What is it about our human nature that allows us to deal better with adverse situations once we know why they occurred? It begins at almost the moment we learn to talk. “But why mom?” We ask when we had a different outcome in mind. And it has never ended; we need closure on every significant event that doesn’t go our way.
If you are responsible for procuring your company’s commercial insurance coverage, the Commercial Auto line item in the renewal proposal your broker presents these days is likely a source of anxiety, leaving you with that oh so familiar question: WHY??!!
Let’s satisfy that insatiable curiosity of yours so you can move on to the next thing you don’t understand that is driving you crazy.
Vehicle Repair and Replacement Costs
If you are in your mid 40’s or older, remember when you could go to a junk yard to get the parts to repair a vehicle involved in an auto accident? Know anyone who has done that recently on a car that isn’t at least 20 years old? Cars seem to be more computer than car now a days, and when you hit the bumper of said computer, there’s a potential you’ve completely totaled it.
Decreased Competition
The days of Commercial Auto being a profitable line of coverage for insurance carriers, is now only discussed by folks who spend their days on rocking chairs on their front porches watching the grass grow. OK, slight exaggeration. However, the number of carriers willing to write Commercial Auto coverage only, without combining it with another coverage they do believe they can be profitable on, has shrunk down to a very small group. Underwriting guidelines are much stricter, declinations fly fast. The situation no longer exists where you get 4 or 5 competitive quotes and underwriters are willing to revise premiums several times to win this line of business. It’s much more of a take it or leave it dynamic now.
Distracted Driving
We are doing more in our cars now than ever. Cars are only getting more gadgets, and that phone never leaves our hands. Each new generation that receives their driver’s license has had it ingrained in them that multi-tasking is one of the best skills you can obtain. Any wonder there is an increase in claim frequency and severity?
Rising Medical Costs
The reasons behind the medical costs continual increases is a whole other blog, er…….book. But if we can get our heads around the idea that this is a fact of life, then it’s easy to understand that when we get hurt or hurt others in an auto accident, the associated rising costs are significantly affecting premiums.
Increased Litigation
This is another deep subject, as it dares to ask the question of why our society has become so litigious. But let’s dispense with the soapbox speech as to why our society has been so quick and so comfortable with suing each other, and just agree that we are indeed in an all-time high litigious environment.
Litigated claims are much more expensive claims. Litigated claims that go to trial are now subject to possible nuclear judgements. Read more about nuclear verdicts on our social media here.
Compliance Changes
Adjustments to compulsory coverage is ever evolving, from either the people you do work with or via regulation. Higher limits, endorsements that grant more coverage to 3 parties, Symbol 1, are just a sample of mandates now having to be navigated.
Closure?
Hopefully this provided a little more closure than the answer, “It’s me not you”, that we get sometimes when we ask why. If so, you are now free to go back to torturing yourself with the maddening question of how the writers of your favorite Netflix series could have possibly thought it was a good idea to end your favorite series the way they did. Maybe write the studio a strongly worded letter.
All Is Not Lost
We’ll post a follow up blog in the near future to discuss another fact we often don’t consider. “No” is sometimes forever, but most of the time it merely means, “Not right now”. We’ll discuss what is in your power to mitigate Commercial Auto insurance increases, or dare we say even possibly decrease them. Keep your eyes out for that blog soon.
Each month, Swarts, Manning & Associates covers relevant topics for your business. Stay tuned to hear more discussions about managing your insurance and industry-specific tips.
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