The US commercial auto insurance sector is facing a severe profitability crisis, buckling under the weight of escalating claims and rising repair costs, according to a new market overview by the insurance research and investment firm Conning.
The analysis paints a bleak picture of a market segment mired in its 13th consecutive year of underwriting losses, with industry-wide combined ratios remaining stubbornly above 100%, the benchmark for unprofitability. This persistent financial drain continues despite what Conning notes are 55 straight quarters of rate increases, signalling that pricing power alone has been insufficient to outpace a toxic combination of risk factors.
Conning’s 2025 market report, “Commercial Auto Insurance Market – Challenges and Opportunities,” identifies a “dual crises” battering the industry: soaring liability losses and spiraling post-pandemic physical damage costs.
“Despite more than a decade of rate increases, the commercial auto line remains a challenge,” said Alan Dobbins, a Director in Insurance Research at Conning.
The report highlights several key pressures driving the deep underwriting losses. Chief among them is the escalating severity of liability claims. Conning’s data indicates that claim severity has surged by 64% since 2015, a trend driven by “social inflation” and a significant increase in large-scale “nuclear verdicts” in courtrooms.
This liability crisis is compounded by operational challenges. A persistent shortage of experienced commercial drivers across the US has led fleets to hire less-experienced operators, contributing to a higher frequency of accidents.
Simultaneously, the cost of resolving physical damage claims has climbed. Post-pandemic supply chain disruptions, broad inflation, and the increasing complexity of vehicle technology have pushed repair costs significantly higher and extended the time required to settle claims.
The report also casts a wary eye on emerging risks. The growing adoption of electric vehicles (EVs) by commercial fleets introduces new exposures, including cyber vulnerabilities, battery fire hazards, and the higher repair costs associated with specialized components and platforms.
“The commercial auto market is at a crossroads,” Mr. Dobbins added, suggesting that insurers must fundamentally shift their approach to risk.
According to Conning, a return to profitability will require more than just continued pricing adjustments. The firm argues that insurers must aggressively invest in predictive analytics, adopt new safety technologies, and implement smarter underwriting strategies to restore stability to the troubled market.
