The commercial auto insurance market continues to contend with challenges that are negatively impacting the sector, resulting in underwriting losses, significant rate increases and a lack of profitability. Challenges such as driver shortages, distracted driving and the impact of social inflation continue to be a blight on the market. More recently, the state and federal conflict with marijuana legalization is creating an additional area of concern.

As a result, the market continues to remain hard, with profitability remaining a challenge. As rates continue to increase, “we need to educate our customers as to why their rates continue to rise—and perhaps even more so this year," says Dan Clements, senior director sales, underwriting, market development for transportation, Sentry Insurance. “Together, agents and companies can also help customers prepare for their upcoming renewals."

Here are four current trends agents can discuss with their clients:

1) Driver shortages. “The driver shortage problem stems from a lack of qualified drivers," says Mark Gallagher, national transportation practice leader at Risk Placement Services (RPS). “As an industry, most insurance companies won't accept drivers until they are at least 23 years old and have at least two years of driving experience."

While the journey toward autonomous trucks has begun to unfold, some states have made an effort to alleviate the shortage with outreach to younger candidates. “There are some really good programs in the industry right now that are trying to encourage younger people to get involved in the trucking industry," says Jennifer Nuest, transportation practice leader, Amwins. “Next Generation Trucking, a nonprofit trade association, is working with high schools and partnering with CDL schools because you can be an intrastate driver at the age of 18."

“There's also a pilot program for 18 to 21-year-old drivers at the federal level," Nuest continues. “Unfortunately, there hasn't been a lot of participation in this program because the bar has been set very high in some of the program elements."

2) Distracted driving. “Distracted driving is a national crisis," says Steve Bojan, director of transportation safety services, Sentry Insurance. “The number of physical and cognitive distractions continues to increase for all drivers as both vehicle and mobile technologies become ever more robust."

Further, “distracted driving is prevalent among company drivers, and staffing shortages could be exacerbating the issues as drivers take on more work and tighter deadlines," says Kristina Talkowski, head of middle market commercial lines, Nationwide. “These pressures also have the potential to negatively impact safety and claims outcomes as 42% of drivers told us [in Nationwide's Agency Forward survey] their employer has reduced hiring criteria due to staffing challenges—and one-third feel safety has suffered as a result."

The use of technology, such as outward and inward-facing cameras, is one solution carriers are encouraging their clients to make use of. “The most effective thing with the use of technology is heavy involvement from a loss control aspect of the truck line," says Chris Homewood, senior vice president and head of commercial auto, Hudson Insurance Group. “Unfortunately, in many instances, if you have an owner-operator with five or 10 units, they are also responsible for loss control, but they don't have time to do it because they're doing everything else operationally."

3) Social inflation. The effects of social inflation continue to significantly impact the commercial auto insurance market. However, “the factors that cause it are not singular, and therefore not simple enough to attack with one strategy," says Nick Saeger, associate vice president, products and pricing for transportation, Sentry Insurance.

“Attorney representation on commercial auto claims continues to rise, with plaintiff attorney ad spending increasing and driving at least some of that increase," he says. “And with more nuclear verdicts, others have become interested, including third-party litigation financing operations, whose funds go to law firms to encourage them to take more of these cases to trial."

More positively, “state trucking associations and insurance trade organizations continue to advocate for the industry," Saeger says. “That's led to tort reform successes in Florida last year and Georgia this year, but those reforms will have to take hold in more geographies to have any sort of impact on the climate of social inflation."

4) Conflicting marijuana legalization. While different states have and are implementing laws around the use of marijuana, agents need to highlight some important facts for their clients who are involved in interstate commerce. “It is still illegal for CDL holders to be utilizing marijuana," Nuest says. “CDL regulations come down from the Federal Motor Carrier Safety Administration (FMCSA), which is part of the Department of Transportation (DOT), a federal agency. Drivers are subject to drug testing and marijuana is unacceptable to use."

Further, “one of the interesting things on the marijuana front in the last few years has been the use of CBD, which is not regulated," Nuest explains. “Sometimes THC is still in CBD even though it is not supposed to be—so there's actually been cases of drivers testing positive for marijuana from CBD oil use."

Olivia Overman is IA content editor.