I will guess that, because some carriers are doing ‘ok’, they must be writing only certain classes of commercial vehicles, in certain territories. That must exclude the largest carriers, which could be tested by looking at their most recent financials split by line.
The increase in frequency and severity of commercial auto claims might be due to lower gas prices… which has recently reversed. Does that mean a slowing or reversal of claim frequency? I dunno; I’m just a bit smarter than your average polar Berra.
Yes, more miles driven is part of it. However, a larger portion of the loss issues is the amount of uninsured drivers that is driving UM/UIM claim activity.
Unfortunately for agents, UM/UIM claim activity still goes on the losses under the contingency contract. The insured did nothing wrong, but he was unfortunate at being run over by the UM or UIM driver. Hey, it was a loss says our carrier, sorry.
Boo Polar Boo! … is that you? Where have you been?
Anyhoo; doesn’t the rise in UM/UIM claims just offset a decrease in insured liability claims that resulted from decreased insured driver’s miles? Or is it more illegal immigrant and/ or wildcat driver miles driven, with much of it by un(der)insureds?
Yogi, I had a Commercial Insured contractor submit three new hires to me wanting approval for them to drive his vehicles. Not one valid license between them and the forgeries were bad. Bought them at the border and they didn’t have anything right except for the picture. Sorry, we have a problemo on this.
I’m sure you reported these “forgeries” to the proper authorities. And notified underwriting on the account of such “forgeries”. Or, you could just write the account with Progressive and list the drivers as having an international driver’s license. But, they probably price optimize for that and I know you’re against that.
Obama would order the “authorities” to quickly release them, pay them some amount of US taxpayer’s money for their inconvenience, and hand them some SNAP cards (Food Stamps) before sending them on their way back to Mex… um, … LA, Chicago, SF, Newark, New Haven, or some other sanctuary city.
May 9, 2016 at 11:30 am
Agent says:
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Mark, you know that little thing inside your head that keeps you from saying things you shouldn’t? You don’t have one of those.
May 5, 2016 at 6:12 pm
Yogi Polar Berra says:
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Well then, Agent; maybe Trump will put a halt to the rise in UM claims caused by Illegal Immigrants? {Kevin Costner voice} “If he builds it, they won’t come here anymore.” {/Kevin Costner voice} If so, it will reduce UM premiums, and traffic will be a little lighter. Win-win!
They technically write through Berkshire Hathaway. Fortunately, they are not depleting our commercial auto lines like they did with the personal auto :)
State Farm as well. I saw some of their excellent policy issuance a few years ago. The insured had 6 trucks, all on separate policies, written on different dates with no business name insured and on Personal Auto policies. Did I mention minimum limits?
Buyer to GEICO – I want a quote on my truck. It is a 2016 Ford F-450 two ton dually. Cost new is $68,500. GEICO to buyer – how do you plan to drive it? Answer – Pleasure use. GEICO to buyer – Your quote is on the way.
An interesting point an actuary once told me; if enough carriers do this type of classification mis-use, and it isn’t detected by ISO, the rates for the class will eventually ‘self-correct’; i.e. rise to reflect the F-450 in ‘pleasure use’. Then, writers properly classifying PU risks will make a profit on the now ‘fat’ rate. LOL!
I suspect some or most of that type of class abuse is detected in audits of the data. But what do I know? I’m just a bit smarter than your average Polar Berra!
The carriers who know how to underwrite this line are still successful.
When the line was profitable a few years ago, many carriers started to come back to the Commercial Auto market. They did not have the expertise to navigate it successfully. Some even took on difficult trucking and people transportation risks without special pricing and underwriting considerations.
I own an independent agency. Over the last 36-48 months I have noticed an increase in automobile claims and I think it goes back to the text messaging, twittering, facebooking while driving phenomenon we have now. Also…Attorney offices in larger cities are setting up one stop shop (chiropractor/doctor/& attorney) all in one office building. Building a case right from the beginning and more people are willing to go under the knife to build their case for the extra monetary benefit. One other item mentioned above is the amount to fix the vehicle itself. I can say the days of an estimate being less than a $1,000.00 have disappeared. If you back into a tree now and you need a new bumper with backup cameras/backup sensors etc your looking at a couple of thousand dollars easily.
