Brokers in the driving seat as carriers “tighten their belts” in commercial auto insurance

Brokers in the driving seat as carriers “tighten their belts” in commercial auto insurance | Insurance Business

Brokers in the driving seat as carriers “tighten their belts” in commercial auto insurance

Insurance carriers are “tightening their belts” in the commercial auto sector. After years of unhealthy combined ratios, sustained losses and inadequate rates, many carriers have shifted gears in terms of what risks they’re willing to take on. They’re looking for best-in-class accounts with effective risk management, loss prevention technology, and a willingness to buck the upward loss trends that have caused such strife for the insurance industry.   

As the market dynamics twist and turn at every junction, and carriers continually tweak their risk appetites, the role of the insurance broker becomes ever more important. Jeffrey Blumberger, brokerage specialist at Jimcor Agencies, is an expert at navigating the transportation insurance markets. He has focused much of his career around public transportation and hard-to-place auto risks, working with different industry players, from carriers and MGAs to wholesalers. 

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When it comes to finding coverage for hard-to-place auto risks, focusing on the individuality of each client and their unique needs is vital, according to Blumberger. He told Insurance Business he always goes to maximum lengths to ensure clients are placed exactly where they need to be, and he speaks with insureds and industry leaders as frequently as possible “to identify industry issues and pain points” and create solutions for them.

“Brokers need to fully understand the unique needs of each and every risk,” said Blumberger, who was recently named one of Insurance Business’s Top Specialist Brokers 2019. “They have to understand their clients’ operations and their risk management procedures. They need to be 100% comfortable with that risk because the more a broker knows about a risk when entering negotiations with a carrier, the better the chances of that business being successful.

“In order to make the best submission possible, brokers can advise clients about any improvements they can make prior to getting a quote for their account. That might include tightening up safety procedures, carrying out driver employment checks, making sure they have an appropriate fleet maintenance program in place, and so on. Some accounts might already have some of these things, but don’t have it documented, so brokers can help them tidy everything up. At Jimcor, we try to improve each account, take what they do well and make it even better, allowing our clients to get the best terms available.”  

As carriers “tighten their belts” in the auto insurance markets, they’re looking for risks that have invested within themselves. They want accounts that have installed GPS and speed monitoring, in-cab cameras, telematics, and other technological loss prevention tools. Some carriers will even offer policy discounts based around the risk mitigation investments that accounts have made. According to Blumberger, it’s very telling for carriers if an auto account has installed telematics and has proof of driver training schemes and other risk management measures. It shows they’re trying to “be a best-in-class” account, he said.  

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“At the end of the day, whether it’s a trucking account, a limousine account, an ambulance account, or a charter bus account, the one thing they all have in common is the drivers,” Blumberger noted. “If the drivers are not doing their jobs properly or are not following best practices on the road, these telematics and monitoring systems will pick up on that and will feed that information back to the insureds, and possibly the insurers, who can then take action and hopefully avoid any accidents going forward.”

For some public transportation and hard-to-place auto accounts, the biggest challenge is finding a market willing to take on the risk at all, even if they have all of the appropriate risk mitigation measures in place. For example, Blumberger identified charter bus accounts as being quite challenging at present because there are very few markets looking at that risk anymore. Those that are willing to write a charter bus account are looking for newer aged units and a strong driver class.

“The problem is, charter bus accidents in the past have made major headlines and there have been some significant losses, so the carriers have pulled back on what types of risks they want to write,” said Blumberger. “They’re trying to mitigate their losses for what they’ve seen and experienced in the past.” That seems to be the case across the wider commercial auto market thanks to the upward trending of loss frequency and severity.