Commercial Auto Insurance Market in Review
Underwriting results for commercial auto insurance have been favorable for more than half a decade through 2009, a major shift for the line of business relative to the previous three decades, according to a Conning Research & Consulting report.According to Conning, underwriting results in the past seven years have been profitable for commercial auto, and combined ratios have placed under 100 during that time. In contrast, commercial auto witnessed underwriting profits in just four of the previous 30 years (1972 to 2002) and had a mean average combined ratio of 107.8 in that time.
Additionally, Conning notes commercial auto pricing cycles seem to be a barometer for other lines of business, turning ahead of the rest of the market.
The amount of commercial auto business placed in residual markets has fallen drastically since 2002, Conning noted. "About $5.8 billion, or 18 percent of the augmented commercial auto insurance premium potential, is estimated to be in alternative market mechanisms," Conning said. "Its relative size decreased from about 40 percent estimated in 2002."Conning said the decrease suggests the insurance industry is providing adequate capacity, product features, and pricing that business owners are able and willing to purchase.
Additionally, Conning noted that "commercial auto customers generally have not sought to expand or even retain their own risk assumption and management for commercial auto exposures when insurance options are competitive."As mentioned earlier, there are a number of reasons for businesses to acquire multiple auto insurance quotes, most importantly trying to acquire the best possible rate.
A recent report out of Massachusetts notes that Attorney General Martha Coakley called on the state’s insurance commissioner to reduce auto insurance rates for companies, citing an analysis by her office showing insurers overcharged manufacturers, trucking companies, and other businesses that own vehicles by approximately $1 billion between 2004 and 2010.
In that time period, commercial auto insurance rates in Massachusetts were significantly higher than necessary, putting a damper on economic activity and costing the state approximately 3,000 jobs annually, according to Coakley.
While what happened in Massachusetts is an example of commercial auto insurance pricing going astray, make it your company’s business to not get taken for a ride.