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Industry Trends

On the Road Again with This Year’s Ongoing Auto Liability Trends

New exposures are rapidly complicating underwriting for auto liability policies. With significant auto losses and supply chain disruptions impacting the industry, what trends can commercial fleets expect in the year ahead?

January 3, 2022

With the pandemic limiting driving activity for many businesses in 2020, auto liability claims saw a slight decline, but with average payments for auto accidents increasing within that period, the data can be misleading. Now, with driving activity rebounding to surpass pre-pandemic levels, carriers are preparing for increased accident frequency and severity, resulting in higher claims costs due to auto repair and medical treatment costs still on the rise.

“Drivers were subjected to less traffic on the roadways at the start of the pandemic, which led to aggressive driving and deadlier speeding,” said Rich Magold, Commercial Auto Product Manager at Safety National. “With the addition of delivery drivers adhering to time constraints, new driver behaviors and personal vehicle usage, we’re now writing for a whole new set of exposures that play into increased pricing trends.”

Commercial fleets can expect these trends to significantly impact auto liability throughout 2022.

Driver Turnover & Fatigue

With turnover rates as high as 90% for some large long-haul carriers and COVID-19 continuing to impact the industry, supply chain disruptions remain a source of economic frustration. What does that mean for commercial drivers currently? Longer hours with increased pressure to meet high demands. Ongoing driver fatigue is likely to increase accident frequency until drastic changes are made in driver retention and recruitment. Drivers leaving their current roles cite poor pay, insufficient revenue miles and limited time at home as reasons. Many choose to switch employers, go solo as an owner-operator or leave the profession entirely.

Infrastructure Bill Impacts

As part of the $1.2 trillion Infrastructure Investment and Jobs Act, truck drivers under 21 will soon be able to cross state lines. The federal minimum age for commercial drivers is currently 21, but with recruiting challenges, industry experts believe this could fill the shortage. An apprenticeship program, set to begin this month, will require drivers between 18 and 20 to complete 400 hours of on-duty time with an experienced driver. While any trucks driven by anyone under the age of 21 will be required to have safety systems in place, this change could increase accident frequency, as younger drivers statistically have more accidents.

The bill also includes much-needed roadway improvements, but more construction zones, hazards, traffic rerouting and congestion add an increased danger to commercial drivers. In the long term, these upgrades will be hugely beneficial to all drivers, but they may cause an uptick in accidents in the interim.

Telematics Usage

Infrared cameras, hard braking monitoring and vehicle tracking, have become common forms of telematics usage in large fleets. Offsetting the cost of telematics technologies can be difficult for smaller organizations, but when the data is reviewed effectively, and timely feedback is provided to drivers, the risk reduction can lead to long-term cost savings. However, an organization needs the resources to review this data and often requires drivers willing to install applications on their personal devices. Organizations face an even greater associated cost when the technology becomes more sophisticated than these straightforward applications. A successful telematics program needs a risk management leader dedicated to interpreting the data and buy-in from the executive suite to the drivers behind the wheel.

Pricing Increases

The industry continues to see pricing increases across the board due to extreme losses. Where $1 million used to be a large loss, $5-10 million is now commonplace due to nuclear verdicts. With much larger commercial vehicles on the roadways, the damage that an 80,000 pound truck can cause when a passenger vehicle is involved means increased injuries and higher overall costs.

Distracted driving also continues to be a major cause of accidents through cell phone usage and additional vehicle components like navigation and sound systems. Many organizations adapted to a delivery format at the height of the pandemic. While those fleets may now be reduced in size, the exposure still exists and must be accounted for in the underwriting process.