Underwriting losses have become a persistent passenger when it comes to Motor Fleet insurance; compelling insurers to adjust their seatbelts. The industry, characterised by its complex risk profile, has witnessed diminished profitability, steering us towards a path of double-digit rate increases. For policyholders, particularly those managing larger fleets or grappling with a poor loss history, these trends demand a closer look and strategic action.

Understanding underwriting losses

Underwriting losses in commercial auto insurance are not new. They indicate that the premiums collected are not sufficient to cover the losses and expenses incurred. These losses can be attributed to various factors, including increased claims costs, Inflation, changing legal precedents, and regulatory changes. With commercial vehicles, there’s an added layer of risk due to the high utilisation and exposure on the roads, making loss control a challenging but essential endeavour.

The trend of single-digit rate increases

In response to sustained underwriting losses, the industry has seen a trend towards single-digit rate increases. This cautious approach is a balancing act; insurers must ensure adequate risk pricing without placing undue strain on their clientele. However, these incremental changes may not fully account for the risk, especially in cases of severe or frequent claims. This has been more recently impacted by sharp inflation which has lead to significantly higher repair costs. This has followed double digit rate increases in the short term for insurers to adjust to repair inflation.

Implications for policyholders

And of course, it’s not only insurers who have to deal with this; the implications for policyholders - especially those with larger fleets or a history of losses – are significant. The consequences can include:

• Increased premiums: A direct impact of rate increases is the rise in premium costs. For businesses with larger fleets, this hike can be substantial, affecting their financial planning and operations.

• Stricter underwriting: Insurers may tighten underwriting criteria, seeking more detailed information and implementing stricter guidelines for coverage.

• Risk management emphasis: There will be a stronger focus on risk management practices. Fleet businesses may need to demonstrate proactive measures to mitigate risks to secure favourable insurance terms.

Insuret’s perspective

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At Insuret, we approach these challenges head-on, with a proactive approach to:

• Tailored risk assessments: We conduct detailed risk assessments  as part of our underwriting process to understand our customers business practices and price each fleet's unique risk profile accurately.

• Risk mitigation strategies: We collaborate with policyholders to develop and implement robust risk mitigation strategies, potentially improving their loss history and impacting premiums positively.

• Clear communication: We maintain transparent communication with our clients regarding how industry trends may affect their policies and what we can do to mitigate those effects.

• Customised solutions: Recognising that one size doesn’t fit all, we offer customised insurance solutions that address the specific needs of policyholders with larger fleets or challenging loss histories.

The road ahead

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As the market adjusts to the new realities of repair inflation, changing legislation, underwriting losses and rate increases, our role is to ensure that our clients are not left in the rear-view mirror. Through strategic partnerships and innovative solutions, we can turn these challenges into opportunities for enhanced protection and improved fleet management.

We invite our clients and those navigating these complexities to contact us, so we can strategically drive your fleet towards stability and profitability, regardless of the market's twists and turns.

Contact the team Insuret to discuss your fleet's future.

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