The commercial auto insurance industry is shifting. And how it underwrites, prices, and sells fleet insurance is creating new profitability challenges.
Commercial Auto Insurance Profits
As Andrea Wells writes in Insurance Journal, modern cars continue to rack up more miles, and distracted drivers account for more of those miles, so “moving commercial auto insurance to a profitable place has not gotten any easier.”
Those aren’t the only headwinds. Insurers have reported net losses in commercial auto insurance underwriting each and every year since 2011. As Wells explains, “While commercial auto insurers have tried to address unfavorable results by tightening underwriting and improve rate adequacy, the changes haven’t been enough to aid the distressed line overall.”
The industry clearly needs a fundamental change. Incremental optimizations have yielded eight straight years of red ink. To save commercial auto insurance for fleets and insurers, something needs to change.
Driver Coaching to Improve Fleet Insurance Rates
Part of the problem is that the way people use cars is changing. As we’ve before discussed in our blog, more and more drivers are sharing single vehicles. This is keeping cars on the road for longer, accumulating miles and, eventually, accidents. As a result, the likelihood of each accident totaling the car increases. And that’s bad for commercial insurers’ bottom lines.
Therefore, commercial auto insurers have had to raise fleet insurance rates for all but the best drivers in order to cover these losses.
“Overall, I see [rates] tightening up. Average accounts to more distressed accounts will see rates going up. Only the better-than-average accounts will see rates holding steady,” says Ed Havermann, VP of Transportation at Keating.
The solution for insurance-strapped fleets? Driver coaching. The Zendrive telematics platform includes powerful driver coaching that analyzes driving patterns and offers practical driver behavior improvements that minimize collisions and lower insurance rates.
The result? You can coach up your riskiest drivers, shifting your rates lower and putting the power back in your hands.
Pay-How-You-Drive Fleet Insurance
The Zendrive platform’s other major benefit for both fleet operators and commercial auto insurance providers is that it enables a pay how you drive (PHYD) insurance system.
We’ve examined PHYD insurance models on our blog before. As we discussed, powerful telematics data-acquisition systems enable PHYD models. They measure exactly how each individual driver behaves, and using powerful artificial intelligence, predict their likelihood for risky behaviors 6X more accurately than traditional insurance models.
Zendrive’s 150 billion miles of driver data provide commercial auto insurers and fleets with radical transparency. This transparency enables insurers to offer safe drivers and fleets better rates. And it allows fleets to reap the benefits of PHYD models, which offer drivers a better price based on how they actually drive.
Conclusion
Fleet insurance and commercial auto insurance are changing as bottom lines grow tighter.
The Zendrive platform offers both insurers and fleets a better, and more profitable, way forward.
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