Commercial car performance improved in 2020, but segment price increases slow and severity could potentially deteriorate, according to a report Wednesday by Fitch Ratings Inc.
Commercial car insurance performance improved in 2020 by a combined 101.6% 2020, an improvement of 7.8 points compared to the 109.4% reported in 2019. The segment's total share averaged about 110% from 2015 to 2019.
Interest rate increases are expected to continue until 2021, but the insurer and broker's feedback indicates smaller increases and decreased speed after several years of double-digit increases. Information from the Council for Insurance Agents & Brokers' survey on commercial property / accidents indicates that the number of commercial car renewals has increased every quarter since the third quarter of 201
“Regular increases in the degree of damages are a key factor behind chronic problems with underperformance in commercial vehicles over the past decade. Higher costs due to increasing disputes and greater jury judgments and conciliation costs are likely to weigh profits in the future, says Fitch.
However, the decline in the claims rate was "unparalleled," Fitch said, with data from Schedule P of insurers' statutory applications showing a 26% reduction in the 2020 accident year in the total number of claims claimed. "… research from organizations, including the American Transportation Research Institute, points to a significant growth in the number of transportation lawsuits exceeding both $ 1 million and $ 10 million as a primary source of commercial volatility with automatic loss," Fitch said.