Commercial auto headwinds continue: Guy Carpenter
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The outlook for the commercial auto liability segment remains negative as challenges persist despite some progress made by insurers, Guy Carpenter & Co. LLC said in a report sent to clients and shared with Business Insurance on Thursday.
Both medical and vehicle repair costs continue to rise, the reinsurance brokerage division of Marsh & McLennan Cos. Inc. said, while emerging risks such as distracted driving and cybersecurity pose new challenges to the management of on-road risks.
Meanwhile, the industry pushes back with rate increases, the broker said.
“Carriers are making a concerted effort to raise auto rates/pricing to the levels needed to achieve consistent profitability,” the report said, noting that “through 2018, expense ratios and combined ratios have shown continued improvement.”
The transportation industry is also investing in technologies such as telematic and collision avoidance systems, which in some cases can get them premium credits with insurers, Guy Carpenter said.
These efforts are gaining some traction, although they have yet to turn the sector, Guy Carpenter said.
“While carriers have implemented effective strategies that improved their operations and as a result are achieving improved accident year performance, evolving market and environment factors continue to challenge auto insurers. Consequently, improved expense ratios and rate increases did not fully offset cost inflation. The outlook for the sector remains negative,” the report stated.
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