Commercial fleets and the auto insurance industry are facing challenging times. The award-winning LossDetect software, a key factor in Munich Re’s Smart Mobility program, is an innovative solution to address the client’s loss mitigation needs.
The commercial auto sector has been experiencing financial strain for several years now. Through the third quarter of 2018, the commercial auto combined ratio continued to deteriorate from the 2017 combined ratio of 111.0%. This was driven by adverse loss trends in commercial auto liability, making 2018 the eighth consecutive year with a combined ratio above 100%1.
Underwriting commercial auto business is a complex issue
Underwriting commercial auto profitably has become more complex due to a number of factors. As a result of the strong economy, trends have indicated a rise in claim frequency due to more vehicles on the road, more miles driven, an increase in distracted drivers, and a truck driver shortage.
In a 2018 year-end review, commercial insurers also report that this increase in claim frequency and severity are among their most pressing concerns. Adverse loss frequency in addition to large verdict and settlement awards continue to plague the commercial auto sector1.
Commercial fleets are looking for answers
With auto collisions on the rise, commercial fleets are looking for solutions that can mitigate their losses while simultaneously improving fleet safety. When Munich Re consulted with fleet owners, we determined that many businesses recognized the benefits of improving fleet safety but were overwhelmed by the numerous options available in the market.
LossDetect - the solution
LossDetect’s advanced analytic techniques (detailed in the video above) determine the cause of the loss rather than fault of a collision, enabling Munich Re’s Smart Mobility team to provide commercial fleets with customized safety solutions based on their unique loss history. This allows fleets to maximize their loss savings potential by matching their particular loss profile with the latest innovative solutions. To date, LossDetect has analyzed losses for 43 commercial fleet clients totaling over $3.2 billion in losses, and found that over 60% of auto losses could be prevented.
Pilot programs - LossDetect results in action
Based on LossDetect’s recommendations, the Arizona School Risk Retention Trust, Inc. (the Trust) and Phalcon LTD have launched pilot programs. The Trust outfitted 465 buses across 13 school districts with Mobileye, Orion and Lytx technologies while Phalcon LTD anticipates purchasing over 300 Mobileye units for their entire fleet. Pilot programs allow clients to test the technology and recognize potential savings and safety improvements in a relatively low-risk environment.
Recognition and next steps
Since its market inception, Smart Mobility’s LossDetect tool has already made headlines. The innovative software was awarded gold medals at both the 2018 EFMA-Accenture Innovation in Insurance Awards and the 2018 Celent Model Insurer Awards. Munich Re isn’t going to stop there. LossDetect is currently being updated on a quarterly basis to fine-tune product recommendations and the causes of loss. Ultimately, Munich Re plans to offer Smart Mobility, inclusive of LossDetect, on a white label basis.
Smart Mobility was developed to help make the future of mobility safer for everyone. Start your LossDetect mitigation analysis at https://lossdetect.smartmobilitysafety.com/munichre.
For further details on Smart Mobility’s loss control services, please contact https://www.munichre.com/us-non-life/en/solutions/innovative/smart-mobility.html
1Conning Insurance Segment Report – Commercial Auto, Year-End 2018.
