Underwriting losses continue in commercial auto insurance
A new Fitch Ratings report highlights the factors resulting in the commercial auto segment's ninth consecutive year of underwriting losses.
For the ninth consecutive year, U.S. property and casualty (P&C) insurers are facing underwriting losses on commercial automobile insurance, which remains among the weakest major commercial lines P&C segments, says a new report from Fitch Ratings.
In 2018, the segment posted a statutory combined ratio of 108%, and as underwriting losses continue, Fitch says insurers can only expect to see moderate improved results in 2019.
“Pricing increases alone have been insufficient,” James Auden, managing director in Fitch’s Insurance Ratings Group, said in a statement. “The chronic underwriting losses in commercial auto in the last eight years reveal a need for change in several areas including risk selection, underwriting practices, and claims.”
Influencing factors
Increasing claims severity, particularly bodily injury claims, nullified the 13% increase in statutory direct written premiums the commercial auto segment gained last year, explains Fitch. This combination of factors has resulted in loss ratios that are consistent with significant underwriting loss.
On the bright side, advances in technology present the opportunity for greater operating efficiency and performance improvement for commercial auto underwriters. Fitch is hopeful that the utilization of information gathered from telematics, electronic logging devices, and new data from third-party sources can deliver opportunities to streamline the insurance application process and improve the overall quality of information.
Technology and analytics can also be leveraged to assist in creating better pricing segmentation and quicker recognition of high severity or fraudulent claims, Fitch says.
The full report, “U.S. Commercial Auto Insurance Market Update – Recovery in Results Still Slow to Emerge,” is available on the Fitch Ratings website.
Related: