A More Proactive Approach to Commercial Auto Insurance Premium Increases

Improving Fleet Safety is Becoming Mandatory for Survival

Insurers and Fleets need to be proactive about driver safety to buffer the inevitable increases in insurance premiums—fleets need to mandate technologies, insurers need to provide/incentivize technologies to provide a path of financial survivability for insured fleets. 

There is clear consensus that commercial auto insurance rates are on the rise, often drastically so. We see anything forecast from double digit percentage rate increases to some truly frightening specific markets seeing 6 fold increases in rates. We see more fleets unable to get insurance or getting it on far less favorable terms. Some of the factors causing this “perfect storm” pushing commercial auto premiums drastically higher are that insurers/underwriters are dropping out of entire markets, collision rates are steadily increasing, plaintiff attorneys have become more aggressive and more focused on commercial fleets, settlement costs are raising significantly, “nuclear judgements” proliferate, commercial auto insurers continue to lose money. Fleets run the risk of not being able to continue in business, either through unavailability of coverage, or because of the financial ramifications of large increases in coverage rates. 

Reality is now that if you are a fleet that will not attempt to identify and correct risky driving behavior, then you are going to inevitably have that “deer in the headlights” look come insurance renewal time, especially if your lack of safety proactivety is resulting in a less than desirable safety record. If the excuse is drivers refuse to be tracked in their vehicles, driver privacy is the ultimate concern, that video is too invasive, that cell phone distraction avoidance is something the drivers don’t want, then don’t be surprised if you find yourself standing in the line for huge insurance cost increases. If you tolerate cell phone distraction, which has more of a negative impact on driver reaction time than driving drunk, then you deserve the increase in rates. You wouldn’t tolerate drunk driving, why do you let drivers continue to use/handle cell phones while driving? The drunk driver is safer than the texting driver.

Fleets must be concerned not just with the identification of driving risk, which technologies are getting better and better at doing, but the more important focus is on the correction of identified risk. In the case of cell phone distraction, technology is capable of blocking the use of phones while still allowing hands-free use of phones (still a distraction, but less risk overall), access to navigation apps, and shutting off the blocking feature totally for emergency use.

A less guaranteed path is being touted by the new breed of AI oriented cameras as they can identify a driver smoking, or drinking a drink, or handling a cell phone. Once again, however, the identification of a safety issue is not the same as the correction. Commercial insurers are less supportive of technologies that are dependent on the longer term effective coaching toward marginal improvements over time.  When you have the capability to eliminate cell phone distraction, why rely on interpersonal coaching to drivers to get a slower and less effective resolution?

Especially in challenging fleet segments, with marginally insurable fleets, or in fleets looking at huge increases in rates, there has to be a better answer than insurers responding only with huge premium increases. It is only logical that the fleets that minimize their exposure to insurance rate increases are those that prove to their insurer that they are living up to a higher safety standard that will ultimately improve their safety and related loss exposure. Creative insurers have the opportunity to incentivize the use of technologies that they know will improve their financial position and future loss exposure from vehicle accidents.

The answer for both fleets and insurers is to mandate the use of proven technology to improve driver behavior. It is well understood that driver distraction, and especially that caused by cell phone usage, is manageable.

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LifeSaver Mobile is a leading provider of cell phone distraction avoidance technology, with over a dozen commercial insurers offering formal programs incentivizing use amongst their insureds.  www.lifesaver-app.com    [email protected]