The on-demand economy was transforming the commercial auto market even before the pandemic hit, with consumers tapping new ride services to get around and relying on delivery not just for pizza, but for weekly groceries, household goods, and anything you can order online.
The trend has accelerated as more people began working from home and avoiding public gathering places in 2020. Already a tough line of business for insurers with nearly a decade of losses and expenses exceeding premiums, some commercial auto insurers are responding to the accelerating on-demand economy with new products that are more flexible and responsive to the changing marketplace.
During our Verisk Velocity session Commercial Auto Exposure Insights from COVID-19 and Data-Driven Risk Management Strategies, we were joined by an automotive telematics expert to discuss how incorporating relevant customer data into underwriting can be the difference between profitability and unprofitability for insurers, especially today.
Here are some key takeaways:
Coverage by exposure: One-size-fits-all insurance coverage often doesn’t fit anymore, as a vehicle may only be used for commercial purposes part of the time, say by a part-time delivery driver. Commercial insurance by the hour, by the mile, or by stages of risk presents more options for insurers to accurately rate an on-demand customer or to potentially exclude exposures that don’t fit within their risk portfolios.
Assessing where liability falls: The on-demand economy has the potential to blur liability for commercial auto carriers. It’s important for insurers to fully understand the exposure of a customer’s contractual relationships.
Telematics adds data: Embedded devices in commercial vehicles can give accurate data about everything from a driver’s speed to a vehicle’s location, fuel efficiency, and need for maintenance. Vehicle operational data is highly predictive of future claims experience for the purposes of risk evaluation. This data can inform decision-making for insurers on how to price policies and control loss costs.
Verisk offers a full suite of Commercial Auto Solutions that accurately identify exposure and help insurers reach better margins.