Forces Driving Commercial Auto Insurance Costs
1. BODILY INJURY LOSS COSTS
Since 2020, bodily auto severity has increased 20%, while total loss claims have jumped by 29%.1 Factors contributing to this trend include an increase in uninsured motorists on the road,
medical cost inflation and a rise in speedingrelated fatalities and injuries. In the latter case, nearly 30% of total traffic fatalities and 13% of total people injured can be attributed to
speeding. Among speeding drivers involved in fatal crashes, 29% did not have a valid driver’s license, and more than half (52%) were not wearing a seatbelt at the time of the crash.2
Employers should implement a strong fleet safety program and monitor driver behavior to help reduce the likelihood of speeding.
2. RAPID RISE OF LITIGATION COSTS
It’s not just nuclear verdicts (awards that exceed $10 million) that are on the rise; increased attorney involvement and social inflation are also contributing to higher
litigation costs. Lawsuit abuse and scare tactics, such as the use of reptile theory in the courtroom – appealing to the jury’s emotional responses by highlighting what the defendant
could have done differently – are often used in an attempt to secure a higher amount for the damage award.3 What’s more, third-party litigation funding is on the rise as a result of
lax federal oversight, as well as the possibility for investors to get substantial returns on higher verdicts. To help reduce your exposure to costly lawsuits, focus on hiring and training
experienced drivers and hold everyone accountable for following safety standards.
3. DISTRACTIONS AND IMPAIRMENT
In the Travelers 2024 Risk Index – Distracted Driving report, 64% of companies surveyed worry that employees driving while distracted could cause liabilities, representing a fiveyear high. Technology is one of the primary causes of distracted driving, with 25% of employees reporting crashes or collisions while driving for work due to distractions
from a mobile device or tech.4 Employers should demonstrate the importance of safety on the road by implementing and consistently following a distracted driving policy at all
levels of the company.
4. INEXPERIENCED DRIVERS
Resignations and retirements are leading to a shortage of commercial operators, increasing the chance that less experienced replacement drivers are behind the wheel. Studies have
shown that inexperienced commercial drivers have higher rates of preventable accidents, crash involvements and moving violations than their more experienced counterparts.5 This data
suggests that fleet managers should work to retain more experienced drivers while offering formalized, structured training to new drivers.
5. VEHICLE REPAIR AND REPLACEMENT COSTS
Autos have become more expensive to insure and repair, due to factors such as the inclusion of advanced materials and emerging technology. When these vehicles are involved
in an accident, costs can be high; in fact, the consumer price index of motor vehicle maintenance and repair rose 10% between 2023 and 2024 alone.6 Meanwhile, vehicle theft
rates are further contributing to increasing auto insurance costs, with vandalism and catalytic converter thefts driving recent claims volume.
6. INCREASING USAGE OF THIRDPARTY TRANSPORTATION CARRIERS
The use of third-party carriers is on the rise, thanks to the explosion of global e-commerce shipping, supply chain complexity and cost optimization. However, businesses that rely
on third-party carriers could face litigation if the motor carrier is involved in an auto accident and lacks adequate liability coverage. Additionally, increasing attorney involvement
means plaintiffs and their legal counsel may seek higher damage amounts by alleging that the business was negligent in hiring the thirdparty transportation provider or was engaged
in direct oversight to the drivers.
Please contact us here for a commercial auto quote.