Zurich addresses unfavorable trends in commercial auto claims
Dramatic increase in frequency and severity of vehicle crashes has adversely affected claims across the commercial insurance industry
The nation’s roadways have been experiencing a dramatic increase in the frequency and severity of vehicle crashes. The National Safety Council (NSC) reports that as many as 40,000 people died in motor vehicle accidents in 2016. This is a 6 percent increase over 2015 and a 14 percent increase over 2014 — the most dramatic two-year escalation in 53 years. What’s more, nearly 4.6 million people required medical treatment after crashes in 2016, an increase of 7 percent over 2015.1 The NSC estimates that the cost of deaths, injuries and property damage attributed to crashes in 2016 totaled $432 billion, up 12 percent from 2015.2
Accompanying these adverse statistics is a rise in the frequency and severity of automobile claims. Industrywide, due to continued unfavorable loss ratio forecasts, the combined ratio for commercial automobile coverage in 2015 was between 108 and 109 percent, according to a report from A.M. Best that also forecasts 2016 will be even worse.3
Factors fueling these claims trends include distracted driving, particularly due to texting and phone calls, which are attributed to more than 25 percent of crashes;4 an improving economy and lower gasoline prices, which have led to more drivers on the road and more miles driven; a shortage of skilled commercial drivers to meet demand; higher state speed limits, and higher automobile repair and medical injury costs.
Given the poor loss ratio performance of Commercial Automobile insurance and following decisions made throughout the commercial insurance industry, Zurich North America is taking immediate pricing action in the automobile line to offset these consistently negative trends.
To counter these negative developments, Zurich is proactively working with our customers to help them improve their risk profiles to promote safer driving habits. Our initiatives to address the major contributors to the spike in frequency and severity of commercial automobile losses include:
- Create effective distracted driving policies focused on smartphone use in vehicles
- Develop and monitor drivers’ skills and training
- Help combat driver’s fatigue
- Focus on Motor Vehicle Records (MVRs), including those for non-owned/operated exposures
It is our goal that these and other proactive measures can help reverse the alarming trends and begin to help protect everyone travelling on the nation’s roads.
1 “Motor Vehicle Deaths in 2016 Estimated to be Highest in Nine Years.” National Safety Council. 15 February 2017. http://www.nsc.org/Connect/NSCNewsReleases/Lists/Posts/Post.aspx?ID=180
2 “Auto Crashes.” Insurance Information Institute. April 2017.
3 “Deteriorating Commercial Auto Insurance Performance Continues to Hinder Profitability of P/C Market.” A.M. Best. 14 December 2016.
4 “Annual Estimate of Cell Phone Crashes 2013.” National Safety Council. 2015.