April 2018 Articulate

Commercial Auto Insurance as Foretold By R.E.M.

Written By: Brian Scarborough

Prior to becoming a well-recognized insurance nerd, I was your run-of-the-mill, de novo nerd growing up in Gainesville. During my high school days in the early ’90s, my favorite band was R.E.M. As evidence of my nerd cred, I along with the few friends I had actually “performed” R.E.M.’s “It’s the End of the World as We Know It” at the Buchholz “Air Band Night” (I remember two things: 1. I memorized every word to a song with nonsensical lyrics in spite of my not actually needing to sing; and 2. We melted faces.) Twenty-seven years later, R.E.M. has retired but the song still comes to mind as I see the trends in commercial auto insurance (check out that bridge, Michael Stipe). Claims numbers are universally crummy among carriers with all trends pointing negative, yet “the end of the world as we know it” may mercifully be around the corner. And, I feel fine.

Believe it or not, I hate it when an insurance company raises rates, and I take great pleasure when I’m able to back a company down to a “flat” or rate reduction offer for a client. This has become increasingly rare, even when it comes to commercial auto coverage. Our insurance agency has access to the vast majority of insurance companies writing coverage, and virtually all of them are hemorrhaging money when it comes to commercial auto. In my opinion, there are three major reasons:

1. Vehicles are becoming more expensive to fix as they become more and more enriched with various technological advancements. According to a 2016 article on PropertyCasualty360, physical damage claim costs are up 17 percent, due in large part to the enhanced electronic components within late-model vehicles.

Brian Scarborough is the area executive vice president for Scarborough Insurance/ HUB International and specializes in commercial insurance and employee benefits. 

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