TSPS MAR 2025 FINAL REV - Flipbook - Page 25
INSURANCE ARTICLE
WHAT’S
DRIVING AUTO
INSURANCE
PREMIUMS
And What Can Be Done About It?
BY: Cassie Doolittle, VP of Anco Insurance
ommercial auto insurance premiums have been steadily
rising since 2017. Despite these increases, auto insurance carriers have struggled to achieve pro昀椀tability for
over a decade. In 2023 alone, commercial auto insurers recorded an underwriting loss exceeding $5 billion. While many of the
factors driving these losses—and consequently, your premium
costs—are beyond your control, understanding them can help
you navigate this challenging landscape.
C
Key Factors Driving Auto Insurance Costs
1. Vehicle Supply and Valuation – A drop in the supply of new
vehicles has in昀氀ated the value of used cars, leading to higher
replacement costs.
2. Global Supply Chain Disruptions – Delays in obtaining
auto parts have resulted in longer repair cycles and increased repair costs.
3. Skilled Labor Shortage – A decline in the number of skilled
auto technicians has further driven up costs and repair times.
4. Rising Catastrophic Weather Events – The frequency and
severity of natural disasters are increasing, leading to higher
claims and losses.
5. Advanced Vehicle Technology – Embedded technology in
modern vehicles, while enhancing safety and ef昀椀ciency, also
raises repair expenses.
6. Legal and Litigation Trends – Large verdicts and increased
attorney involvement in claims have contributed to rising
insurance costs.
7. Escalating Healthcare Costs – The increasing cost of medical treatment directly impacts claims involving bodily injuries.
Mitigating Costs Through Proactive Measures
While these industry-wide trends may seem insurmountable,
businesses that foster a culture of safety and responsibility can
achieve meaningful cost control. Insurance underwriters reward
policyholders who demonstrate a commitment to risk management. Here’s how you can position your company as a preferred
partner:
• Invest in Training – Provide tailored safety training that addresses speci昀椀c hazards employees may encounter. Ensure
staff knows what to do in case of an accident.
• Enforce Policies and Procedures – Develop and document
clear policies, communicate expectations effectively, and enforce compliance when necessary.
• Prioritize Vehicle Maintenance – Conduct proactive inspections, repairs, and regular maintenance to reduce the likelihood of costly accidents and claims.
IF AN EMPLOYEE IS INVOLVED IN AN ACCIDENT
WHILE USING THEIR PERSONAL VEHICLE FOR
WORK, THEIR INSURANCE POLICY IS THE
PRIMARY COVERAGE. HOWEVER, ONCE THOSE
LIMITS ARE EXHAUSTED, LEGAL ACTIONS MAY
TARGET YOUR COMPANY.
The Overlooked Risk Factor: Hired and Non-Owned Auto
Coverage
One commonly overlooked risk is employees and business owners using personal vehicles for work-related tasks. Ensuring your
commercial auto policy includes Hired and Non-Owned Auto
Coverage can protect your business from unexpected liabilities.
If an employee is involved in an accident while using their personal vehicle for work, their insurance policy is the primary coverage. However, once those limits are exhausted, legal actions
may target your company. Protect your business by implementing
these measures:
• Mandate Minimum Insurance Requirements – Require employees to maintain at least $100,000/$300,000/$100,000
in personal auto liability coverage.
• Verify Coverage Annually – Request a copy of employees’
insurance declarations pages every year to con昀椀rm compliance.
• Review Motor Vehicle Records – Conduct annual reviews of
employees’ driving records to identify and address high-risk
drivers.
Consistency in Leadership and Risk Management
The effectiveness of your risk management strategies hinges on
consistency. Implementing policies without enforcing them can be
detrimental, especially in a legal dispute. For instance, telematics
systems have proven effective in improving driver behavior, but
failing to follow up on data insights and enforce disciplinary actions can weaken your defense in a lawsuit.
Record-keeping and follow-through are essential. Ensure your
insurance agent is aware of your proactive risk management efforts so they can present your business favorably to insurance
carriers, potentially leading to better coverage terms and lower
premiums.
By taking these steps, businesses can take greater control over
their insurance costs, enhance safety, and position themselves as
lower-risk policyholders in the eyes of insurers.
March 2025 THE TEXAS SURVEYOR
23
