Getting commercial auto accounts to innovate requires compromise

Getting commercial auto accounts to innovate requires compromise | Insurance Business America

Getting commercial auto accounts to innovate requires compromise

As carriers “tighten their belts” in the auto insurance marketplace, investment in technological innovations focused on loss prevention have been heralded by some as a way for trucking accounts to show they’re serious about risk management. However, there are speed bumps along the way as commercial trucking companies consider implementing these new tools.

“The national average for truckers is 5% profit margins, so that doesn’t leave a lot of room for them to reinvest,” said Mike Mitchell (pictured), area president – transportation for Risk Placement Services (RPS). “For them to really invest in the [technology], they need to see that the insurance companies are going to give them some sort of discount on their insurance premiums to offset that.”

Nonetheless, carriers are sometimes hesitant to offer discounts until they see loss prevention tools at work.

“They don’t want to give a discount unless they know they’re going to [benefit from the] use of that data,” said Mitchell. “The insureds are thinking, ‘do I really want to invest in this when I don’t know what type of discount I’ll receive?’ You get the chicken and the egg dilemma there – what needs to come first?”

Truck drivers, for their part, are becoming more comfortable with using some techy tools, especially now that electronic logs are mandatory. Cameras, for instance, have proven their worth when trucking companies encounter legal issues.

“A lot of times, unfortunately, transportation risks are easy targets for certain individuals to go after these high policy limits, even if there was no fault of the transportation risk,” explained Mitchell. “What ends up happening is these cameras are allowing us to see what actually transpired in the situation to see that the truck didn’t do anything wrong.”

Yet, because of the thin margins plaguing the industry, the rate of adoption for innovation has not been as high as it could be, added Mitchell, though compromise seems to be one of the ways to move the needle on this issue.

“We’ve got carriers we represent that will eat some of the costs of the cameras [installed] inside vehicles, and that actually has helped encourage some of these accounts to go in that direction, when they see the insurance company is willing to absorb some of that cost,” said the RPS expert. “It helps everybody involved – it helps the insurance company and it helps the insured keep track of their drivers, and then also possibly avoid claims.”