Navigating Fleet Insurance: Trends, Challenges, and Risk Reduction Strategies

Fleet insurance is a critical component, and often a sizeable line item, for companies that operate their own fleets, ranging from smaller and lighter schedules to larger operators with extra-heavy vehicles. As the landscape of fleet insurance evolves, understanding the current trends driving rate increases and how to best mitigate them is essential to protect a company’s assets and manage its bottom line.

Continued Escalation of Insurance Costs

As of this writing, commercial auto insurance premiums have been on the rise for several years, and it doesn’t appear there’s an end in sight. Increases have most notably impacted states in the Southeast, Texas, and California, but the effects are felt nationwide.

The upward trend has been driven by several factors, including economic inflation, shifting cultural ideas of fault, higher repair costs, and more. However, the largest contribution comes from claim litigation and third-party litigation financing, which pave the way for nuclear verdicts. The fear of staring down a nuclear verdict has pushed insurance carriers to settle claims long before a jury trial, and as settlement costs only continue to rise, insurance carriers continue to lose money in the commercial auto segment.

This trend underscores the importance of proactive legal strategies and robust claims management practices to mitigate litigation risks.

Mitigating Risk Through Safety and Loss Control

In today’s climate, fleet operators need to be proactive about creating and implementing safety and loss control programs, and it all starts with drivers. Implementing a robust driver interviewing process can help eliminate risk before someone is hired. After onboarding and new-hire training, a schedule of ongoing training throughout the year should be established to emphasize and remind the team about the company’s commitment to safety. Fostering a culture of safety within the organization by promoting accountability, recognizing and rewarding safe driving behavior, and providing ongoing communication and feedback on safety performance encourages continuous improvement. ​

In addition to driver-based risk mitigation, companies with a fleet on the road should have a dedicated vehicle maintenance program, accident reporting structure, and a no cell phone policy. Telematics, dash cameras, and other technologies have become more cost effective and easier to implement in recent years – all of which will bolster a safety program and help justify a lower premium when properly communicated to insurance carriers. 

Alternative Solutions to the Standard Insurance Market

In the standard insurance market, the top-performing operators subsidize their subpar competitors. Those who would rather be rated on their own performance instead of being community rated have been actively seeking alternative methods of risk transfer. Those who can afford to take on more risk, and who seek more control, stability, and transparency, have moved to highly customized policies designed for their specific needs, Group Captives or Single Parent Captives, depending on size. These options allow best-in-class operators to take advantage of lower risk sharing within the market, maintaining more favorable and consistent pricing and maximizing the ROI on their insurance spend.

Conclusion

Navigating the complexities of fleet insurance requires more than reacting to premium increases.  It requires a thorough understanding of current trends as well as the implementation of effective risk mitigation strategies that align with a company’s goals and a fierce commitment to performance. By staying informed and being proactive, operators can better manage and predict their insurance spend.

If you‘re looking for a customized commercial auto insurance solution, a customized safety program, an evaluation of your current program, information on captives, loss control services or more, contact us at (972) 387-3000 or info@swinglecollins.com to be paired with one of our Risk Advisors.