Elevated inflation, rising litigation and medical costs, and the increasing complexity of technologies used in today’s vehicles are making auto claims more expensive each year. Although stay-at-home orders during the COVID-19 pandemic helped quell the sustained cost growth, auto insurance loss ratios in the second quarter of 2022 climbed to their second-highest level in 20 years.1 

To offset the higher cost of auto claims, insurance carriers are increasing premiums, tightening their underwriting standards and reducing coverage options to maintain profitability — and passing those costs onto consumers.

While the inflationary environment and surge in litigation and medical costs is likely to continue, fleet managers that embrace data analysis tools can offset the effect of rising auto claims and show carriers they’re a good risk. Implementing tools such as telematics not only help uncover undesirable driver behaviors but also identify vehicle issues and accident near-misses — leading to substantial cost savings. 

Maximize data to minimize risk

Creating an effective risk management strategy that centers around data analysis can help fleet managers reduce their exposures and secure insurance coverage with the best terms and conditions at the best price. To start the process, fleet managers should:

  • Conduct a risk assessment. Look at all fleet exposures and identify potential risks associated with vehicles and driving habits. This may involve an analysis of driving records to pinpoint patterns of accidents or tickets that could lead to higher claims. In addition, the assessment should include a review of vehicle safety features and upgrades that could reduce the risk of accidents.
  • Invest in technology. Advancements in technology can help reduce the number of accidents — and the number of claims. For example, telematic devices can monitor driving behavior, provide feedback to drivers and encourage safer behind-the-wheel practices. Advanced safety features in cars — such as automatic emergency braking and lane departure warnings — can further reduce the likelihood of accidents.
  • Make education a regular occurrence. Frequent education and awareness campaigns can help drivers understand the risks of unsafe driving practices and encourage them to take measures to reduce their risk of accidents. This can include programs that provide tips for safe driving and promote responsible behavior on the road. Consider offering bonuses, days off or other rewards to incentivize good driving behavior.
  • Know how to manage claims. If an incident occurs, have a plan in place for collecting all necessary documentation for your broker to expedite the claim filing process. Share any relevant data— such as video recordings or telematics — that may help your broker negotiate with the carrier to ensure you’re fairly compensated for your claim.
  • Collaborate with your broker. Sharing data and best practices with your broker can help you further develop effective risk management solutions and minimize the impact of rising claims on your bottom line. Maintaining regular communication with your broker can also help you better align your insurance policies with your risk profile.

Contact HUB International’s claims management specialists to learn more about reducing claims costs in your auto fleet.

1 American Property Casualty Insurance Association, “APCIA Publishes New Paper Outlining the Latest Data regarding the Impact Inflation has on Auto Insurance,” October 24, 2022.