Risk Management

Commercial auto underwriting losses continue: A.M. Best

Matthew Lerner

November 08, 2021 Reprints

Auto liability P/C Insurers More + Less -

Despite years of premium pricing increases, the commercial auto sector continues to see underwriting losses, according to a report Monday by A.M. Best & Co.

Continuing premium increases have not offset loss trends that continue to worsen, Best said Monday.

The Oldwick, New Jersey-based rating agency said that according to The Council of Insurance Agents & Brokers, commercial auto underwriters have now increased pricing, on average, for 40 consecutive quarters since the third quarter of 2011.

During roughly the same period, however, from 2011 to 2020, commercial auto underwriters saw more than $22 billion in underwriting losses, Best said.

Quarterly pricing changes ranged from 9.0% to 11.0% between the third quarter of 2019 and the first quarter of 2021, before pulling back to 6.8% in the second quarter of 2021.

“Despite more conservative pricing throughout the majority of the previous decade, commercial auto results have not yet shown sustained improvement,” demonstrating

both the line’s rate to price inadequacy, and that increases in loss costs continue to outpace increases in pricing and insurers’ gradual corrective underwriting actions.

Best added that one result may be that agents and brokers looking at coverage options may have to contend with less capacity and more restrictive policy terms.

In particular, insureds with large fleets or a poor loss history are likely to see more significant rate increases and updated policy terms.

Progressive Insurance Group and Travelers Group lead market share in the commercial auto sector and are the only two at more than 5% market share, at 12.7% and 6.2%, respectively.