Like so many other things, fleet insurance costs have soared in the last few years. According to the American Transportation Research Institute (ATRI), premium costs per mile have risen 47% in the last decade, climbing from 5.9 cents to 8.7 cents. A combination of accident rates, higher repair costs, and litigation have created a challenging environment for both fleets and insurers.
As a result, Sentry — which insures more than 48,000 units throughout the United States — has been working closely with customers to help them manage risks, and in turn, control costs. We recently spoke with Daniel Grant and Brad Schneider from Sentry to learn more, including how Motive and Sentry customers can use AI dash cams to lower their rates.
What’s driving up fleet insurance costs?
Higher fleet insurance costs are partially the result of “nuclear verdicts,” as multimillion-dollar judgments against motor carriers are handed down more frequently. In 2021, a Florida jury awarded a landmark $1 billion verdict in a wrongful death case involving two trucking fleets. Even if money is never collected in the case, the judgment shows that juries believe huge rewards like these are warranted.
Questionable tactics like the “reptile theory” are driving up fleet insurance costs, too. Trial lawyers play on jurors’ emotions to award excessive judgments to the plaintiff. Other times, they pressure insurers to put up policy limits of $1 million or more, even when fault has yet to be determined. And if they don’t?
“The window to negotiate a settlement may close, and we may be faced with a demand or judgment well above the policy limits,” says Grant, Sentry’s Corporate Director, Safety and Loss Control Services.
As claim costs grow, insurers are exiting the commercial fleet market altogether. Those remaining are becoming more selective about the fleets they insure. The decline in insurers is driving up rates, along with nuclear verdicts, accident costs, and inflation.
“When one of our insureds gets into an accident and has vehicle damage, it will cost significantly more to fix compared to just a few years ago,” Grant says. “Additionally, it may take much longer to repair, due to ongoing part shortages. With thousands of accidents a year, insurers have to pass on a portion of unexpected costs through increased premiums.”
Fleet insurance costs are increasing in all sectors
According to ATRI, almost all motor carriers experienced substantial increases in fleet insurance costs between 2018 and 2020, despite higher deductibles and improved safety. “Premiums increased across all fleet sizes and sectors, with small fleets paying more than three times as much as very large fleets on a per-mile basis,” Heavy Duty Trucking notes.
“After an accident, it’s expensive to put people and vehicles back together again,” explains Schneider, Sentry’s Director of Underwriting, Transportation. “In addition to physical damage from an accident, medical costs to cover bodily injury have skyrocketed. When a truck is involved in an accident, it’s expensive. Themes like these are putting pressure on the trucking industry, creating a costlier environment.”
Higher premiums get passed along to consumers in the form of pricier goods and services. As a result, fleets are paying more for used vehicles, repairs, parts, fuel, and so much else.
“For the last few years, fleets have been dealing with an increase in costs — from fuel to maintenance to equipment,” Schneider says. “They’re paying more to hire and retain drivers, and to keep their vehicles moving. Customers keep asking, ‘Are fleet insurance costs coming down at some point?’ But inflationary pressures are still out there, and that’s keeping premiums high.”
In this environment, the exoneration power of AI dash cams is more valuable than ever. Even aggressive legal tactics are no match for the power of video. AI dash cams are a strategic tool, especially for commercial fleets and drivers. In fact, the AI dash cam may be fleets’ greatest hope for driving down insurance costs. Here’s how to go about it.
Invest in AI dash cams to earn insurance discounts
To help drive safety and lower costs through telematics, Motive and Sentry Insurance have partnered to incentivize customers with lower insurance premiums. Customers who use Motive’s Driver Safety Solution can see insurance premium savings of up to 5% when they share their Vehicle Gateway-captured telematics data with Sentry. For large fleets, a 5% cut in insurance rates can save $10,000 or more. In addition to insurance savings, fleets could experience a reduction in accident frequency, further enhancing their ROI.
This exclusive benefit for Motive-Sentry customers puts fleets in position to reduce risk and lower their rates. Customers who take advantage of the insurance discounts will share their ELD and AI dash cam data with Sentry. Sentry will then be able to analyze the data and understand the connection between fleet safety performance and risk levels over time.
“We use CSA scores and loss information to analyze safety and compliance trends,” Grant says. “Understanding these trends gives us a more accurate picture of fleet risk. We’ll be able to determine which fleets are performing well and which have room for improvement.”