Among the 20 top commercial auto insurers, 14 had combined ratios of more than 100 last year. (Credit: Kalyakan/Adobe Stock)
The commercial auto insurance sector had a $4.9 billion underwriting loss in 2024, according to a new report from AM Best.
Commercial auto liability coverage saw a $6.4 billion loss, its largest ever. Meanwhile, commercial auto physical damage coverage had a profit of $1.5 billion.
Among the 20 top commercial auto insurers, 14 had combined ratios of more than 100 last year. A combined ratio above 100 means an insurer had an underwriting loss, where the cost of claims and operations was greater than the premium income collected from policyholders.
It’s the 14th consecutive year of negative performance for the commercial auto insurance industry. Rate increases have not been able to keep up with the rising cost of claims. Liability claim severity has risen 8% annually, according to the report, which is nearly three times the rate of inflation.
Third-party litigation funding and nuclear verdicts are the main reasons claims costs are rising. Technology adoption has helped commercial auto insurers streamline operations and cut six points off their expense ratios, but it hasn’t been enough to keep up with higher claims costs.
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