Is There any Chance Commercial Auto Insurers get to Profit?
Since 2010 the commercial car insurance, hasn’t produced an industrywide ratio below 105 according to a Guy Carpenter.
Nick Durant (managing director, Guy Carpenter) wrote: “It is an open question regarding which will arrive first: autonomous cars and trucks or underwriting profits for CAL [commercial auto liability] writers, Although carriers have been aggressively raising their rates, the increases have not been adequate enough to bring the combined ratios down below 100 percent.”
The results have been deteriorating for the past decade, year after year pointing to acceleration in claims frequency related to mileage and congestion.
For the answer to what has caused congestion, he pointed out ride sharing explosion and loss emergence, and to more delivery vehicles on the nation’s roads. As the internet consumption of economy deliver more vehicle on the roads, congestion causes there are influently more accident happening this causing increased number of claims. He points out, that the other factors include impared driving, driving under the influence of alcohol has reduced, but driving under intoxification of Cannabis has risen. While increasing the insurance prices havent been enough to compensate the increasing number of accidents, one of the suggestion made by Durant is the purchase of reinsurance to address frequency and severity of loss. Durrant suggests to carriers that write commercial package policies:“should avoid the temptation to use CAL to over-subsidize other casualty lines, such as workers compensation and general liability. Given this, the return on capital for CAL has decreased in recent years.“
Nowdays the workers compensation is actually performing well for most of the carriers. In fact, more than 59 percent of carriers have achieved an underwriting profit since 2013, even as rates continue to decline. Durant see the prospect of more accurate commercial auto insurance in telematics – which can help insurers to deploy behavioral profiling and risk evaluation, which effects more flexible pricing of the insurance policy itself.