Why Insurance Costs Keep Rising, and How GPS Fleet Tracking Can Help
Key Takeaway: Auto Rates Will Keep Rising… But You Can Protect Your Business
When ClearPathGPS hosted a recent webinar with two experts at Leavitt Group, one of the country’s 10 largest private insurance brokerages, they had good news and bad news about commercial auto rates. In this post, we’ll explore both.
Why Do Commercial Auto Rates Keep Going Up?
The bad news is that commercial auto rates are still trending up, for many reasons. The main reason is that the commercial auto insurance industry has been unprofitable for the last decade, even though they’ve been raising their rates year after year. As Nick Campo, Director of Fleet Insurance for Leavitt Group, pointed out in our webinar, for every $1 these insurers have earned in premiums since 2010, they’ve had to pay out $1.08 in claims.
Here are the five market factors that Nick and his colleague Alex Miller, Leavitt Group’s Director of Safety Services, discussed to explain what’s been pushing up commercial auto rates:
1. Auto Repair Costs are Going Up
Nick cited one stat, for example, that vehicles are 2x more expensive to repair when they have some type of driver technology—such as lane departure detection or other self-driving capabilities assistance. Also, he noted, labor costs are rising as well, which drives up insurers’ costs to repair their clients’ vehicles.
2. Legal Challenges are Way Up
Because juries have been trending toward bigger judgments, lawyers are now more willing to roll the dice and go to court in auto-related cases. That also drives up insurers’ costs—even if they win.
3. Businesses are Hiring Less-experienced Drivers
As Alex pointed out, with greater demand for delivery services—even pre-pandemic, but also throughout 2020—businesses have been bringing on drivers at a faster pace than ever. That means we have more drivers out there with little or no experience. The increased demand also means experienced drivers are putting in longer hours, which can also lead to problems.
4. Fatal Traffic Accidents are Up
Leavitt Group also published a report citing data from the National Highway Traffic Safety Administration, which found that fatal crashes spiked 7% in 2020—even though there were fewer vehicles on the road due to the lockdowns. Worse: these crashes were up across almost every category:
Nighttime crashes (up 11%)
Weekend crashes (up 9%)
single-vehicle crashes (up 9%)
Passenger vehicle occupant fatalities (up 5%)
Urban interstates (up 15%)
Rural local/collector roads ( up 11%)
5. Drivers are Speeding More Often
Finally, Alex and Nick pointed out that speeding rates have steadily gone up over the years—and they really spiked in 2020. Consider these two eye-popping stats from a recent Wall Street Journal article. During a 5-week period in March 2020, New York City’s police cameras caught 296,000 speeders—81% more than during the same timeframe in 2019. Also in 2020, California’s Highway Patrol wrote 87% more tickets than in the previous year for drivers exceeding 100mph.
Okay, What Can We Do About it?
The news shared wasn’t all doom and gloom. Nick and Alex offered plenty of practical suggestions to help businesses better manage their fleets’ insurance costs. Let’s briefly review them here:
1. Build an Internal Risk Management Process
Alex explained that often businesses pay more in auto insurance over time because they lack processes that could reduce the problems that lead to claims and rate hikes in the first place.
For example, he says, businesses can mitigate many problems by beefing up the screening process for hiring new drivers, implementing ongoing training, and rolling out a driver-safety program. Watch the webinar to see the full walkthrough of Alex’s best practices for auto-related risk management. He’s got some great ideas.
2. Improve Your Insurance Process
Nick added that although commercial auto rates have gone up overall in recent years, that does not mean a business with a fleet of vehicles should just pick the first insurer they find and sign up for coverage.
There’s plenty of competition among insurance companies, and their quality of service can run the full spectrum as well. So, Nick pointed out, it’s worth working with a brokerage instead who can help you with the best match for your company’s specific needs, along with providing additional value. Nick has some valuable advice on finding help for your instance needs, check it out!
3. Leverage the Right Technologies!
Finally, Alex explained, you can save your business a lot of headaches—and money—on insurance-related challenges by having the right technologies. His top recommendation: The right GPS fleet tracking solution.
As Alex noted, before GPS tracking was available, a business sending its drivers out into the field would have no way of knowing what those drivers were doing with the company’s vehicles, how well (or poorly) they were treating the vehicles, or even where they were. As Alex said… “For all you knew, your drivers were treating your vehicles like rental cars.”
But with GPS fleet tracking, he said, you get a great amount of data that you can use not only after an incident, as evidence, but also proactively to influence and improve your driver’s behavior with your fleet. You can also work these into your internal processes, such as for performance programs to reward great driving in your company’s vehicles.
The bottom line, Alex said, is that implementing the right GPS fleet tracking system is one of the best things a company can do to improve its operations. We partner with ClearPathGPS for a reason, as we know they have the right system and focus on customer success that makes a difference.
GPS Tracking in Action: How Leavitt Group Used GPS Data to Defend Client Against Inaccurate Claim
A Leavitt Group commercial auto client was being sued over an accident on a highway onramp. The other driver’s insurer claimed that the company’s vehicle was going 65mph on the onramp, then swerved into another lane, and hit the other car. Luckily, though, the company was protecting its fleet with GPS fleet tracking.
That meant they were able to produce data showing the driver was going 40mph—not 65—and that he did not swerve into the other car’s lane.“We were able to really strongly defend that client,” Nick said. But what if the company didn’t have a GPS fleet tracking system installed on its fleet at the time of that accident? It would’ve been a risky case of we said, they said.
Want to learn more about rising insurance costs and what you can do about it?
We encourage you to watch the webinar recording or speak to one of our GPS specialists about how ClearPathGPS can help!
At ClearPathGPS, we are focused on helping our customers improve their operations and bottomline. Our top-rated GPS fleet tracking solutions provide real-time data insights and tools needed to more effectively manage the vehicles, people, and assets businesses send into the field everyday. Can ClearPathGPS help your operations get better results? Let’s find out – request a demo or contact us!