Commercial Auto Rate Ask Flashcards
Commercial Auto Rate Ask
Written 9-6-19 / Updated: 9-6-19
Category: Underwriting
When to Use: Give agent info to prepare client for auto rate increase
Intro / Why
It’ll be no surprise that I’ll be asking for a moderate amount of auto rate at renewal of our mutual accounts, mid to high teens. Did you know that the last year the insurance industry showed an underwriting profit in auto was 2010? Industry wide commercial auto rate changes have not kept up with the pricing in prior years or the current loss trends. 2018 industry combined ratio is estimated at 110.4% - 8th consecutive year with CR above 100%. So, even if a risk has not had a loss, it contributes to the overall book and so a rate increase is needed.
Data Backing Up Need for Rate Increase
During the 2008-2009 recession, competition drove price levels down along with exposure changes and decreased mileage and at the same time, claim costs started to increase. 2010 rebound from recession - more autos purchased, more miles driven. Started seeing auto CR above 100 due to increases in frequency and severity and underpricing. Started increasing prices in 2012.
I think most everyone knows that distracted driving, more vehicles on the road and modern technology used in vehicles are driving up loss frequency and severity. However, auto severity trends are also influenced by increases in attorney representation rates across all vehicle types: about 60% of auto claims have attorney representation which increases the length of time it takes to close a loss adding to the time and expense as well as the overall claim costs. In addition, we are seeing many more policy limits claims for non-owned auto which we had not been seeing before. That’s why it’s important for drivers to pre-qualify those vehicle operators as if they were driving company vehicles.
The Ask
I’d love your help selling auto rate increases since they are needed so badly. How helpful is the above information in your conversations with your insureds when I’m asking for auto rate? How do you successfully sell auto rate to your insureds?
Possible Conversation / Back-Up Data / Conversation Points: The Need for Auto Rate
Auto loss severity continues to rise throughout the property-casualty industry. The 6 risks driving commercial auto losses include escalating medical costs. Medical claims are on the rise and auto accidents causing bodily injury to others can have costly and compounding effects for business owners. The average, on-the-job MVA can cost employers over $70,000 with medical costs accounting for 20-30%. Medical providers can bill for treatments not performed or misrepresent the true cost of medical services resulting in medical fraud losses. With over 12,000 claims and medical professionals nationwide, TRV has the expertise and resources to help mitigate losses - TRV Medical Advantage. Distractions - we’ve all seen it - texting while driving and pedestrians looking down at their mobile devices while crossing the road. Distractions caused by mobile device use by both drivers and pedestrians is an increasingly large problem. Businesses should continually address this with their employees to prevent costly and potentially fatal accidents. Yet in a survey of TRV customers, only 27% reported having a formal policy on distracted driving that was strictly enforced. Personal Autos as work: businesses can retain the risk when employees use their own vehicles for work. A formal driver safety program is needed to address to maintain safe drivers. Attorney involvement: auto related liability is amongst the top 10 in the national law journal top 100 verdicts of 2014? Auto claim costs are increasing as more lawyers get involved in more aspects of driving related incidents. Travelers has the legal resources to handle claims as quickly and efficiently as possible for optimal results. Inexperienced drivers: it can take years to find, build and retain experienced commercial drivers. Driver behavior is responsible for 90% of all highway accidents. Data Proliferation: between GPS, traffic cameras and telematic systems, there is a lot of info available to the public on driver behavior. Can be used to manage drivers but also in legal actions against businesses. If companies use data as part of an ongoing safe driving feedback and coaching program, it can help. But how many companies do that?
