2024 Commercial Auto Insurance Market Outlook

The auto insurance market has experienced a tumultuous few years. COVID-19-induced production challenges, supply chain disruptions and inflationary pressures have led to hardening conditions and premium hikes. Some of these pressures have eased, and other factors now weigh on the market. Specifically, the rapid emergence of electric vehicles, connected cars and autonomous vehicles points to a period of systemic change for the industry, making it difficult for insurers to predict the future cost of claims. Additionally, stolen vehicle trends, auto insurance fraud and high claims costs are ongoing market factors. As such, the hard market may prevail into 2024, and premiums could increase, especially for policyholders with sizeable fleets or poor loss histories.

Well-performing fleets with robust risk management strategies and thorough driver training programs will be best equipped to navigate the coming year’s commercial auto insurance market.

Developments and Trends To Watch

• Driver shortages—The growth in e-commerce during the COVID-19 pandemic increased the demand for delivery drivers, leaving a shortfall. Additionally, much of the trucking industry’s workforce is approaching retirement age, further impacting vacant driver positions. The sector is currently short of 20,000 drivers, which may soon grow to 30,000 given the increasing average driver age, according to a report by professional services firm PwC. Although some businesses have proactively adjusted recruitment and retention strategies to help expand talent pools, some have had to lower their driving applicant standards to fill open positions. Unfortunately, this strategy could increase commercial auto losses and related claims in 2024.
• Inflation—Inflationary pressures have driven up motor parts and vehicle repair expenses. According to Statistics Canada, vehicle parts, maintenance and repairs costs increased 5.6% from October 2022 to September 2023. Although some Canadian provinces (e.g., Alberta and Ontario) have announced legislative changes to combat the ongoing auto insurance premium inflation, premiums may still increase for some policyholders. Reporting accidents swiftly may help fleet managers keep
  costs down and improve outcomes.
• Increased crime—Auto theft increased in Ontario by 31% and in Quebec by 17% year over year in the first half of 2023, according to fraud prevention firm Équité. This trend could continue, especially since sophisticated electronic tools make it easier for fraudsters to bypass modern vehicle security systems. Consequently, premiums could increase, especially for specific vehicle models. Moreover, the market has also seen increased cargo theft and staged collisions as some individuals resort to crime due to the inflated costs of goods and services.
• Evolving technology—In recent years, vehicles have become more advanced and incorporated new technology (e.g., blind-spot cameras, GPS devices and other sensors) to increase driver safety and bolster fleet operational efficiency. When implemented correctly, this technology has the potential to reduce road accidents significantly. However, vehicles with high levels of technology may be more challenging to repair, which could increase premiums. Overall, technology could both help and hinder the market in 2024.

Tips for Insurance Buyers

• Consider the merits of fleet telematics systems and other technology solutions to gather real-time data to aid risk management. Constantly scrutinize the risks associated with technology use, especially regarding data collection and storage.
• Establish effective onboarding measures for new drivers and regularly retrain them on safe driving techniques. Implement a robust attraction and retention program to maintain experienced drivers and attract new talent. For instance, offer enhanced employee perks, provide upskilling opportunities, and implement measures to bolster employee well-being.
• Prioritize accident prevention initiatives and establish proper post-accident investigation protocols.
• Speak to your insurance professional to determine if any changes to your commercial auto policies are required.

CMB Insurance offers a reliable, one-stop source for insurance and safety solutions. We have teamed up with Strategic HSE Systems Inc. to provide compliance and safety solutions for your transportation business. Find out more here.

For information on trucking insurance, or to find out how to reduce your insurance costs call CMB at 780.424.2727 or click here to get a quote. 

This Market Outlook is not intended to be exhaustive, nor should any discussion or opinions be construed as professional advice.