Conning has published its latest analysis of the commercial auto insurance sector, which examines ongoing financial pressures, emerging risks, and changes in underwriting approaches within the property and casualty (P&C) industry’s commercial auto segment.
According to Conning, the commercial auto line has experienced 13 straight years of underwriting losses. Combined ratios have remained above 100% throughout this period, despite 55 consecutive quarters of rate increases.
"Despite more than a decade of rate increases, the commercial auto line remains a challenge," said Alan Dobbins, director in insurance research at Conning. He noted that the 2025 study details the dual issues of rising liability losses and increased post-pandemic physical damage costs, which continue to affect both insurers and policyholders.
The report identifies several factors contributing to the sector’s ongoing difficulties. Social inflation and so-called nuclear verdicts have driven liability claim severity up 64% since 2015. The US is also facing a shortage of commercial drivers, which has led to higher accident rates as companies hire less-experienced drivers to fill gaps.
Physical damage costs are rising as well, influenced by advanced vehicle technology, supply chain disruptions, and general inflation. These factors have increased repair expenses and extended the time required to resolve claims.
Additionally, the adoption of electric vehicles (EVs) by commercial fleets is introducing new risks, such as cyber vulnerabilities, battery fire hazards, and higher repair costs. These developments are prompting insurers to reconsider their pricing models and risk management strategies.
Recent market data indicate that auto insurance rate increases have moderated, with 2024 seeing a 10% year-over-year rise following a 15% hike in 2023.
This moderation, combined with a 13.6% growth in direct written premiums to $359 billion, has contributed to improved insurer profitability and more stable incurred loss ratios. Some carriers are now positioned to pursue growth strategies and, in some cases, even file for rate decreases.
The market is also seeing a shift in consumer behavior, with over 45% of in-force auto insurance policies being shopped at least once by the end of 2024. This trend is especially pronounced among older consumers aged 66 and above, as well as long-tenured policyholders, who have shown a 35% year-over-year increase in shopping activity.
The transition to electric vehicles is also impacting claim frequency. Drivers moving from internal combustion engine vehicles to EVs have experienced a 14% rise in claim frequency, adding another layer of complexity for insurers as they adapt to new technologies and risk profiles.
"The commercial auto market is at a crossroads," Dobbins said. "Insurers will need to go beyond pricing adjustments and invest in predictive analytics, safety technologies, and smarter underwriting to restore profitability."
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