In a business environment focused on simplification and ease for customers, commercial auto insurance seems to be an outlier. Yet businesses must have fleet insurance and navigate these complexities. Making things simpler and easier for customers is why we decided to begin providing Ford Pro Insure, the first commercial automotive insurance product offered by an automaker-owned insurance carrier in the U.S.
The industry is fragmented, with more than 50 commercial auto insurance providers in the U.S. and no single provider holding more than 13% market share. According to a 2023 J.D. Power report, customer satisfaction with auto insurance providers (commercial and private) experienced the biggest one-year drop in two decades. At the same time, the industry is growing. In Illinois alone, the dollar amount of written premiums for commercial auto liability insurance increased by almost 20% between 2021 and 2022, a greater increase than premiums nationwide.
From the underwriter’s perspective, the risk models for commercial fleets are more complex than personal vehicles. Vehicles used for business purposes might be driven by various employees, travel longer distances, and carry heavier loads—all of which expose drivers and vehicles to different types of risk and liability. Not all commercial fleets are created equal. Coverage for a small fleet of heating repair vans in a high-traffic city differs from a large fleet of heavy-duty construction trucks operated mostly on remote job sites. Those differences are fairly obvious, but there are even differences between businesses in the same line of work that can be difficult to discern using traditional insurance evaluation tools.
Also, the insurance industry is regulated at the state level, rather than the federal level. Each state has its requirements, both for insurers selling coverage and for consumers seeking to meet minimum financial responsibility requirements. This can be a challenge for companies doing business in multiple states.
In Chicago, for instance, the city’s location in the northeastern corner of Illinois is close to Indiana, Michigan, and Wisconsin. While its extensive network of roadways fosters a dynamic business ecosystem, it requires businesses operating across state lines to navigate differing insurance requirements under each state’s regulations.
For example, all four states require liability insurance, albeit with different minimum coverage limits. Michigan requires personal injury protection; Illinois and Wisconsin require uninsured motorist protection; and Indiana requires neither.
How to reduce complexity and save
Despite the complexities in commercial auto insurance, there are ways to modernize and improve this vital aspect of operations. For example, telematics data allow carriers to tailor coverage and pricing to actual driving behavior, such as speed and braking patterns, rather than rely strictly on more limited historical data.
Cutting-edge insurance telematics started with plug-in devices and then began moving to mobile phone applications. With customer consent, its use is progressing quickly and now includes using modern vehicles’ onboard systems to get the most complete and accurate information available. This can help customers, insurers and vehicle manufacturers work together more closely to improve and reward safe driving, reduce claim frequency and severity, and enhance the claims and repair experience.
Then, there is the ability to help commercial fleet managers better navigate state-specific insurance requirements. As the commercial arm of Ford Motor Company, Ford Pro is providing business customers with simplified experiences that support safety, productivity, quality and cost savings. Its subsidiary, The American Road Insurance Company, is the first automaker-owned carrier offering a commercial auto insurance product, and we are highly focused on helping commercial fleets get the best value in total cost of ownership while adhering to each state’s regulations.
Ford Pro Insure is offered with managing general agent Pie Insurance in Arizona, Illinois, Indiana, Tennessee, and Wisconsin, and we intend to expand it across the country over the next few years. The deliberate approach is worthwhile. Aligning across states will help simplify the process of obtaining coverage and reduce time-consuming administration for businesses.
There’s a strong emphasis on making things simpler and more convenient for customers in our current business landscape. In an industry such as commercial auto insurance, complexity is a given. Yet it doesn’t have to be—and shouldn’t be—this hard. Applying new technologies, processes, and business models can help reduce complexity in highly regulated spaces like commercial auto insurance and create pathways for better value and increased efficiency.
For more information about Ford Pro Insure and Ford Credit, visit www.fordpro.com/en-us/insurance/.
Ford Credit is Ford’s financial services subsidiary and a leading provider of automotive financial products and services globally. Ford Credit was established in 1959 and supports Ford sales through dedicated dealer products and services, as well as a variety of financing plans and strong services to meet consumer needs.
News Author: Kirby Harris leads Ford Credit’s insurance businesses in the U.S. and Europe. He has served in finance and insurance for over 36 years in a wide array of capacities, including sales, operations, risk, and strategy.
Photo by BRIAN DOBEN PHOTOGRAPHY