Randy, you couldn’t be more correct. We see story after story about the fraud being perpetrated in many states. Florida seems to lead the pack on the number of them. Yes, physical damage claims are far higher now. I insure a good body shop. He tells me the new Ford aluminum body pick ups are very challenging and expensive to fix. You are right, they don’t fix, but replace with whole assembly’s. By the time you end up painting after replacement, you have substantial expense.
Text messaging has been around for years. It’s oil prices and the crazy cost of repairing cars, which, for pricing the new vehicles really should be the ones with the big pricing increases.
While I agree that makes sense, I can tell you that we are seeing a big increase in the number of accidents that are clearly being caused by driver distraction. I’m not sure what’s causing it, as I agree drivers have had better things to do than watch the road for years. I wonder if part of it is that auto manufacturers are increasingly building these distractions right into the dashboard.
Actuary, did you say you weren’t sure what was causing the increase in driver distraction? Really? Did you not know there is a cell phone in almost every adult hand in America? If not in their hand, it is in their blue tooth connection or built right in to the vehicle so they can play while driving. They are so distracted that they are taking selfies while driving. Many states have caught on and are giving penalties for this, but it may be too late. These idiots can’t go to the bathroom without their precious cells. Try having a conversation with them sometime. Their attention span is about 30 seconds at best.
May 9, 2016 at 6:37 pm
Ken says:
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Commercial Auto pricing has been flat since 1989 when I got in the business, still about $1000 unit or $600 for a sizeable fleet of 30 units in my state. Duh where are the actuaries that are setting the rates? Is there any other product or service that has been flat for 27 years?
If they continue their quest to raise the minimum wage the auto workers (along with everyone else now earning above minimum) will need raises to keep up with the increased cost of living and the vehicles will cost more as well as the parts. Then the repair shops will get hit with higher wages and health care costs so they will have to raise their prices. And up goes the cost of insurance claims.
Moral of the story: There is no free lunch, or Every action causes a reaction.
I will guess that, because some carriers are doing ‘ok’, they must be writing only certain classes of commercial vehicles, in certain territories. That must exclude the largest carriers, which could be tested by looking at their most recent financials split by line.
The increase in frequency and severity of commercial auto claims might be due to lower gas prices… which has recently reversed. Does that mean a slowing or reversal of claim frequency? I dunno; I’m just a bit smarter than your average polar Berra.
Yes, more miles driven is part of it. However, a larger portion of the loss issues is the amount of uninsured drivers that is driving UM/UIM claim activity.
Unfortunately for agents, UM/UIM claim activity still goes on the losses under the contingency contract. The insured did nothing wrong, but he was unfortunate at being run over by the UM or UIM driver. Hey, it was a loss says our carrier, sorry.
That’s true, UIM losses are paid off the money tree the insurance companies have out back. They should not be counted as losses at all.
Boo Polar Boo! … is that you? Where have you been?
Anyhoo; doesn’t the rise in UM/UIM claims just offset a decrease in insured liability claims that resulted from decreased insured driver’s miles? Or is it more illegal immigrant and/ or wildcat driver miles driven, with much of it by un(der)insureds?
Yogi, I had a Commercial Insured contractor submit three new hires to me wanting approval for them to drive his vehicles. Not one valid license between them and the forgeries were bad. Bought them at the border and they didn’t have anything right except for the picture. Sorry, we have a problemo on this.
I’m sure you reported these “forgeries” to the proper authorities. And notified underwriting on the account of such “forgeries”. Or, you could just write the account with Progressive and list the drivers as having an international driver’s license. But, they probably price optimize for that and I know you’re against that.
The “authorities” would catch them! Do it, Agent!
Oh, wait!
Obama would order the “authorities” to quickly release them, pay them some amount of US taxpayer’s money for their inconvenience, and hand them some SNAP cards (Food Stamps) before sending them on their way back to Mex… um, … LA, Chicago, SF, Newark, New Haven, or some other sanctuary city.
Mark, you know that little thing inside your head that keeps you from saying things you shouldn’t? You don’t have one of those.
Well then, Agent; maybe Trump will put a halt to the rise in UM claims caused by Illegal Immigrants? {Kevin Costner voice} “If he builds it, they won’t come here anymore.” {/Kevin Costner voice} If so, it will reduce UM premiums, and traffic will be a little lighter. Win-win!
