commercial-autoCommercial auto insurance rates are on the rise. In the auto liability line, the Insurance Journal reports that rates could increase by as much as 10 percent this year.

What’s behind the higher prices? In a nutshell, the number of crashes has gone up. The severity of injuries has gone up. And the medical costs associated with severe injuries have gone up, too. Put it all together, and you get ballooning claims.

Frequency rising

Why is crash frequency on the rise? To some extent, the answer is economic. When the employment rate is high, people need to drive to work, and they have more money to spend on their cars and fuel. When people drive more, there are more cars on the road. This brings the risk of collision up, which in turn brings about an uptick in frequency.

So goes the theory, but it’s more than just armchair speculation: Based on its analysis of statistics, the National Safety Council attributed the rise in traffic accidents to a stronger economy, lower gas prices, and an increase in the miles being driven.

Distracted driving

The pervasiveness of smartphones is another likely contributor to the rise in accidents. Accidents involving distracted driving have been on the rise. The National Highway Traffic Safety Administration (NHTSA) found that fatalities linked to distracted driving increased 8.8 percent from 2014 to 2015.

Distractions are especially dangerous for commercial drivers. The Virginia Tech Transportation Institute found that texting while operating a heavy vehicle or truck made an accident 23.2 times more likely.

What can moving and transportation companies do to combat rising insurance costs?

 According to a WillisTowersWatson Marketplace Realities report, individual risk profiles will drive each account’s underwriting fate. Below is a list of risk management strategies to help keep your losses down, so you continue to be an attractive commercial auto risk:

  • Hire safe drivers and encourage them to stay safe. Even good drivers can fall into bad habits over time, so provide frequent safety reminders and training when necessary. April is when the National Safety Council observes Distracted Driving Awareness Month, for example, so it’s a good time to remind drivers about the dangers of texting while driving. Also review seasonal safety issues, such as ice and floods, every year.
  • Implement strong policies to prevent collisions. For example, regardless of whether local laws prohibit cell phone use while driving, company policy definitely should. Additionally, policies should not encourage sleep-deprived driving or prevent tired drivers from pulling over. Although it’s often difficult to prove that drowsy driving caused an accident, the NHTSA linked 72,000 crashed to sleep-deprived drivers in 2013.
  • Use telematics to your advantage. Modern technology makes it simple to track dangerous driving habits, such as speeding. Bad habits can be identified and corrected immediately, and drivers are more likely to avoid dangerous behavior if they know they’re being tracked. Employers who are worried employees will react negatively to being tracked can probably relax. A TSheets survey found that 95 percent of employees subject to GPS tracking had a positive or neutral view of it.
  • Reward safe drivers. Instead of always focusing on problems, taking time to acknowledge and reward good drivers can be a great boost to morale and a strong motivator.

As always, make sure you have great insurance. Learn more about insurance for moving companies and our full value protection insurance program here.