While the story for commercial lines in general continues to include overall softening conditions as excess capital and capacity drive competition, Commercial Auto/Trucking is heading in the opposite direction, with some companies exiting parts of the market and rates generally on the rise.
The need for harder market conditions in Commercial Auto — particularly within certain segments — has been recognized for a few years, even if the timing was in doubt.
In 2014, during a conference call to discuss Q1 results that year, W. Robert Berkley, then-COO and current CEO and president of W.R. Berkley Corp., called the Commercial Transportation segment “a great puzzle” and noted the line had long seemed ripe for a hardening that hadn't come. That same year, Fitch Ratings noted price deterioration prior to 2011, combined with an erosion of underwriting standards, had led to underwriting losses and unfavorable reserve development. A recent Insurance Information Institute (I.I.I.) chart illustrates that the combined ratio for Commercial Auto crossed the 100 mark in 2011, and remained there through 2014 after eight straight years of combined ratios lower than 100.
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