Loss Trends in the Automobile Market

There have been numerous recent headlines regarding vehicle accidents with extraordinary large claim payouts that reach well into the tens of millions of dollars. The majority of these accidents involved large trucks/tractors, however a few have been caused by private passenger automobiles, particularly from the “hired and non-owned” exposure, where employees are either renting a vehicle or using a private vehicle on company business.

In looking further into these recent large events, some common factors/trends come to mind:

• Driver fatigue (hours of service)
• Driver distraction from texting/cellphone usage
• Aging workforce (slower reaction time)
• Relatively new employees that have unfamiliarity with the equipment or route
• Employees that pass the 1-year mark and have become comfortable with driving let down their guard
• Faulty vehicle maintenance

As reported by recent statistics:

• According to the U.S. Bureau of Labor Statistics, in 2014 work-related vehicle crashes on public roadways were the leading causes of work-related fatalities, accounting for 23%.
• The National Highway Traffic Safety Administration (NHTSA) stated that based on a study released in 2014, the economic cost of motor vehicle accidents totaled more than $277 billion in 2010. With quality of life valuations from motor vehicle accidents adding another $594 billion, the cost totals to $871 billion.

As these large events continue to rise, it has caused some concern in the insurance marketplace by the reduction in available risk bearing capacity or reconsidering the product offering for automobile/truck liability. Insureds with large fleets are actively involved in trying to mitigate these exposures by investing capital and resources in safety and driver training programs, more vigorous driver selection reviews, fleet maintenance, and having a robust claims management approach.

At Old Republic Risk Management, our unbundled approach to claims and loss control allows our insureds to determine which claims protocol is best for them and which safety programs fit their goals and budgets. We are dedicated to managing these risks for the long run and are willing to provide solutions from an underwriting and claims perspective as we continue to see rise in these unfortunate circumstances.