In commercial auto management, telematics can be a double-edged sword — but would you rather go into battle unarmed?
If you’re insuring a vehicle, you already know it’s bad: Premiums have been accelerating upward for years, and things show no sign of reversing course anytime soon.
“Almost every insurance carrier that operates in the commercial auto liability space has seen deteriorating results, so there’s been continual rate hikes to try and manage profitability,” said Greg Stefan, SVP, risk control, Arch Insurance Group.
Trucking fleets may be feeling it most, but every company that relies on vehicles — whether employer- or employee-owned — is seeing its premiums rise.
“Commercial auto has gone up, on average, 10% [a year] for the last seven or eight years,” said Rohan Malhotra, CEO and cofounder of Roadzen, an Insurtech specializing in auto lines. “This is massive for small and medium-sized companies, such as a trucking owner or a plumber who owns seven vehicles.”
Alongside rising premiums is a corresponding decline in capacity: “The capacity is really challenging, because previously, you could get a reinsurer to take $10 million or $15 million of a line,” said Lisa Paul, chief strategy officer for transportation at HUB International. “Nobody’s willing to take $15 million of a line anymore. There are reinsurers that are limiting their participation to a total of $10 million in a $200 million tower, and they want that $10 million in different layers … So the layering of these casualty towers is very difficult for large fleets.”
The result, Paul said, is that “the insurance marketplace has been under tremendous financial pressure, with poor-performing auto rates driven by a number of factors: the cost of parts, the complexity of how our vehicles are built today and how they have to be repaired combined with tort liability issues and nuclear verdict issues … and the connector to all of these sorts of things is technology.”
And as is so often the case with problems caused by technology, only technology can make it better.
