US Commercial Auto Insurers Struggle as Losses Top $10 Billion
October 10, 2025
The US commercial auto insurance segment posted $4.9 billion in underwriting losses in 2024, pushing the line's total losses over the past 2 years to more than $10 billion, according to a new AM Best report. The report, Stuck in Reverse: Commercial Auto Losses Keep Mounting, highlights persistent challenges in the sector, which has now reported underwriting losses for 14 consecutive years.
The report attributes the mounting losses to rising loss severity, increasing claims costs, and adverse prior-year loss reserve development. Over the last 11 years, the segment has averaged more than $2.9 billion in annual underwriting losses.
"One bright spot to note is that during the past decade, insurers have trimmed about 6 percentage points off their underwriting expense ratio for commercial auto insurance," Christopher Graham, senior industry analyst at AM Best, said. "While commercial auto insurers are not recognized as often as personal auto insurers for adopting and leveraging technology through their operations, commercial auto insurers have nevertheless made some strides in improving their efficiency."
The gap between auto liability and physical damage results continues to widen. While both coverages have seen similar improvements in underwriting expense ratios—roughly 3 percentage points compared to 6 or 7 years ago—the net loss and loss adjustment expense ratio for liability coverage remains significantly higher.
Mr. Graham said, "Even if insureds find benefits in physical damage coverage, they may opt for higher deductibles to pay less for coverage." The report suggests that the optional nature of physical damage coverage, compared to compulsory liability coverage, may be influencing purchasing decisions.
Despite implementing substantial rate increases, insurers have not been able to keep pace with inflation-driven loss severity, which includes higher replacement costs stemming from vehicle technology and increased labor costs for repairs. "Adverse loss development has been a constant drain on commercial auto results and is getting worse," David Blades, associate director at AM Best, said.
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October 10, 2025
