Commercial auto insurance has been a losing enterprise for years now. There are a number of factors that are contributing to this, but the reality is that, as a whole, commercial auto insurance has been losing money for seven consecutive years.
The slow fall of commercial auto insurance is not news. The industry has been struggling to find an effective way to reverse the descent for years. In fact, the industry decreased rates in 23 of the last 25 quarters. Despite that continuous rate drop, the sector has continued to lose money year over year.
One of the reasons this drop has been so difficult to stop is the myriad of factors that are contributing to the problem. The problem continues to grow because of the astronomical increase in distracted driving that comes along with smartphones and smart cars. Since the economy is growing and expanding, a growing number of people are driving to work. When the total number of miles driven increase, so to does the number of accidents and insurance claims.
Not only is the commercial auto insurance industry losing money issue becoming more common, the problem is also becoming more severe. On average, speed limits are going up. That naturally leads to more severe accidents. Cars are continuing to get more advanced, and more expensive in turn. That means that every claim costs insurers more money.
These are just some of the factors facing the auto insurance in America. Knowing this, it is not surprising that the industry continues to lose money every year. None of these factors are likely to dissipate anytime soon, which means auto insurers need to adjust to succeed in this new business climate. The future of private transportation is changing, and the insurance industry needs to change with it.
It is worth pointing out that these industry trends are just that, trends. That means that these findings don’t apply to all auto insurers. In fact, the insurance journal reports that auto industry leaders are not experiencing this problem. The leading auto insurers are adapting to the changing climate. If the smaller insurers want to keep up, they are going to have to find a way to do the same thing.