Best’s Market Segment Report: US Commercial Auto Insurance Segment May Finally Be Seeing Light at End of Tunnel

OCTOBER 29, 2026 08:48 AM (EDT)

Best's Market Segment Report: US Commercial Auto Insurance Segment May Finally Be Seeing Light at End of Tunnel

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OLDWICK - OCTOBER 29, 2026 08:48 AM (EDT)
Positive signs have emerged for U.S. commercial auto insurers as underwriting performance metrics have reached their most favorable level in the past decades, excluding COVID-impacted years, according to a new AM Best report.

The Best's Market Segment Report, "Commercial Auto May Finally Be Seeing Light at The End of The Tunnel," notes that underwriting results for commercial auto have consistently been worse than for any other commercial line of property/casualty coverage over the past decade, with losses each year. The removal from consideration of the peak COVID years when fewer vehicles were on the road, which led to better underwriting results, albeit still unfavorable, shows a sustained trend of deep underwriting losses. However, the $2.2 billion underwriting loss in 2025 represented a 55% improvement over the previous year, and positive momentum has extended through the first half of 2026, as the commercial auto line's direct loss ratio of 66.1 shows a modest improvement compared with the same prior-year period.

"The commercial auto market remains a hard market outlier compared to other property/casualty lines of coverage, where broad market conditions have become more competitive with prices softening," said Christopher Graham, senior industry research analyst, AM Best. "Although commercial auto pricing data indicates that the magnitude of renewal pricing increases has declined somewhat, year-over-year increases are still needed, indicating market conditions across property/casualty lines of business have distinct differences."

According to the report, results for the line's liability and physical damage components tell different stories. On the liability side, the industry's underwriting loss in 2025 was more than $4.6 billion while the commercial auto physical damage side saw a $2.4 billion gain, despite rising costs to replace or repair parts in newer vehicles damaged in accidents and surging labor expenses.

"Paradoxically, technology has helped lower auto accident frequency while also increasing the cost to repair vehicles when accidents occur," said David Blades, associate director, Industry Research, AM Best. "However, commercial insureds that have been more proactive with fleet monitoring and maintenance have benefited from a reduction in the frequency of preventable accidents, which has likely aided overall auto physical damage profitability."

Other report takeaways include:

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• Adverse prior-year loss reserve development continues to impact the line, but the drag is less significant than in years past. Overall, loss reserve deficiency is down, and the most recent accident year appears to be adequately reserved.
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• Progressive Insurance Group remains the market leader by a wide margin, writing more than double the direct premiums written of the No. 2 carrier, Travelers Group. Insurers focusing on the line have managed to do well through turbulent years.
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• Commercial auto liability insurance has been hard hit by social inflation over the past decade. While tort reforms in Florida have provided greater benefit on the personal auto liability side, even the muted positive impact on commercial auto insurers may provide a road map that other states could follow. (Additionally, see the Best's Special Report: "Social Inflation Adds Pressure to Property/Casualty Liability Results.")
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To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=370097.