Slowing Down the Surge in Insurance Costs & Navigating an Unpredictable Market

Commercial fleet insurance continues to surge, with rates expected to climb between five and 15% within the first quarter of 2024, according to data from HUB International’s U.S. Market Rate report. Amidst escalating inflation, economic unpredictability, and a volatile insurance market, numerous fleet operators may encounter steep insurance renewals this year.

Top-tier fleet operators, on the other hand, have reason for optimism. Those embracing technology and new ways to integrate that technology — like telematics — into their risk management strategy boast robust safety protocols and programs and favorable loss records.

Conversely, carriers plagued by frequent accidents and subpar driving metrics should brace for the higher end of the rate hikes alongside increased deductibles.

The operational costs of running a fleet have hit historic highs in recent years, propelled in part by soaring fuel and procurement expenses, escalating collision and maintenance repair costs, and disruptions in the supply chain.

Although pandemic-induced manufacturing shutdowns occurred more than two years ago, the repercussions are still being felt. The scarcity of auto parts has increased prices, and auto body shops now spend an average of 30 days longer to source parts made from costly commodities compared to pre-pandemic times.

Increased litigation, medical expenses, and nuclear verdicts further exacerbate the trucking industry's challenges. Over the past decade, commercial auto insurance liability claims costs have surged by over $20 billion.

The convergence of these factors has made the recovery of the commercial auto insurance sector difficult. Given the tough market conditions, some carriers have exited the space altogether. The remaining insurers have intensified their scrutiny of policyholders, adopting a more discerning approach. Strong risk management supported by the latest technology and an overlay of traditional insurance may be the best formula for success.

Five Ways to Enhance Work Truck Fleet Safety Measures Today

Enhancing safety measures and prioritizing the well-being of your team can lead to more stable insurance rates. Here are five ways to do just that:

1. Provide continuous education and training. Even the most experienced drivers can fall into bad habits, making regular training and education essential. Integrate risk management technology into your platform to send drivers notifications, emails, or videos at least once a month to keep them up to date on training. These materials can showcase the best safety practices, illustrate how accidents could have been avoided, or review mandatory fleet inspection checklists. The more frequent the training, the better the retention and improvement among drivers. Recognize and praise drivers who embody the safety culture, perhaps by offering small awards or tokens to inspire others to follow suit.
2. Embrace technology. Consider integrating GPS, automatic emergency braking, and telematics data into your safety program. This information can help identify performance issues, provide real-time monitoring of driver locations, improve communication, help determine the cause of accidents, and improve compliance with pre-trip inspection policies. In addition, road-facing cameras clear drivers of fault in 63% of incidents, whereas driver-facing cameras absolve them from blame in almost half of accidents This highlights technology’s crucial role in bolstering safety and can help reduce legal costs. Technology can also streamline claims and hiring processes, facilitate onboarding of new drivers, track CDL violations, ensure regulatory compliance, and connect drivers to essential training and education resources to maintain roadworthiness.
3. Regularly evaluate your drivers. Maintaining an effective disciplinary program while monitoring compliance, safety, and accountability (CSA) scores is crucial. Harness the power of new safety technology, like AI, doing innovative safety things. Drivers who consistently violate safety protocols should undergo significant retraining or face dismissal to safeguard overall safety ratings and prevent premium increases. Underwriters prefer insuring best-in-class risks, so take pride in your record and document all facets of your safety program and how its implementation has reduced overall accident frequency and severity.
4. Maintain rigorous hiring standards and foster mentorship. In a competitive job market, not compromising on hiring policies is vital. Thoroughly scrutinize all driver candidates' motor vehicle records and pre-employment screening program reports and ensure that new hires pass a pre-hire road test. Consider assigning recruits to experienced driver mentors who can guide them through your company’s policies and procedures. These seasoned drivers can also emphasize the importance of your safety culture and foster camaraderie between new and established drivers.
5. Encourage drivers to commit for the long term. Elevated turnover rates may signify safety issues within a fleet and raise red flags for insurers. Fleet enterprises fostering a robust organizational culture centered on employee safety and welfare through benefits cultivate a sense of belonging among drivers, increasing the likelihood of retention.

Having the appropriate technology and team by your side is essential in an environment marked by complexity and high costs. This includes selecting the right broker to aid in purchasing coverage and continually mitigating risks over time.

Given the challenges posed by the commercial auto insurance landscape and the ever-evolving transportation technology, it’s crucial to be able to navigate the market's intricacies, identify potential exposures, and secure the necessary coverage with an expert partner.

About the Author: Bill Passarotti is senior vice president of HUB International, a global insurance brokerage. With 24 years of experience in the insurance industry, Bill is an experienced sales leader specializing in a wide range of transportation verticals, most notably car and truck dealerships, transportation asset-heavy, and last-mile delivery providers. This article was authored and edited according to WT editorial standards and style. Opinions expressed may not reflect that of WT.