Why Companies Face Significant Fleet Insurance Challenges

Every commercial fleet has a significant problem now and a growing problem in the future regarding the availability and cost of fleet insurance. This problem continues a negative pattern many years in the making. If you are fortunate enough to have an exemplary safety program and associated low level of accident exposure, you may be able to avoid a drastic increase to your cost of commercial vehicle insurance. Any shortcomings in the fleet safety program and associated results will ultimately result in large increases in premiums, cancellations, or being forced into accepting large fleet insurance deductibles or seeking alternative structures such as group insurance or captives.

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Why is Fleet Insurance more of a challenge now?

  • Crashes, associated claims and payouts have increased significantly in spite of strong investments in fleet safety training and use of proven technology
  • Aggressive plaintiff attorney actions, nuclear verdicts, “reptile theory” case pursuit, and social inflation combine to make for a more hostile legal environment and associated larger claims settlements
  • Outside funding has made pursuit of cases against fleets very profitable and increased plaintiff aggressiveness and marketing efforts to encourage the aggressive pursuit of cases involving fleets

What is “social inflation”?

  • Negative attitude against corporate America
  • Search for “deep pockets”
  • Attitude that $100 million judgments are not excessive
  • Judicial structure is perceived negatively in certain geographic areas
  • Growing reception from juries to reptile theory

Don’t blame the Fleet Insurer

Fleet insurance has been unprofitable for the past dozen years despite efforts by the insurance carriers to reverse this trend by steadily raising premium rates over the same period. In spite of fleets being more professional and proactive around safety training and a tremendous investment in technology aimed at identifying and correcting driver behavior, the crash rates and fatalities continue to climb. While the pandemic lowered the miles driven, the severity of crashes increased. Now that the volume of driving is returning to normal, the crash and fatality rate is climbing rapidly.

Why have commercial fleet accident rates continued to climb?

One of the largest drivers of vehicle crashes has been, and continues to be driver distraction. Many effective solutions can help identify such elements as speeding, generally aggressive driving, driver distraction, and unsafe following distance. 

While certain elements of driver distraction have always been there (eating, drinking while driving, playing with the radio, looking at work orders, conversing with others in the vehicle, etc.), there is one negative behavior that is new in the equation. Our addiction to the mobile device has no boundaries, even behind the wheel, and thus the mobile device has become the most frequent cause of vehicle crashes today.

Summary of Fleet Insurance Challenges

Instead of being a “nice to have”, it is becoming mandatory for fleets to improve hiring and training practices and effectively use technology to determine and correct issues of risky driving behavior.  It is critical that this effort results in a stellar safety program or the only answer will be for insurers to continue to raise rates in the face of rising claim losses. Without an effective driver behavior focus, many fleets will be priced out of the availability of future commercial auto fleet insurance.

About Alan Mann

Driver risk scoring/coaching/cell phone distraction avoidance/driver behavior expert.
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