This article was produced in partnership with Amwins.
For years, business auto coverage was quietly bundled into large commercial insurance packages where general liability, property, and workers’ compensation took center stage.
But as loss ratios have worsened, insurers are rethinking this model, unbundling auto insurance from packages and pushing it into the specialty market.
The shift is reshaping how transportation underwriters view business auto risk and raising the stakes for insureds seeking competitive monoline quotes.
“Auto has become a high-frequency, loss-leading line,” said Joe Krieg (pictured on the left), assistant vice president at Amwins Brokerage in Chicago. “Standard carriers never really set out to be auto insurers. They wrote it because they were already writing the rest of the program. But when they started peeling back the numbers, they realized auto was dragging down their books.”
That realization has led to widespread non-renewals of just the auto portion of packaged policies. Retail carriers are forcing insureds, particularly those with mixed fleets or specialty exposures, into the wholesale channel.
The result? An influx of submissions and a scramble for capacity in the specialty market.
“There isn’t a ton of capacity for business auto risks outside package programs in the standard market,” Krieg said. “That’s why us as wholesalers are seeing such a spike in this business. The specialty markets we access have the expertise and the appetite to evaluate these risks on their own merits.”
One of the biggest changes involves hired and non-owned auto (HNOA). Historically, HNOA was automatically included in standard market packages. In the specialty space, however, it now faces intense scrutiny.
“In the wholesale markets, HNOA is no longer a freebie,” said Evan Taylor (pictured on the right), senior vice president at Amwins National Transportation Underwriters. “Carriers want to see specific applications, profit and loss statements, and full details on exposures. They want to know exactly what they’re picking up, and they’ll price it accordingly..”
Underwriters now rate HNOA closer to owned vehicles, narrowing coverage and raising premiums. That means insureds must be prepared to provide much more detail and expect that costs will rise.
Another nuance is the difference between business auto and for-hire trucking. While trucking operations are subject to federal filings and extensive reporting, business auto is more diffuse.
“Business auto is such a broad segment,” Taylor said. “It can cover everything from construction contractors to propane distributors to school buses. There are countless subcategories, and each comes with its own underwriting considerations.”
Krieg agreed: “With trucking, you have reefer, flatbed, dry van… it’s pretty straightforward. With business auto, the variations are endless, and the exposures don’t fit neatly into trucking markets or light commercial markets. That’s why so many of these risks are migrating to the E&S market.”
Public auto is one area drawing particular scrutiny. Passenger transport, especially buses, requires high liability limits, often up to $5 million.
“Because of reinsurance costs, many carriers won’t put up those limits anymore,” Krieg said. “We’re seeing some of those risks migrate into captives or risk retention groups.”
So how can insureds put their best foot forward when auto is carved out of a package and placed on its own? Safety and transparency, according to the Amwins experts.
Krieg and Taylor noted that underwriters are increasingly requiring firms to present telematics data even before the quoting stage. “Implementing strong risk management practices is critical,” Krieg said. “Underwriters want to see driving behavior, mileage, and safety investments.”
Taylor added that insureds moving from the standard to the E&S market often face sticker shock. “Premiums can double or triple for narrower coverage,” he said. “But the accounts that invest in safety consultants, that can show they’ve tightened up operations, will stair-step back to better terms much faster.”
In this hard market, wholesalers play a crucial role in bridging the gap between insureds and specialty markets. Aside from market access, Amwins also brings in additional resources, including a claims advocacy team that can step in and fight tough claims on behalf of insureds.
“We know which markets can take which risks, and we can help explain to clients why the pricing is changing and how to adapt,” said Krieg.
For now, the unbundling of business auto from packages looks set to continue. With claims severity and frequency still weighing on loss ratios, carriers show little appetite to return auto to its “throw-in” status. That reality means business auto insureds will need to accept narrower coverage and higher costs, but also an opportunity to improve their operations.
“Carriers are realizing they can’t subsidize auto with other lines. Auto has to stand on its own, and it has to be priced accordingly,” Taylor said.
“As painful as it can be, the shift forces insureds to invest in safety, rethink their operations, and ultimately present a better risk,” said Krieg. “For those who make the changes, the long-term payoff is a stronger insurance partnership and more sustainable coverage.”
To learn more about Amwins’ transportation capabilities, visit amwins.com/transportation.
