Commercial Auto Risk Trends for 2023

March 10, 2023

By Casey Myers

Brace for additional rate pressure in commercial auto insurance this year as carriers continue to grapple with costly claims caused by increasing parts costs, labor shortages, poor driving behaviors and social inflation.

Social inflation is defined as, “the phenomenon of unexpected rising insurance claim costs because of societal trends and views toward litigation,” according to the Insurance Risk Management Institute.

“In 2021, combined ratios [among commercial auto insurers] fell below 100%. But that looks like that’s going to reverse in 2023,” predicted Jennifer Friesen, vice president of Brown & Brown. “Inflation, risky driving, and other factors contributing to costly claims are likely going to continue throughout 2023.”

Additional impacts to the commercial auto insurance market include nuclear verdicts – jury verdicts favoring the plaintiff in personal injury lawsuits and demanding payouts over and above what insurance policies are supposed to cover – will also continue.

Technology and inflation have driven up the cost of auto insurance claims. As vehicles become more sophisticated, repair and replacement cost more.

How can Movers Manage Commercial Auto Rate Increases?

According to MarketScout, US commercial auto rates rose 7% in Q4 of 2022 which is consistent with the upward trend in premiums over the last several years.

By taking a proactive approach and developing strong driver / van operator safety programs, you can mitigate risk for your company.

Safety Program Management

Safety and loss control are the keys to proactively dealing with claims. The average cost of a loss related to a fleet vehicle accident is around $70,000, making it the most expensive workplace injury claim, according to Travelers.

Keep van operators and shuttle drivers up to date with training, safety policies and procedures, even during peak season whenever possible.  Routinely evaluate your organization’s safety programs to ensure they address critical safety issues within your fleet.

Risk Retention

You may want to consider higher liability deductibles, and potentially captives, to take better control of your insurance expense, particularly in moving and storage. Explore this option with your insurance provider, especially if your company has a large fleet as it may help you save money.

Captive insurance is an alternative to self-insurance where a wholly owned subsidiary insurer is formed to provide risk mitigation services for its parent company or related entities. In many cases, companies in captive programs haven’t seen the rate increases that clients in lower deductible programs have.