Old Republic International Corp. continues to push for commercial auto rate increases even as its fourth-quarter 2016 results showed evidence of the benefits provided by past hikes.
"We continue to see fairly strong rate increases on the commercial auto line of coverage to offset the severity trends that we've observed and we've been discussing for some time now," Craig Smiddy, president of Old Republic General Insurance Group, said during a Jan. 26 conference call.
The company reported a benefits and claim ratio of 76.8% in the commercial auto business during the fourth quarter of 2016 and 79.4% for the full year. Those figures compare to 80.3% in the fourth quarter of 2015 and 77.8% in full year 2015. The 10-year weighted-average commercial auto benefits and claim ratio is 75.2%.
Smiddy said the year-over-year improvement in the fourth quarter of 2016 was "indicative of the compounding rate increases that ... continue to earn through." But he said Old Republic would like to generate further improvement in the business.
"We will continue to address the commercial auto severity that we are seeing through rate and risk selection until that claim ratio on this line comes down and is more in line with our historical experience in the low to mid 70s," he said.
Old Republic ranked as the No. 8 commercial auto insurer based on 2015 direct premiums written at the group level. Progressive Corp., the nation's largest writer of commercial auto coverage, saw its commercial lines combined ratios improve from the elevated levels it reported in mid-2016. It too has filed for a number of rate increases on commercial auto business, according to U.S. product filing data collected by S&P Global Market Intelligence.