Gulfshore Insurance > Gulfshore Blog > Commercial Risk Management > More Accidents, More Dollars

Gulfshore Insurance is pleased to bring you this eye-opening series that explores the rise in commercial auto insurance costs; factors impacting the rise in claims; and solutions you can implement to help combat the situation. If you have any questions or concerns, don’t hesitate to contact one of our trusted advisors. Click below to read previous articles in this series:

 


 

After investigating the factors contributing to auto loss, it’s clear that more accidents, means more claims. Rising claims costs typically stem from either increased frequency or severity — but in the case of commercial auto, it’s both. Across the nation, the frequency of collision claims continues to rise, and in addition to increased frequency, a variety of other factors are driving up claim severity, resulting in higher payments for both bodily injury and property damage. Treating those injured in a commercial auto accident is more expensive than ever as medical costs rise at a faster rate than the overall Consumer Price Index.

This increasing trend in the industry is showing no signs of slowing or reversing. Here are three examples of recent claims that highlight how the “collision” of claims frequency and severity is impacting the auto insurance industry:

  • Claim #1: Improper Maintenance – 1998 Truck with 463,000 Miles 

Driver was heading north on the Florida Turnpike when he noticed his truck began shaking and was losing power. He pulled over to the shoulder and noticed the driveshaft had broken off and was in the middle of the highway.  The plaintiff’s counsel argued the truck was not maintained properly. The insured confirmed they perform all maintenance in-house.  The truck was unable to be inspected to determine what caused the driveshaft to break loose. A total of 10 vehicles struck the shaft, with each suffering damage, and one of the drivers suffering injuries to the neck and shoulder.   Total cost of claim: $239,011.31

  • Claim #2: DOT Violation/Improper Screening of Drivers

Insured driver was operating a tractor, pulling a flat-bed trailer loaded with sod. Driver made an illegal U-turn.  A vehicle traveling in the opposite direction struck the trailer in the right rear indicating the U-turn had been nearly completed at the time of the collision.  Driver suffered severe injuries to legs, hips, and knees; had $10,000 in PIP, and no medical payments coverage. Insured driver was cited in the accident. It was later determined the insured driver was employed for less than a month, and had two prior moving violations on his MVR in the six months prior to the accident, to include careless driving.  Furthermore, the trailer lacked proper reflective tape and was additionally cited for a DOT violation.  A witness statement also placed 100% of the blame on the insured driver. Total cost of claim: $758,969.35

  • Claim #3: Improper Repair/Improper Screening of Drivers

Insured driver was heading north on I-295 in the right-hand lane, when the claimant suddenly changed lanes and drove his vehicle into the rear of the insured’s truck. After the impact, the claimant traveled into the left lane and struck the inside guardrail, swerved back into the travel lanes and rolled several times before coming to a stop.  The insured’s vehicle suffered minor damages, and was placed back into service shortly after the accident. The insured driver was not cited by local law enforcement, or the DOT. Plaintiff’s counsel argued negligence on the operation of the truck, after an investigation revealed the insured’s driver had a criminal history which included possession, resisting arrest, and driving on a suspended license. They also argued negligence on the maintenance of the truck after discovering the underride bar was not properly installed, and did not perform as advertised due to a modification performed by the insured.  The insured admitted to welding metal strips onto the bottom of the underride bar due to the original welds breaking loose after normal wear-and-tear.  The manufacturer claimed the modifications changed the original product, not allowing it to work as advertised, and the plaintiff’s counsel argued the accident would not have been as severe had the bar not been modified. Total cost of claim: $201,070.00

As you can see from the shocking costs above, now is the time to reign in your auto exposure, before the cost of claims balloons even further. With claims at an all-time high, commercial auto policyholders should consider utilizing a consultative approach and tools to better manage their transportation exposures.

Don’t miss our final article in the series where we will highlight: solutions & best practices companies can use to help alleviate the bumpy road auto insurance has become. Organizations who partner closely with their insurance and risk management professionals to understand these risks – and the consultative support and tools available to manage them – will be better positioned to protect their employees, fleets, and businesses.