Commercial auto insurance has experienced poor performance in aggregate, but the industry has also seen pockets of improvement resulting from considerable and unique technological advancements.
Executive Summary
PART 2 of THREE-PART ARTICLE. After a tumultuous decade for the U.S. commercial auto insurance industry, fleet managers and insurance providers are rethinking how road experience should be monitored, underwritten and priced with the help of accelerating technological advancements. Many of these advancements aim to directly improve road safety, and others are expanding the insurance toolbox used to segment risk.
In this three-part article, a consulting actuary from Milliman and executives from Luminant Analytics and meshVI describe how advancements in data and tech are revamping the commercial auto insurance industry.
Part 1 provides an overview of the U.S. commercial auto insurance line's historical performance and key drivers of the current market performance.
Part 2 details the vast improvements in technology and data that the industry has embraced in the last decade.
Part 3 focuses on the growth and positive performance of a recent cohort of commercial auto InsurTech startups in the last five years.
The primary drivers behind these advancements have come from commercial vehicle owners and fleet managers adhering to changes in safety improvements, environmental sustainability and government regulations as well as an underlying push for operational efficiencies.
While different in their purposes, many of these changes have and will impact risk profiles, claims frequency and severity, and insurance products.
Regulatory demands often largely influence technological advancement and implementation. Examples in two key areas include mandatory compliance with existing regulations, such as implementation of electronic logging devices (ELDs), and the anticipated forthcoming regulations concerning autonomous vehicles.
Telematics and ADAS
Technology improvements focused on safety include systems like advanced driver assistance systems (ADAS), which are increasingly prevalent in commercial vehicles. Likewise, telematics devices can include operational efficiencies, compliance and safety advancements. Telematics devices range from front-facing, driver-facing and side cameras to real-time vehicle tracking, geospatial monitoring, remote diagnostics, predictive maintenance, driver behavior monitoring, route optimization and fuel efficiency tracking.
The advancement in telematics provides not only an immediately obvious solution but also invaluable data that the insurance industry is beginning to leverage. One of the main obstacles the insurance industry faces in fully utilizing this revolutionary data is the vast number of telematics service providers (TSPs) and their unique data and technological capabilities.
