Will the Auto Market Show Improvement?
A highly respected credit rating agency sees good and not-so-good news in the commercial auto market this year and next.
A.M. Best has an overall negative outlook for the U.S. commercial auto insurance market – even though its analysts believe it should improve somewhat this year.
The gloomy/happy forecast stems from commercial auto insurers having taken steps to address their most problematic exposures, while previous years’ loss reserves are still adversely affecting current calendar results.
The report noted that the rated commercial auto insurers say they have implemented measures aimed at addressing the issues they considered the most problematic relative to exposures to commercial auto losses, risk management, underwriting and pricing.
Unfortunately, according to A.M. Best, based on industry profit and loss results, these enhanced underwriting pricing measures have yet to improve rate adequacy. Those actions, in part, have included multiple years of rate increases.
In particular, A.M. Best blames what it sees as years of inadequate pricing and woefully inadequate reserving that have left the sector with a premium base unable to keep pace with deteriorating loss frequency and severity trends.
The ratings agency sees more deterioration in the net combined ratio, which should lead to companies pushing for more rate increases. The added rate hikes should “bring the line closer to rate adequacy amid the ongoing escalation in current-year loss costs,” A.M. Best said.
Even with rate hikes, A.M. Best’s report sees U.S. commercial auto being challenged by more vehicles traveling more miles boosting accident frequency, the poor shape of U.S. roadways and distracted driving.
What’s the bottom line for Van Beurden Insurance clients? What can be done to prepare for potential rate/premium increase? Here’s the solution: let me assess your operations and complete a full risk assessment to ensure we maximize all the savings the marketplace can provide.
How will it affect your business if your Auto premium took a 10% or 20% increase? Let Van Beurden Insurance prepare you for what’s on the horizon. An initial 10-minute phone conversation can get you started. Please contact our office for more information.
Information in this post from InsuranceJournal.com