According to Traveler's Risk Index, in 2024, one in four commercial auto accidents was caused by tech-influenced distracted driving. For insurance companies, distracted driving is a twofold problem: one, addressing driver behavior, and two, assessing the risk it poses to profitability.
As the evolution of artificial intelligence (AI) and big data begin to influence the insurance market, commercial auto insurance Risk Control teams can work cross-functionally to utilize data solutions to mitigate distracted driving risk and accurately price policies.
We will explore the consequences of distracted driving, draw a strategic connection between Risk Control within commercial auto insurance and explain why this internal function is necessary to reduce the risk of distracted driving.
The direct impact of distracted driving has been tangible in the commercial auto insurance market in a financial and operational way. The Council of Insurance Agents & Brokers (CIAB) shared that market conditions are unstable in relation to premium pricing. According to their Q4 2024 Market Index survey, commercial auto premiums increased by 8.9%, the highest of all lines.
This was the 54th consecutive quarter of commercial auto premium increases.
These premium increases were the direct result of lowered underwriting capacity and increased claims. A report by AM Best states that the severity of accidents involving commercial vehicles in 2023 was affected mainly by distracted driving, social inflation and a shortage of experienced drivers.
“The U.S. commercial auto insurance segment incurred a net loss of $5 billion in 2023, with results in the first half of 2024 showing further deterioration.”
– AM Best’s Special Report
The exacerbated costs and rise in nuclear verdicts caused by distracted driving pose challenges for Risk Control teams to present effective solutions and strategies that can mitigate risk. However, these teams also have an opportunity to explore and utilize driver data, which may create a comprehensive view of risk that can lead to targeted pricing and risk prevention.
Today, vast amounts of data exist for Risk Control teams to leverage in a pivotal way to combat the growing concern and threat of distracted driving. Telematics, driver monitoring systems and motor vehicle records (MVRs) are all data points that can provide insight into driver behavior—offering a complete view of driver risk. Here’s how:
When Risk Control teams integrate multiple streams of data sources, they have a unique opportunity to deliver mitigation strategies to underwriting or claims teams surrounding distracted driving.
Risk Control, equipped with a comprehensive view of data, has core internal goals that guide their team within a commercial auto insurer. Here’s what they aim to do:
With these goals in mind and data to influence decisions, Risk Control may present teams with several interventions. For example, with identified patterns of distracted or risky driving through telematics, internal teams can segment their book of business based on risk profiles. This data can also bring more visibility to accurately price, lower claim frequency and proactively intervene with mitigation strategies.
Reviewing claims data and understanding how it relates to driver behavior, vehicle types or routes can flag repeat patterns in loss events and give a closer look at adjusting coverage terms. Overall, this data can equip Risk Control to recommend smarter policy decisions and less surprising losses that often lead to nuclear verdicts.
Telematics devices or dashcams that detect risky driving behavior can provide rich data to support accurate risk classification. Risk Control can provide reports to Underwriting to help evaluate a commercial policyholder’s risk for pricing.
Lastly, Risk Control can leverage data on newly bound policies to identify hidden risks, set benchmarks for improvement and establish engagement strategies. This assistance to insurers avoids unmanageable risk and strengthens profitability—a hurdle for the insurance market to date.
A complete view of data allows Risk Control teams to create proactive measures for their commercial policyholders to identify, monitor and intervene in distracted driving before accidents happen. For example, an account with patterns of excessive phone use and erratic lane changes may indicate the need to implement policies around distracted driving, such as proactive training.
Outside of individual driver risk, aggregated data can reveal broader trends or patterns of distracted driving incidents. Risk Control teams can equip the company with these data patterns to improve risk segmentation and enable more accurate pricing.
While distracted driving on the surface seems like a driver-only problem, in the commercial insurance world, it's a business risk, a liability and a claims driver. That’s where Risk Control comes into the picture.
These strategic teams offer data-led offerings to their commercial lines counterparts to evaluate and mitigate the risks ahead. Whether it’s through risk assessments that inform underwriters to price customers or reduced litigation exposure, Risk Control has the impact of reshaping how commercial auto insurers manage distraction.
For SambaSafety, we offer a comprehensive 360-degree view of data that creates a comprehensive risk profile for Risk Control to evaluate and present leadership with the chance to mitigate risk through fleet training programs or improve commercial underwriting precision.
Managing risk doesn't have to be trivial. In our upcoming webinar, we'll explore what could be driving premium increases and discuss what strategies, like the ones we outlined here, are helping combat the rise in insurance costs. Sign up below to join our industry experts on May 20.