VEHICLE INSURANCE PERFECT STORM UNPACKED
Many members want answers to the questions surrounding insurance costs for commercial vehicles and all the confusion surrounding the subject.
The first thing you should know is that in California, there was an exodus of insurance carriers that left the market or went out of business in recent months. With exceptions like Merced who was undone by the extensive wildfire damage claims, most
simply were not making money. In fact, commercial auto was unprofitable from 2015 to 2019 and generated underwriting losses from 2012 through 2019. While I know you’re all experiencing “sticker shock” at the cost to insure your vehicles today, the truth is that prices were artificially too low for the past years. Insurers who are left in the market are trying to keep their doors open. We want that because we need insurance. Also, there are much less companies and vehicles doing transportation work. The market has been down 85-95% since early 2020. With less companies buying insurance, there is less dilution. The more insureds, the more the cost of doing business can be spread out. On the converse, a smaller market drives per unit pricing up.
Insurers are targets for claims and suits. There exists an entire industry devoted to milking insurers. With the huge surge in vehicles on the road due to Uber and Lyft, accidents and claims up through 2019 skyrocketed. Defending claims today is 10xs more expensive than just 10 years ago. Guess who has to bear the brunt of those claims? Your premium.
Here is some good news. The California market is opening up with new insurance companies coming in. The Pandemic, for better or worse, has helped insurance companies reinvent themselves with more tools to streamline their businesses and creative ways to approach insuring vehicles, including by-the-mile programs. Also, while not much activity was happening on the insurance underwriting front last year, with so few cars on the road there were many less claims paid out which helped to save insurance company’s bottom line.
You need to have a relationship with your agent. The best way to find the right agent is to network with your peers here at the GCLA. We are taking on this subject at our Spring Conference, being held at the Huntington Beach Hyatt on Tuesday, March 30th. TIB and D.W Ferguson & Associates (Western Partners) are two excellent agencies who are sponsoring our event and will be there to talk in person with you. The cost is $50 as a GCLA member. If you’re not a member we have a combination membership + conference package for you. Just email me at sara@gcla.com or go to www.gcla.show
