Reducing Commercial Auto Risk Exposure – Upload & GO
For incomplete trucks through accurate data and automation
Are you understating premiums on commercial trucks? Information is recognized as one of a company’s most valuable assets, with the value of that information increasing dramatically as its accuracy increases and it is used. For commercial auto insurance carriers, accuracy is the ultimate variable in risk mitigation; it supports operational process efficiency and expedites uote response for current and prospective customers. t the same time, the level of accuracy reuired is highly dependent on the type of information and how it will be incorporated into the underwriting process. Price Digests • Reducing Commercial Auto Risk Exposure • pricedigests.com • 2
nsurance carriers are, of course, faced with a myriad of challenges they must consider when looking to integrate new or enhanced data into their existing systems, including… Maintaining profitability Enhancing the accuracy in a slow-growth market of risk categori†ation Improving speed Updating legacy systems to quote ‡ moderni†ing data infrastructure Modernizing processes in commercial underwriting However, the question must be asked if the added risk exposure in maintaining business-as-usual processes outweighs the growing pains of moving to more accurate, data-driven technologies and processes. One key data element for accurately underwriting a commercial vehicle is the Original Cost ew OC. oday, many commercial insurance carriers rely on ehicle dentification umber decoding as a primary way to obtain a vehicle s OC. hen a manufacturer assigns a to a commercial truck, the contains many critical details about that truck, including its manufacturer, model, year, trim, ma€or components, and weight. ‚dditionally, the reveals if the vehicle was “complete” or “incomplete” when it left the factory. Price Digests • Reducing Commercial Auto Risk Exposure • pricedigests.com • 3
Complete vs. Figure 1 Completing the Truck Incomplete Trucks This is a significant distinction for + = commercial trucks. This one factor causes commercial auto insurance carriers to underestimate the true OCN, leading to lower premiums and an incomplete understanding of the risk for the insurance carrier—what + = is known as premium leakage. Incomplete trucks require customization before the can begin their useful life. This customization is specific to the unique needs + = of the business and reflect the specialized applications of the truck, such as within the construction, food transport, utilit, or medical transport industries. Importantl, + = these customized truck bodies can add significant alue to the OCN and will not be captured b the IN. Price Digests • Reducing Commercial Auto Risk Exposure • pricedigests.com • 4
Illustrative Example Acme Construction is expanding its business, and part of this expansion includes the acuisition of a commercial truck. he compan purchases a used Peterbilt ith €‚ƒ„ …P†‡ˆ‰5DŠ5‹5 and contacts their insurance carrier for a uote. he proŒide the €‚ƒ number, and hen the €‚ƒ is keed into the carrier’s sstem for a premium uote, €‚ƒ decoding reŒeals that this specific truck as an incomplete truck hen the €‚ƒ as issued. ‘hile the €‚ƒ proŒides the carrier ith ke specifications including age, ’Cƒ, gross Œehicle eight or gross combined Œehicle eight, truck“tractor indicators, and other attributes, it does not proŒide the Œalue of the truck bod. ‚f the insurance carrier does not collect additional information than hat the €‚ƒ proŒides, risk and financial exposure are introduced, and Acme ma unknoingl not be full coŒered in the eŒent of a claim. hat’s risk for the carrier, but also risk for Acme. ‚ntelligence solutions integrated into the uoting sstem at the insurance carrier can alleŒiate the risk b looking not ”ust at the €‚ƒ decoding, but also other industr•related factors to deliŒer a range of Œalues for the insurance carrier to consider hen uoting a premium. –sing an insurtech solution, the carrier is able to accuratel uote a polic that coŒers the hole truck, not ”ust the cab and chassis. his protects both the insurance carrier and Acme Construction in the case of a claim. Price Digests • Reducing Commercial Auto Risk Exposure • pricedigests.com • 5
