Driving change: trends in the business auto space

The escalating prices of automobiles and the rising costs of repairs are significantly influencing business insurance rates, particularly in the commercial auto insurance sector. Several interconnected factors contribute to this impact, creating challenges for businesses that rely on vehicles for their operations, says Mark Trudel of One80 Intermediaries.

Higher vehicle replacement costs

As the prices of new vehicles continue to soar, insurers face increased expenses in the event of a total loss or theft. The replacement cost of a commercial vehicle plays a crucial role in determining insurance premiums. Insurers must adjust their rates to account for the higher costs associated with replacing damaged or stolen vehicles, impacting the overall cost of commercial auto insurance for businesses.

Advanced vehicle technologies

Modern vehicles are equipped with advanced technologies, including sensors, cameras and sophisticated safety features. While these technologies enhance vehicle safety, they also contribute to higher repair costs. In the event of an accident, repairing or replacing these advanced components can be expensive, leading insurers to adjust their rates to accommodate these increased costs.

Supply chain disruptions

Global supply chain disruptions, such as those experienced during the Covid-19 pandemic, have affected the availability and cost of auto parts. The scarcity of certain components can lead to delays in repairs and increased costs when replacement parts are finally obtained. These supply chain challenges put additional pressure on insurers to adjust rates to account for the uncertainties and potential delays in the repair process.

Inflation and economic factors

Economic factors, including inflation, play a role in driving up auto prices and, consequently, insurance rates. Inflation can affect the cost of materials, labour and other components involved in manufacturing and repairing vehicles. Insurers may reflect these economic factors in their pricing models, impacting the overall cost of business insurance for commercial vehicles.

Impact on SMEs

The increase in auto and repair prices disproportionately affects SMEs that may operate on tighter budgets. As insurance rates rise, these businesses may face challenges in maintaining adequate coverage for their commercial vehicles. The financial burden of higher insurance premiums can impact the competitiveness and profitability of SMEs, prompting a need for strategic risk management.

Finding a business auto solution

In this challenging environment, GMI, a subsidiary of One80 Intermediaries, has strategically positioned itself to address the evolving needs of businesses by offering a specialised monoline business auto program. The program focuses on businesses where insured vehicles are used to transport personnel and equipment to job sites, followed by periods of inactivity while services are completed. This includes contractors, artisans, building supply dealers, retailers, manufacturers and wholesale distributors. By tailoring coverage to the unique characteristics of these businesses, GMI aims to provide effective and affordable insurance solutions, mitigating the impact of increasing auto and repair prices on their clients.

In conclusion, the surge in auto and repair prices is a multifaceted challenge that directly influences the landscape of business insurance rates, particularly in the commercial auto insurance sector. Businesses must be vigilant in monitoring these trends, implementing risk management strategies, and exploring cost-effective insurance options to navigate the evolving challenges associated with the increased costs of vehicles and repairs. GMI is committed to addressing businesses’ specific auto coverage needs for difficult-to-place categories through innovation and responsiveness in our ever-changing insurance environment.

About the author

Mark Trudel is responsible for One80’s offerings in the auto rental operators, contingent lease, monoline business auto and cannabis transport space. He joined the organisation in 2023 with the acquisition of GMI Insurance and Corporate Claims Service, where Mark served as president and CEO since 1994.

In this role, Mark provided oversight of GMI’s operational platform, which includes technology and administration, as well as underwriting for the company’s leasing and garage business. GMI has been a leading writer of commercial auto insurance since 1980.