Higher claim frequency and severity driven by distracting driving and the lack of a meaningful impact from advanced auto technology have put the commercial automobile insurance marketplace into a tight spot, with insurers hoping they can improve underwriting results through rate increases and more sophisticated predictive analytics.
Even “relatively large” rate increases in the auto space are “just barely keeping pace with loss-cost trends” as well as producing significant underwriting losses, according to M. Steven Levy, president and CEO of Munich Re’s reinsurance division.
Distracted driving “creates a problem across all of auto,” said Keith Wolfe, president of US P&C for Swiss Re. Automation technology in vehicles has not had the impact on claims that insurers expected, he added. The National Safety Council reported a total of 40,100 traffic-related deaths in 2017, a drop of just one percent from the previous year.
“They think, ‘trucking’s trucking.’ Well, it’s not. It’s really changing,” she said. “Unfortunately, I feel that some of them are still stuck back 10 years ago—or even five years ago. We need your help. If we don’t change, we will go out of business. We need partners that can really help with that ideation, that creativity.”
Insurers also run the risk of becoming irrelevant if they don’t adapt, panelists agreed. The long-trusted method of relying on actuarial data may not be fast enough. Other businesses will step in to develop a solution.