RISK-BASED INSURANCE PRICING IN THE U.S. COMMERCIAL TRUCKING INDUSTRY
Abstract
In the contemporary commercial auto insurance market, motor carriers face unprecedented volatility driven by nuclear verdicts, social inflation, and systemic maintenance and medical cost escalations. This monograph investigates the econometric and actuarial mechanics governing commercial auto liability pricing. By synthesizing regulatory data from the Federal Motor Carrier Safety Administration (FMCSA) Safety Measurement System (SMS), Central Analysis Bureau (CAB) indices, driver turnover tenure dynamics, and multi-year loss run histories, we evaluate how underwriters establish baseline loss costs and experience modification factors. Empirical findings demonstrate that carriers maintaining Unsafe Driving BASIC scores exceeding the 65% intervention threshold incur average per-unit premium surcharges of 85% to 140%, while annualized driver turnover surpassing 80% directly amplifies severe loss frequency by 3.2-fold over a rolling 36-month horizon. Strategic remediation pathways, including AI-integrated telematics, driver tenure stabilization programs, and alternative risk transfer (ART) captive models, are formalized for enterprise motor carriers.
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