimal loss history will get a better rate,” said Mark Plousis, SVP of Underwriting at Philadelphia Insurance Companies (PHLY).

Here are the top five factors driving commercial auto losses and how risk managers can best mitigate their exposure.

To learn more about Philadelphia Insurance Companies, please visit their website.

Philadelphia Insurance Companies (PHLY) offers product-specific resources, alliances, and service capabilities to achieve a multi-faceted approach to risk management, including safety program development, site audits, and training (including interactive web-based training). We offer a wide range of products and value-added services at financial terms to be agreed upon to help you achieve your risk management goals.

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