Claims Severity & Reserve Early-Warning · Brief 02
Attritional Severity Running Hot — Commercial Trucking
A steady claim severity × a frequency the rate never priced — the reserve-and-rate adequacy question behind a book that never dips under break-even
The one line you configure
Is our attritional claim cost on any program structurally outrunning what the rate and reserves assume — quarter after quarter, with no single event to point at?
In a nutshell
Commercial Trucking carries an attritional loss cost the rate never caught up to — a steady ~$30K claim severity at a frequency of ~25 per $M earned, holding flat quarter after quarter with a benign 3.7% large-loss ratio (no tail to reserve for). Held at a book-level 40% reserve ratio, the program still runs above break-even every month — a reserve-and-rate adequacy question, not a shock to reserve against.
At a glance
What's happening · the combined ratio has not re-entered the healthy band in a year
No spike, no event — just a flat ceiling above break-even. A tail-severity view sees nothing here; the chronic-combined view sees a program that has not earned its keep in a year.
Why · steady frequency and steady severity — attritional, not a shock
Both lines are flat — frequency ~24–25 per $M, severity ~$30K. Neither is spiking; the loss cost is simply structurally high for commercial auto and the rate was set below it. This is the mirror image of Propane's episodic tail.
Where the 104% comes from · loss cost plus a heavy expense load
The four components sum to the 104% combined. The loss ratio alone (74.5%) is not alarming — it's the loss cost plus a 16% commission and a litigious-line LAE load that push the whole program past break-even. Levers: rate on the loss side, commission terms on the expense side.
Commercial-auto attritional cost — structural, all four states
Trucking bodily-injury, auto-liability and cargo losses arrive at a steady ~$30K severity and a claim frequency the plan never re-based. There's no venue or event to isolate — GA, MA, PA and TX all run alike — so the answer is a rate/terms and reserve-adequacy decision on the whole program, not a per-claim intervention.
So what
Commercial Trucking's loss cost is quiet and permanent — a steady attritional severity × frequency that keeps the program above break-even every month. Its large-loss ratio is benign at 3.7%, so there is no shock to reserve against; the whole gap is attritional loss cost the rate has never priced for, held at a book-level reserve ratio. That makes it a rate-and-reserve-adequacy decision, not a per-claim one — and because it's structural across all four states, the filing is program-wide.
The points that matter
Chronic, not episodic
The combined ratio has stayed between 100% and 108% for twelve straight months — no single event, no tail; the program simply runs above break-even.
12/12months over 100%No tail to reserve for
The large-loss ratio is a benign 3.7% — this is attritional frequency × severity, so the answer is rate and terms, not a reserve strengthening or a per-risk cap.
3.7%large-loss ratioIt's structural across the footprint
GA, MA, PA and TX all run ~104% — there's no venue to trim, so a program-wide rate filing is the lever, not a state-by-state cull.
4 statesall ~104%Questions it already answers
Is this a deteriorating book or just priced too cheap from the start?
Priced too cheap — the combined ratio is flat, not rising, so the loss cost isn't worsening; the rate was set below a commercial-auto loss cost that runs structurally hot.
Would a per-risk cap or reinsurance help, like it does on Propane?
No — the large-loss ratio is 3.7%, so there's no tail for a cap to catch; ceding attritional loss just cedes margin. This is a rate/commission decision.
Is any single state or producer dragging the average?
No — all four states sit at ~104% on one carrier (Clear Blue); the drift is the whole program, which is why the filing is program-wide.