Commercial Automobile Insurers Could See Fewer But Costlier Claims in Pandemic (AM BestTV)

OLDWICK, N.J.--()--In this episode of AMBestTV, insurance industry experts say they worry that essential workers logging longer hours could hike claims severity, even though insurers saw accident frequency drop during the quarantine. Click on http://www.ambest.com/v.asp?v=commercialauto620 to view the entire program.

Since the shelter in place order went into effect, there has been less traffic on the road. Consequently, fewer cars, buses and trucks mean fewer accidents.

“Looking at data from March 2020, overall, there is an approximate 11% decrease in accidents reported,” said, Kyle Hoffman, vice president of customer success, Convr. “It certainly indicates that we will see fewer losses in commercial automobile while we have shelter in place. The question ultimately is whether premiums will decrease at a rate similar to, or faster or slower than what we see losses decreasing at.”

Despite the drop in the number of accidents, Sam Hanig, senior industry analyst, AM Best, said there are still factors that could affect claims frequency and severity.

“To insure critical supply chains, like medical, food and pharmaceuticals, and to make sure these are not disrupted, the Federal Motor Carry Safety Administration relaxed some of its requirements on commercial drivers’ licenses and learners’ permits. Included in the relaxation is the easing of the 60-70 requirement, which says that if a driver has driven 60 hours in seven days or 70 hours in eight days, that person must have 10 hours consecutively off before transporting goods again. This relaxed rule could lead to driver fatigue, which could mean more accidents.”

“The vehicles that are on the roads are finding them less congested, so they are going to be traveling at a higher rate of speed,” added David Blades, associate director, AM Best. “When you talk about those larger vehicles getting into accidents at that higher rate of speed, there could be more serious accidents that emerge.”

A recent Best’s Market Segment Report on the U.S. commercial auto sector can be found at http://www3.ambest.com/bestweek/purchase.asp?record_code=296100.

Recent AMBestTV coverage includes:

  • Bail Bond Market Grows Despite Legislative Headwinds: David Blades, associate director, and Max Gilberg, associate analyst, both of AM Best, said the bail bond market grew 10.4% in the past five years, despite legislative changes intended to dampen its relevancy: http://www.ambest.com/v.asp?v=bailbonds520.
  • Growing COVID-19-Driven Pressures on Japan Life Insurance Market Prompted Outlook Revision to Negative: Jason Shum, associate director, analytics, AM Best, said pressures on the Japan life insurance market, including mortality table updates, low interest rates and the COVID-19 pandemic, were factors in an outlook revision on the market to negative: http://www.ambest.com/v.asp?v=ambjapan520.
  • Insurers Reduce Hedge-Fund Investments for Fourth-Straight Year: Jason Hopper, associate director, AM Best, said U.S. insurers for a fourth straight year reduced their hedge-fund investments, to $12 billion in 2019 from $25 billion in 2015: http://www.ambest.com/v.asp?v=ambhedgefunds520.
  • Artemis Owner: ILS Industry Rebounding From Cat Losses: The insurance-linked securities industry is “doubling down” to make the market more resilient after a spate of natural catastrophe losses, said Steve Evans, owner and editor of Artemis: http://www.ambest.com/v.asp?v=evans220.

AM BestTV covers exclusive AM Best and insurance industry information and reports, targeted topics and key developments in the insurance, reinsurance and related sectors daily. Sign up for alerts of episodes at www.ambest.com/multimedia/ambtvsignup.html. View AM BestTV episodes at www.ambest.tv.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2020 by A.M. Best Company, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Contacts

Lee McDonald
Group Vice President, Publication and News Services
+1 908 439 2200, ext. 5561
lee.mcdonald@ambest.com

Contacts

Lee McDonald
Group Vice President, Publication and News Services
+1 908 439 2200, ext. 5561
lee.mcdonald@ambest.com