Property & Casualty Insurance: Managing Auto Exposure

SITUATION:

A for profit premier auto parts distributor with operations throughout the tri-state was at increased risk for auto exposures because of their large fleet of vehicle.

Following a territorial expansion, the client significantly increased the number of vehicles in its fleet, which resulted in a corresponding increase in base premium of their property and casualty insurance.  However, disproportionately large and more frequent automobile losses, due to a swell of new drivers, resulted in per-vehicle losses increasing by over 125%.  Unsurprisingly, property and casualty insurance premium rose by over 10% the following year; a six figure increase.

SOLUTION:

In an effort to drive down property and casualty insurance cost, Exude’s Risk Management team focused on reducing excessive automobile losses; first, by identifying and removing high risk individuals from its driver pool, then, by improving the remaining drivers’ habits.  The second risk management technique was achieved by investing a portion of the savings realized through renegotiating the previous broker’s insurance program into a comprehensive fleet telematics system. This, in combination with implementing a systematic monitoring and disciplinary program was the risk management strategy used to improve property and casualty insurance premiums and address the high auto claims.

RESULTS:

In the year following the risk management techniques implementation, the client was able to halve its automobile losses and reduce average automobile claim value by 68%.  As of 2017, and since partnering with Exude, the client’s property and casualty auto premium is down over 20%, despite nominal increases in number of vehicles (insurance premium per vehicle fell by 25% over the same period).