Uncovering profitability strategies for commercial auto insurers

By Jimmy Engström, Greg Jacobs, Jane Shaughnessy

March 11, 2025 / 3 min read

The difficult journey for commercial auto insurance is now well into its second decade, with combined ratios exceeding 100 since 2011.¹ Persistent social inflation² and risky driving behaviors that have outlasted the pandemic³ pose continuing challenges to profitability in commercial auto.

However, it’s possible to succeed with focused strategies that leverage data and analytics to gain a competitive edge, avoid adverse selection, and manage expenses. A recent Verisk white paper, Commercial Auto Profitability: Analytic Approaches and Innovative Tools, explores four strategies in detail.

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Tackle premium leakage with non-rate actions

Radius misclassification alone drove more than $15 billion in premium leakage over 10 years.⁴ Confronting mismatched pricing and risk with non-rate actions that don’t require a rate filing can be a quick way to meet profitability challenges across the policy life cycle. Opportunities include:

Radius – A Verisk study found 23% of commercial vehicles operating beyond the policyholder’s stated radius.⁵ Focusing on the “worst offenders” with tools such as Verisk’s RadiusCheck, which delivers photographic documentation on where and when insured vehicles actually operate, can yield a significant return on investment.

Registration – It’s vital to uncover information such as junked, salvaged, or flooded vehicles or other issues surrounding use, registration, or title history. Verisk’s Vehicle Registration Reports can help find the facts—automatically.

Vehicle attributes – Vehicle identification numbers (VINs) contain vehicle-specific details that bypass self-reported and potentially unreliable information, supporting more accurate replacement costs and premiums. Verisk’s CL VIN Decode can deliver those details.

Optimize spending in a hard market

With the national average cost of a motor vehicle report (MVR) well into double digits⁶, the mission-critical function of tracking driver risk is among the highest costs for commercial auto insurers. A range of Verisk tools can help meet the need effectively but cost-efficiently:

Prefilled incident details – As with other aspects of underwriting, prefill can accelerate delivery of traffic incident indicators or full details upfront to streamline workflows with optimized MVR ordering.

Index of activity – Cost-efficient indicators can flag violations or other incidents that trigger an MVR order—or the choice to skip unnecessary MVRs.

Driver monitoring – It’s possible to know in near-real-time about driver incidents that warrant ordering a new MVR for rerating and reunderwriting before policy renewal.

Unmatched, multisource Public Records Intelligence^TM from Verisk supports effective MVR expense optimization.

Verisk also helps insurers streamline compliance and spend less by handling auto liability insurance reporting (ALIR) for one out of every four registered vehicles.⁷ Carriers can more efficiently meet requirements such as state DMV reporting and loss payee and interested party notices by outsourcing to an industry leader using Verisk’s CV Services.

Achieve scalable straight-through processing

Straight-through processing of eligible business can provide a direct return on investment through expense and time savings—while enhancing agent and policyholder experiences. Proprietary digital connections and partnerships with technology leaders across the industry support seamless integration and streamlined, low-touch processes.

This includes Verisk’s CL VIN Decode, which extracts detailed vehicle characteristics to drive finer risk segmentation, more automated workflows, and more precise pricing with available support from the ISO Commercial Auto Class Plan.

CL VIN Decode offers multiple ways to connect:

Inside the Verisk ecosystem on Verisk’s LightSpeed^®Commercial Auto platform
A Guidewire Accelerator, the in development

Boost rating segmentation with comprehensive data and analytics

Data-forward workflows can help improve the customer experience and conversion rates, but adverse selection can still infiltrate a portfolio. ISO Risk Analyzer Commercial Auto modules can accelerate the complex actuarial analysis needed to maintain a sound portfolio with refined pricing segmentation.

For example:

Localized environmental data, from traffic patterns to weather and terrain, can help refine rating with thousands rather than dozens of territories.

VIN-specific rating symbols can match premiums to expected losses by vehicle type for liability and physical damage, delivering significant lift on top of ISO’s Class Plan for commercial auto.

Innovate to succeed

The above strategies can help insurers prosper through adversity, from fighting premium leakage to containing expenses and leveraging digital workflows and advanced analytics. These advances can continue delivering benefits regardless of market fluctuations.

Take a deeper dive into modernizing your commercial auto strategy when you read our white paper.

Download the white paper

Aggregates and Averages, AM Best, 2011–2023.
“Social Inflation Contributed to $30B Increase in Commercial Auto Costs, Paper Finds,” Insurance Information Institute, March 6, 2023.
Early Estimate of Motor Vehicle Fatalities for the First Quarter of 2023, U.S. Department of Transportation and National Highway Traffic Safety Administration, June 2023.
Recapturing $6.4 Billion in Commercial Auto Premium Leakage, Verisk, 2017
Ibid.
As MVR Fees Increase, Verisk Expands Violation Risk Capabilities. Verisk Blog, July 14, 2023, plus the latest MVR fee increase through February 2024.
Verisk analysis of automobile liability insurance reporting outsourcing.