Despite the technology advancements, commercial auto remains one of the most troublesome classes for global reinsurers, with an unprofitable track record and constrained capacity.

After a decade of underwriting losses, reinsurers increasingly will not provide open-ended protection to insurers writing ride-hailing, delivery and autonomous-vehicle risks.

Jeff Huebner, who leads California State Automobile Association’s commercial division and its Mobilitas unit, put into words just how persistent the pain has been.

“On average, I think that commercial auto insurance industry has had about a 106 per cent or 107 per cent combined ratio over the last ten years,” he said during a recent S&P Global webinar.

In other words, insurers are paying out more in claims and expenses than they collect in premiums, making the line unprofitable.

Autonomous vehicles are expanding quickly, even as insurers and reinsurers remain cautious. Waymo, owned by Alphabet, operates more than 700 driverless robotaxis across several American cities, while Cruise, backed by General Motors, has resumed limited pilots after a high-profile California suspension.

Other firms are lining up behind ride-hailing platforms such as Lyft. Although Waymo data suggests autonomous cars are far less likely to cause injury crashes, nearly 4,000 incidents have been reported since 2019, according to statistics from the US National Highway Traffic Safety Administration.

By contrast, a study from University of Illinois Chicago, published in the Journal of Safety Research, found one-third of human ride-share drivers have crashed on the job.

Meanwhile, Waymo has resumed its driverless taxi service after a large blackout across San Francisco left its cars stranded in the streets, causing chaos last Saturday, December 20.

Mobilitas was built specifically to combat the disruption caused by the new platforms. As Mr Huebner explained: “That’s why we created Mobilitas, to enter the market that we thought was going to be disruptive, and to target clients like Lyft, Uber, DoorDash, Uber Eats, Turo — which is peer-to-peer car rentals — or Waymo and autonomous vehicles. So we wrote our first policy in 2020, and five years later, we’re over a billion dollars in revenue.”

Despite the growth, on the reinsurance side, that high combined ratio has left little appetite for quota sharing.

Quota-share arrangements, which involve reinsurers taking a fixed percentage of both premiums and losses, have historically been a common way to support growth in commercial auto.

“When you think about a commercial auto quota share, if you’re trying to bring a new one to the reinsurance market, I don’t want to say it's completely dead on arrival, but it’s very, very difficult to get done,” said Mr Huebner. “There’s limited capacity for that kind of risk, because it’s been such a troubled class.”

The capacity that does exist is increasingly structured.

“Instead of getting what would be a common quota share, it’s much more apt to be a structured deal, so things like sliding scale commissions or lower ceding commissions, aggregate stops and loss caps and things like that,” he said.

Ironically, the same autonomous-vehicle platforms now generating “over a billion dollars in revenue” for Mobilitas may ultimately shrink both personal and commercial auto insurance, he suggested.

This could raise the stakes for reinsurers in a market already running above the break-even point.