U.S. Commercial Auto Insurers Achieve Best Underwriting Performance
U.S. commercial auto insurers have reached a significant milestone, achieving their best underwriting performance in years, as reported by AM Best.
In its recent study, "Commercial Auto May Finally Be Seeing Light at The End of The Tunnel," AM Best highlights the sector's rebound from historically poor underwriting results. Over the past decade, commercial auto has been among the least profitable sectors in the property/casualty insurance market, struggling with consistent losses. These losses remained significant even after accounting for the temporary improvements during the COVID-19 pandemic when fewer vehicles meant fewer claims. However, 2025 marked a turning point with underwriting losses reduced to $2.2 billion, a 55% improvement over the previous year. The trend continued into the first half of 2026, with a direct loss ratio of 66.1%, signaling ongoing progress.
Challenges and Market Differentiation
As Christopher Graham, a senior industry research analyst at AM Best, notes, the commercial auto market occupies a unique position in the insurance landscape. While many property/casualty lines experience premium declines due to high competition, commercial auto remains a hard market that demands price increases for profitability. Distinctions arise between the liability and physical damage components: in 2025, the liability side saw underwriting losses exceeding $4.6 billion, whereas the physical damage sector displayed gains of $2.4 billion.
Impact of Technology and Risk Management
Despite rising repair and labor costs, technological advancements have lessened accident frequency and lowered claims. However, these innovations also contribute to increased repair expenses. As David Blades, associate director of Industry Research at AM Best, points out, insurers monitoring and maintaining their fleets have experienced reduced preventable accidents, enhancing their financial performance.
| Year | Underwriting Losses | Direct Loss Ratio |
|---|---|---|
| 2025 | $2.2 Billion | 66.1% |
| 2026 (First Half) | - | 66.1% |
For more detailed insights, industry professionals can access the full report on the AM Best website. As the commercial auto sector continues its recovery journey, insurers face the dual challenge of balancing pricing strategies with fleet management advances to sustain profitability.