Why Differentiation Matters in Commercial Auto Insurance World

It is no secret that the commercial auto insurance world is experiencing the worst level of losses in history. The auto loss ratio in 2021 is actually 20-25% higher than it has ever been. This means that if you are lucky and haven’t already seen the consequences in the form of higher insurance premiums, you soon will.

Todd Bishop, Commercial Lines Vice President at McGriff Insurance said for every dollar collected in premiums, insurance companies are paying out $1.50 in insurance claims. To survive, insurance companies are increasingly being forced to spike up premiums.

Why is this happening?

Several factors are at play, including market conditions and driver shortages. However, the biggest one seems to be the increased cost of accidents and particularly litigation funding. Lawyers and body injury claims are expensive. “Nuclear verdicts” (which refer to jury awards where penalties exceed $10 million) are also on the rise. Distracted driving, hiring poor drivers, etc. are typically central issues that affect the entire industry, even companies not at fault.

In this tough market, it is important to differentiate your company in the eyes of the underwriter to get the best possible renewal rate.

“Underwriters are told to live in this box, where they have to increase premiums between 10-50% across the board. The question is do you want to be a 10 or a 50?” said Bishop. “Those getting the 50s tend to have a history of bad claims, bad driver lists and are not proactive.”

How do you differentiate + get best rates?

Help your insurance agent best present your company as “low risk” to the underwriter.

A clear visual that shows all drivers in “green” with clear driving history helps said Bishop. “Do not hire someone just because they look good on paper. Check their MVRs first for blemishes.”

He advises his customers to maintain good driver lists with technology like MVR Monitoring. He also advises clients to consider taking on a more risk themselves by self-insuring small claims (like windshield claims). This helps with overall presentation to underwriters.

According to Bishop, many clients are often over-insured when it comes to their under-insured or un-insured motorist coverage. Often this is not necessary he says, because this is what workman’s compensation is for. Lowering this can lower overall insurance rates. 

While many factors in the commercial insurance world remain out of control, many factors are very much within the control of every company.

Taking proactive steps to minimize risk and increase safety will always be advantageous to help you secure the best possible rates.

For questions or help regarding commercial auto insurance, contact Todd Bishop,McGriff Insurance.

For questions or help with MVRs or MVR monitoring,