Increased mileage has been cited as one of the reasons for losses by numerous carriers. The cost of repairs for vehicles have gone up as well.
I suspect Geico is a large writer of commercial auto, they just don’t know it.
They technically write through Berkshire Hathaway. Fortunately, they are not depleting our commercial auto lines like they did with the personal auto :)
SWFL’s comment was sarcasm. wow. way to recognize.
State Farm as well. I saw some of their excellent policy issuance a few years ago. The insured had 6 trucks, all on separate policies, written on different dates with no business name insured and on Personal Auto policies. Did I mention minimum limits?
Well they price optimize for that so it doesn’t matter to them.
Buyer to GEICO – I want a quote on my truck. It is a 2016 Ford F-450 two ton dually. Cost new is $68,500. GEICO to buyer – how do you plan to drive it? Answer – Pleasure use. GEICO to buyer – Your quote is on the way.
An interesting point an actuary once told me; if enough carriers do this type of classification mis-use, and it isn’t detected by ISO, the rates for the class will eventually ‘self-correct’; i.e. rise to reflect the F-450 in ‘pleasure use’. Then, writers properly classifying PU risks will make a profit on the now ‘fat’ rate. LOL!
I suspect some or most of that type of class abuse is detected in audits of the data. But what do I know? I’m just a bit smarter than your average Polar Berra!
The carriers who know how to underwrite this line are still successful.
When the line was profitable a few years ago, many carriers started to come back to the Commercial Auto market. They did not have the expertise to navigate it successfully. Some even took on difficult trucking and people transportation risks without special pricing and underwriting considerations.
I own an independent agency. Over the last 36-48 months I have noticed an increase in automobile claims and I think it goes back to the text messaging, twittering, facebooking while driving phenomenon we have now. Also…Attorney offices in larger cities are setting up one stop shop (chiropractor/doctor/& attorney) all in one office building. Building a case right from the beginning and more people are willing to go under the knife to build their case for the extra monetary benefit. One other item mentioned above is the amount to fix the vehicle itself. I can say the days of an estimate being less than a $1,000.00 have disappeared. If you back into a tree now and you need a new bumper with backup cameras/backup sensors etc your looking at a couple of thousand dollars easily.
Randy, you couldn’t be more correct. We see story after story about the fraud being perpetrated in many states. Florida seems to lead the pack on the number of them. Yes, physical damage claims are far higher now. I insure a good body shop. He tells me the new Ford aluminum body pick ups are very challenging and expensive to fix. You are right, they don’t fix, but replace with whole assembly’s. By the time you end up painting after replacement, you have substantial expense.
Text messaging has been around for years. It’s oil prices and the crazy cost of repairing cars, which, for pricing the new vehicles really should be the ones with the big pricing increases.
While I agree that makes sense, I can tell you that we are seeing a big increase in the number of accidents that are clearly being caused by driver distraction. I’m not sure what’s causing it, as I agree drivers have had better things to do than watch the road for years. I wonder if part of it is that auto manufacturers are increasingly building these distractions right into the dashboard.
Actuary, did you say you weren’t sure what was causing the increase in driver distraction? Really? Did you not know there is a cell phone in almost every adult hand in America? If not in their hand, it is in their blue tooth connection or built right in to the vehicle so they can play while driving. They are so distracted that they are taking selfies while driving. Many states have caught on and are giving penalties for this, but it may be too late. These idiots can’t go to the bathroom without their precious cells. Try having a conversation with them sometime. Their attention span is about 30 seconds at best.
Commercial Auto pricing has been flat since 1989 when I got in the business, still about $1000 unit or $600 for a sizeable fleet of 30 units in my state. Duh where are the actuaries that are setting the rates? Is there any other product or service that has been flat for 27 years?
If they continue their quest to raise the minimum wage the auto workers (along with everyone else now earning above minimum) will need raises to keep up with the increased cost of living and the vehicles will cost more as well as the parts. Then the repair shops will get hit with higher wages and health care costs so they will have to raise their prices. And up goes the cost of insurance claims.
Moral of the story: There is no free lunch, or Every action causes a reaction.