The road is rough and potentially worse ahead. 

Commercial auto premiums increased 2.65% in April over the same period in 2016, according to the IVANS Index. Making matters worse, auto loss costs increased a cumulative 20% between 2012 and 2015, according to the Insurance Services Office.  

Risk managers, agents and brokers struggling to control soaring commercial auto insurance costs would do well to understand the factors behind this surge and what they can do to better manage exposure and expenses.

Drivers of poor performance

Six factors fuel the deteriorating performance of the commercial auto line:

• More traffic – The number of miles driven is at an all-time high, growing 3.3% year-over-year in the first half of 2016, according to the Federal Highway Administration. More vehicles mean more crashes.
• Distracted drivers – One-quarter of all crashes involve drivers talking or texting on cell phones, according to the National Safety Council.
• Growing medical costs – Medical inflation is soaring 1.5 times faster than general inflation, according to the Bureau of Labor Statistics.
• More accidents and more expensive crashes – Both the frequency and severity of accidents are increasing.
• Inexperienced drivers – There is a shortage of skilled commercial drivers with good driving records, leading to more accidents and compelling some companies to lower standards for their employees who drive.
• Rising auto repair costs – Record U.S. auto sales mean the roads are full of newer cars that are more expensive to repair. A recent Liberty Mutual study found the cost to repair minor front-end damage to a 2016 entry-level sedan was nearly twice as expensive as fixing the same 2014 model, due largely to more sensors and other new technology.

Related: Autonomous vehicle technology could shrink auto insurance sector by 71%