AM Best’s “Stuck in Reverse” analysis estimates that commercial auto liability carriers remain under-reserved by $4 billion to $5 billion industry-wide. The line posted its 14th consecutive underwriting loss in 2024, at $4.9 billion, bringing two-year cumulative losses above $10 billion. More than $2.7 billion of the deficiency stems from accident years 2021 and later, the same vintages still open in most self-insured fleet triangles.
The gap between bodily injury and physical damage tells the story. Liability coverage posted a $6.4 billion underwriting loss in 2024, its largest on record, while physical damage posted a $1.5 billion profit. The liability loss and loss adjustment expense ratio hit 87.6, the highest in 11 years and nearly 25 points above the physical damage ratio. Among the top 20 commercial auto writers, 14 posted combined ratios above 100.
Who it affects
Self-insured trucking, delivery, and transit fleets retaining bodily injury liability. Construction firms with large auto retentions. Captive programs writing commercial auto. Any organization whose auto liability triangle includes accident years 2020 through 2024, where attorney involvement, third-party litigation funding, and nuclear verdicts are still pushing claims toward ultimate.
The reserve mechanism
This is adverse development on prior accident years, driven entirely by bodily injury severity. Average liability claim severity has more than doubled over nine years, growing at roughly 8% annually, more than double the 3% rate of general economic inflation. The deficiency means that development factors applied to retained auto liability losses likely understate ultimate incurred, particularly for recent accident years where social inflation is still maturing claims.
The pattern matches what Lockton’s May 2026 analysis documented separately: $1.8 billion in commercial auto adverse development concentrated in accident years 2022 and 2023, where initial severity selections understated realized loss.
Physical damage severity is not the problem. The entire shortfall sits in the bodily injury liability tail. For self-insured programs that blend BI and PD into a single development triangle, the stable PD component masks the BI deterioration. Separating the two is the first diagnostic step.
What this means for your next review
Ask your actuary whether the development factors on your auto liability triangle reflect post-2020 severity trends or are still anchored to patterns from lower-severity years. The AM Best data provides a concrete benchmark: if the industry’s own reserves understate ultimate by $4 billion to $5 billion after 14 years of rate increases, a self-insured fleet using the same development era should stress-test its selected factors against actual emergence.
Check whether your bodily injury development factors are separated from physical damage. Review accident years 2020 through 2024 for late severity development. Confirm that your actuary’s severity trend selection reflects the 8% annual growth AM Best identifies, not a blended rate diluted by PD stability.