Figure 2 Žruc€ Body Complete ˆ‘… ’ lue „it‚ Cutom Body ncomplete 3 mp ct on “C” 15-16 ft Aluminum 13 cu. Yd. 2’ nul ted Žruc€ ˆ‘… Dump Body Concrete ier ift Buc€et An obvious question to consider at this point is just how much Freig‚tliner €‚,ƒ„… €†‚,‡„… €„†,…… a final truck configuration can 114SD 212 €ƒ‡,„„… 1‰Š 6Š 33Š 1D C€1662 impact OCN, and thus how much this detail can influence the premium quoted. The illustration ƒen„ort‚ €†€,‡‡ ƒ,„† €, …€ to the right (Figure 2) outlines the ‚ƒ 21ƒ €…„, ƒ 22Š 51Š 3‰Š impact various custom bodies can 1„€D…†‡2ˆR2† ‰ have on a sampling of makes and models. epending on the tpe and configuration of the truck bod …eter†ilt €€,‡‡ €ƒ,‡‡ € €,…‚ 21 21 „…,‡‡ 3Š 61Š outfitted, there is potential for an P1Š6‡‰D‰ ‰1 ŒŠ or more increase to the OCN but even on the lower end, a increase to OCN can still materiall ‡etern ˆt r €„‡,‡€ ‡,†€„ ‡,€€‚ impact the risk being underwritten 4†S 21 €ƒ„,„… 2‹Š 63Š ŒŠ b the insurance carrier. ‰€€A‡D‡€P€‹2†ƒ‰ Price Digests • Reducing Commercial Auto Risk Exposure • pricedigests.com • 6
Utilizing the Algorithm To avoid underestimating the OCN, insurance carriers can and sometimes do request additional information about the final truck 35% configuration during the quoting process. However, this additional information request can extend the time to quote and put the potential sale at risk. t is also common for agents to populate their best guess 65% for the truck configuration, which is often inaccurate. Neither of these scenarios are ideal for the insurance carrier and do not address their need for access to fast, automated, accurate information to help them assess the risk, price it accordingl, and ultimatel win the business. new development in the insurtech space, however, will arm insurance carriers with better information so the can begin to correct those understated premiums. Complete Incomplete everaging advanced analtics based on decades of realworld data and a deep understanding of industrspecific truck configurations, it In an analysis of commercial trucks is possible to predict final buildouts and get a far better estimate of conducted by Price Digests oer OCN. oing this in an algorithmic wa means it can happen instantl of te trucks insured by commercial and seamlessl within the quoting process, minimi ing the time to lines carriers are classified as quote while enhancing accurac. incomplete trucks. Find out more Price Digests • Reducing Commercial Auto Risk Exposure • pricedigests.com • 7
Traditional Process vs More Accurate Information Call with insurance quote Provide VIN Reduce Premium Leakage wit etter Truck Intelligence System returns quote based on VIN which may be on incomlete In order to more accurately assess ris System returns Quote truc Data return now also includes and mitigate financial challenges from based on VIN which may data oints for ossible truc bodies – underinsuring vehicles on the road be on incomlete truc returns high low median and average commercial auto carriers could greatly value of comlete asset Quote provided benefit from nowing whether a vehicle based on more informed data. is comlete or incomlete s we’ve illustrated custom truc bodies can increase a vehicle ‚CN dramaticallyƒ ignoring this critical data oint creates Policy Purchase and Underwriting ris assessment inaccuracies and adversely affects remium revenues y adding new data oints to nown information Vehicle Damaged and Claim filed commercial insurance carriers can quicly mitigate ris enhance rofitability and ultimately better serve their customers etter data sulied during quoting throughout the insurance lifecycle Vehicle underinsured and or underwriting rocess results in because of incomlete data reduced losses to insurance carrier and fair payout to owner Find out more Price Digests • Reducing Commercial Auto Risk Exposure • pricedigests.com • 8
Mitigate Risk Quote More Accurately Provide Better Coverage To discuss how adding advanced intelligence and automation, like TruckBody IQ™ from Price Digests, can help reduce exposure within your current book of commercial lines business, mitigate costly premium leakage, or learn more about Price Digests’ Interested? Watch our 1 minute comprehensive commercial vehicle data solutions, contact us. We will demonstrate video and learn how to reduce the risk how our solutions improve process efficiency and support premium lift for your of underinsuring commercial trucks with company, and we can provide a complimentary lift analysis of your existing book of Price Digests’ exclusive TruckBody IQ™ commercial auto business. Intelligence Solution for Insurance Carriers. pricedigests.com (866) 934-3818 Price Digests • Reducing Commercial Auto Risk Exposure • pricedigests.com • 9