How Technology is Transforming Commercial Auto Insurance


Over the last decade, technology has made a real splash in commercial auto insurance. So, what’s new? For insurers who want to win the business of tech-savvy customers, there’s a message in the trends. An annual survey of insurance execs conducted by Guy Carpenter and Co. found that 42 percent of respondents consider technology the greatest opportunity to grow their business in 2017.

UBI is making big ripples

Usage-based insurance is getting the most attention in personal lines, but it may also prove successful with commercial drivers. Insurance Journal reports that more than fifty percent of small fleet managers who took part in the 2015 Commercial Usage Based Insurance Study said they would switch to a carrier offering usage-based insurance if it provided a 10 percent discount and fleet management services.

New safety features are coming

Advances in technology promise to improve safety. Automotive Fleet lists several crucial technologies, including automatic braking, lane departure warnings and cross traffic alerts. As these technologies become more common in fleets, the risk of accidents will decrease—good news for both fleet owners and insurers.

Commercial drivers are embracing telematics

Other technological advances are providing useful data. Monitoring systems such as GPS trackers and dashcams can contribute to route optimization and safer driving habits

Commercial drivers who are familiar with telematics are embracing it, according to Work Truck Online. A survey found that 95 percent of employees who had used GPS tracking at work reported positive or neutral experiences. One company that installed a video telematics program also reported a positive experience. This willingness among commercial drivers will make it easier for fleet owners and insurers to adopt telematics.

Auto insurance is underperforming

While tech gets hotter, commercial auto insurance is staying cold. The entire market reported an underwriting loss for five consecutive years, according to Fitch Ratings. By contrast, P&C as a whole turned a “significant profit” for three years running.

The struggle stems from three factors: collision frequency is up, severity is up, and the medical costs associated with catastrophic bodily injury are up, too. It’s a perfect storm for big claims costs.

Fleets represent a major opportunity

In an underperforming market, new technology provides a way forward. As telematics programs improve and UBI continues expanding into commercial fleets, it’s clear that insurers must get nimble.

The question is, how to earn the business of today’s most tech-savvy clients – especially trucking, taxi and municipality fleets? Three recommendations:

  1. Think long-term. According to PwC, cyber insurance will grow from $2.5 billion to $6.5 billion in the five years spanning 2015 to 2020. Put yourself in a position to capitalize on that trend.
  2. Ditch your legacy system. “The industry is not out of the woods yet when it comes to the replacement of decades of legacy systems with the kinds of platforms that set the foundation for future innovative practices and processes,” said Property Casualty 360. If you haven’t started your journey yet, your disadvantage is going to become increasingly apparent.
  3. Offer innovative services. The “future is wide open” for those who’ve made progress in this area, Property Casualty 360 said – functionality, stability and expanded offerings being three examples.

Silvervine can help. Talk to us about how you can position yourself to capture the business of tech-savvy customers and commercial fleets during a difficult time in the overall auto insurance market. Download our Losing Your Legacy report to learn more.