Since 2010, the median severity of auto losses not related to transportation has increased by 80%

Jun 22, 2024 | Business Insurance, Personal Insurance

There has been a great deal of conversation regarding the transportation sector and the effect that “nuclear judgments” (i.e., jury awards greater than $10 million) have had on the market for commercial auto insurance. Nevertheless, the transportation industry is not the only factor that contributes to this difficult market. Companies who are not in the transportation industry have also experienced an increase in both the frequency and severity of commercial auto losses over the course of the better part of a decade.

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Companies whose primary focus is the movement of either people, products, or infrastructure make up the transportation business. This category includes businesses such as trucking and railroad companies, airlines, and shipping corporations. However, the transportation sector is not the only one that makes use of cars for their various commercial applications. Contractors in all fields who are obliged to travel between customers utilize vehicles to do so. This includes contractors in the building industry, as well as plumbers, electricians, and other tradespeople. There are some sales occupations and real estate positions that demand candidates to be willing to travel. Drivers may also be hired for delivery services in other types of businesses, such as retail and wholesale trade.

Continue reading to gain knowledge about the risk variables that contribute to an increase in commercial auto losses, the severity of these losses, and the industries that are affected. Advisen data reports are the ones that are most affected, as well as the measures that may be employed to prevent expensive vehicle losses.

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Factors of danger

Take into consideration the following contributors to the rise in both the frequency and severity of losses involving commercial automobiles:

Distracted driving 

There has never been a higher incidence of distracted driving than there is today. The usage of mobile phones, complex entertainment systems, navigation systems, and several other electronic devices frequently compete for the attention of drivers.

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Hazardous weather conditions

There has been an uptick in the number of occurrences of severe weather, such as hail and flooding. Unpredictable weather can make roadside conditions hazardous, which can contribute to an increased number of accidents.

An increase in the cost of repairs as a result of new car technology, which has made repairs both more complicated and expensive. The Bureau of Labor and Statistics of the United States reports that the cost of repairing vehicles has increased by 61% from the year 2000 to 2017.

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Inflation of medical costs 

The cost of medical treatment has surpassed the expansion of the economy. Vehicular accidents resulting in injuries are more expensive as a result.

Rising jury verdicts

The severity of jury rulings has increased in recent years as a result of both rising costs associated with litigation and sympathetic juries.

It is possible that impaired driving will become more widespread as the number of states that have legalized cannabis increases. According to the findings of a study conducted by the Insurance Institute for Highway Safety, the legalization of cannabis in the United States has led to an increase in the overall number of car accidents.

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The Advised Data Median for the Severity of Motor Vehicle Losses

According to Adviser’s loss database, the median severity of auto losses in non-transportation businesses rose by 80% from $2.8 million in 2010 to $5 million in 2021. This increase occurred between the years 2010 and 2021.

Because of a lag in the collection of data, the median severity in the year 2021 may not accurately represent loss trends across the country. If we keep up our collection efforts, this number might end up being different.

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Losses from Automobiles in Industries Other Than Transportation

With the exception of the transportation business, the industry that experiences the highest frequency of vehicle losses is the construction industry, followed by the wholesale commerce industry and the administrative, support, and waste management industry.

When broken down by business sector, the public administration sector has the highest overall severity, followed by the retail trade and the construction industry. It is quite obvious that these losses represent a threat that is both costly and severe across the board for the major sectors.

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Risk Management

Consider taking the following preventative measures in addition to getting commercial auto insurance to lower the number of claims filed for automobile-related damages:

Ensure that the driving rules are followed. Establish and strictly enforce safe driving rules, such as a required seatbelt policy, a zero-tolerance policy for intoxicants while driving, and a ban on the use of cellphones while operating a motor vehicle.

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  • Formulate some ground rules for operating the vehicle. You might want to think about restricting the use of company vehicles to activities that are directly related to work. Make sure there is enough time in between meetings so that staff do not feel as though they need to rush to get to the next one on time. Request that staff lock their vehicles when they are not using them and park them in an area that has adequate illumination whenever it is practicable.
  • Ensure that your hiring procedures are adequate at all times. Only hire drivers who have the necessary experience and qualifications. Drivers are required to have a spotless driving record and be able to give evidence that they are licensed appropriately.
  • Make good use of modern technology. The technology that is available in today’s vehicles allows for the monitoring of roadside circumstances, the tracking of driver habits, and the prevention of accidents.
  • Talk to someone who works in the insurance industry. Maintain consistent contact with a reputable insurance professional in order to obtain additional information on appropriate risk management solutions and to determine whether or not policy revisions are required in order to better accommodate the requirements of the business.

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Claims filed against commercial vehicles are filed often and can be expensive. Get in touch with us as soon as possible for more details on how to defend yourself against these allegations.

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