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Commercial auto begins a recovery

The line provides $23 billion in premium, affecting virtually all sectors of the economy

Commercial auto insurance provides more than 10% of the total commercial lines premium, coming in at more than $23 billion, according to data compiled by MarketStance, Middletown, Connecticut. And, like all major commercial insurance lines, it was impacted by the economic downturn, with the exposure base falling in many industry segments.

Commercial auto is one of the most important lines in the construction arena, accounting for $5.2 billion in premiums written in that sector. This certainly added to the line's woes as the construction sector continues to be hard hit by the housing crisis as well as slowdowns in other segments of the construction industry. The second most important sector for commercial auto is wholesale and retail trade, where it accounts for $5.1 billion in premium, followed by the services sector ($4.8 billion) and transportation, communication and utilities ($4.1 billion).

The commercial auto insurance exposure base is expected to show the strongest growth in Alaska, where exposures are expected to grow by 2.79% from 2011 to 2012. Coming in second is Oklahoma (2.6%); Texas (2.27%); Hawaii (2.11%); and North Dakota (2.0%). The worst performance is in Delaware, where the exposure base is expected to fall 1.16%, followed by South Dakota, off 0.9%; Connecticut, down 0.89%; Idaho, down 0.7%; and Indiana, off 0.55%.

The good news is that there has been a modest recovery in 2011, with all Rough Notes regions enjoying positive growth. And even better growth is anticipated.

The population shift southward and westward is reflected by the fact that the best future growth (2012-2014) is anticipated to occur in the Rough Notes' Southeastern, Western and Southwestern regions—up 3.81%, 3.38%, and 3.25%, respectively. The laggards are the Northeast (2.52%) and Midwestern (2.59%) regions.

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