The Summit

Beacon Hill Associates, Inc. A publication of Beacon Hill Associates, Inc.
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The Complex Market for Auto Coverage

The increase in transportation-related lawsuits, coupled with a hardening market, creates an interesting climate for Auto coverage

The outlook for auto insurance market is complex and challenging. Securing Commercial Auto coverage has been tricky not only for carriers and agents but for insureds as well. Agents and brokers are still having difficulty placing Auto and carriers are struggling to write accounts for profitable premiums. Carriers also are tightening their appetites, declining certain classes of business or certain states altogether. These challenges will continue for 2020 due to a few reasons:

The first is claim severity and litigation. For years now, auto claims have been taking longer to settle and are increasing in the amounts paid for claims. One auto liability claim can result in a million dollar settlement or more. Lawyers are also marketing to the public to hire them for auto claims and are extending litigation, resulting in insurance carriers paying  higher amounts.

The second issue is with the insurance market itself. In terms of premium, auto accounts are in some cases being quoted and written for much lower than they need to be. The auto market is still quite soft and some insurance carriers will rate these accounts for cheaper premiums. With the claims severity and litigation issue, this will only result in more money being lost and paid for claims when they do occur.

But not all is bad for the auto world and some improvements are being made. For example, the market is in the beginning stages of hardening, and premiums have been going up slightly. Safety for many insureds is being improved. A lot of insureds now are adding safety policies they didn’t have before or are improving upon the policies they had in place. Agents and their insureds are also becoming more educated on the struggles with placing auto insurance. There are many published articles that explain the current challenges with the auto market and what carriers are looking for, as well as the obstacles they are facing. These informational resources will help to improve the overall understanding of Auto coverage and the current market state.

Although the auto insurance market is changing, one thing remains the same—the demand for this type of coverage continues to rise and the potential for pollution-related transportation incidents will always be there. Any business employing contractors who perform work at a client’s site needs to consider these possible risks. When underwriters are transparent about the challenges in writing these accounts, and then agents keep their clients informed, the process to secure the right Auto coverage is clearer and more straightforward.

For more information on Auto coverage, or to discuss a specific account, please contact us.

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