Let's be honest for a second. The commercial auto market has been a tough nut to crack for a while now. We've all seen the numbers—claims costs are up, and for years, it's felt like we’re taking a loss on these policies. It’s a constant struggle to price risk accurately when a 2023 Ford F-150 can be anything from a basic work truck to a luxury vehicle loaded with more safety tech than a spaceship.
How are we supposed to price that consistently?
For a long time, we’ve relied on pretty broad categories. We'd group vehicles by make, model, and maybe a few other high-level details. But that’s like trying to guess a student’s final grade by only knowing what school they go to. It just doesn’t give you the full picture.
Well, things are finally starting to change. We're moving away from those broad strokes and getting into the nitty-gritty details of each and every vehicle. And it’s making a world of difference.
So, What's the Big Idea? Think of It Like a Report Card for Every Car and Truck
A team of actuaries, including folks from Pinnacle Actuarial Resources, have been working on something they call a Vehicle Build Score, or VBS.
I had the chance to hear from Gary Wang, a Senior Consulting Actuary at Pinnacle, and he explained it in a way that just clicked. He said the old way of rating a vehicle was like a "summary variable." It was a quick snapshot. But this new VBS model is something else entirely.
"VBS stands for vehicle build score, which can be thought of as a model for vehicle characteristics," Wang explained. "This tool’s greatest values are completeness and accuracy. It allows insurers to better understand the specific characteristics of the vehicles they are insuring.”
Basically, instead of giving a vehicle one single grade, the VBS breaks it down into a detailed report card. It looks at everything you can possibly know about a car, starting with the basics.
- Is it a sedan, a van, a heavy-duty truck?
- How much does it weigh? How big is it?
- What are its performance specs?
But then it goes so much deeper. It looks at all the modern safety features that can make or break a claim. We’re talking about things like forward collision warnings, lane-keeping assist, adaptive cruise control—all the bells and whistles that are designed to prevent an accident in the first place.
The result is a numeric score, kind of like a GPA. As Wang put it, "A vehicle that scores very well — equivalent to an ‘A’ grade — would be classified as low risk, while one that’s struggling — equivalent to a ‘C’ or ‘D’ — would be considered higher risk."
Suddenly, you’re not just insuring a "truck." You're insuring a specific vehicle with a specific, quantifiable risk profile. It’s a game-changer.
Where in the World Does All This Data Come From?
You might be wondering, "Okay, that sounds great, but how do you get that level of detail?" The answer is data. A massive amount of data.
Pinnacle teamed up with CARFAX to get access to an unbelievable treasure trove of vehicle information. We're not talking about a handful of data points. We're talking about billions of records.
“The VBS tool leverages Pinnacle’s extensive actuarial and analytics experience and carefully curated data from CARFAX. We work with over 400 raw variables that CARFAX gathers and aggregates,” Wang said.
But here’s the really cool part. They don’t just take that raw data and plug it into a spreadsheet. They perform what they call "data engineering." They combine different variables to create new, more insightful metrics. For example, to figure out how well a vehicle handles, they might combine data on its turning radius, stability controls, and cornering ability into a single, meaningful score.
And the key to all of this is the 17-digit VIN.
For the first time, we can use that full VIN to pull up the specific "window sticker" data for that exact vehicle. We know every option, every package, every feature that was on it the day it left the factory.
"What’s new about this feature is that by using the 17-digit VIN...we are building a sharper resolution of what we know about the car," Wang noted. It’s the difference between looking at a city from an airplane and walking down the street with a map. The level of detail is just on another level.
This Isn't Just for Actuaries—It's a Tool for Smarter Underwriting
Now, you might think this is just some high-level actuarial stuff, but it has a huge impact on the front lines for underwriters.
Think about it. Good underwriters have always had a "gut feeling" about certain vehicles. They just know that a certain truck configuration is more prone to rollovers or that a specific van model has terrible blind spots.
"What we do with symbols and scores is really try to quantify what underwriters likely intuitively know already," Wang explained. "We’re helping them get a better picture."
This VBS gives them the data to back up that intuition. It turns a gut feeling into a hard number, allowing for more consistent, confident, and defensible pricing decisions. This is especially critical in the commercial space, where one bad accident can lead to a massive loss.
The ripple effect is even bigger. When we can precisely identify and price risk, we can start creating real incentives for businesses to choose safer vehicles. If a fleet owner knows that choosing trucks with automatic emergency braking will save them a significant amount on their insurance, they're much more likely to make that investment.
Ultimately, this helps everyone. It leads to safer roads for all of us and a more stable, sustainable insurance market.
Your Truck Might Get Safer While You're Sleeping
If all that wasn't enough, the world of connected vehicles is adding a whole new layer to this. Modern cars and trucks are basically computers on wheels, and that opens up some wild possibilities.
"Manufacturers can now push software improvements directly to vehicles, enhancing safety features and warning systems remotely," Wang pointed out. "You could go to bed and wake up to a safer vehicle than you had the day before."
Think about that for a moment. A safety system could be improved or a bug fixed via an over-the-air update, instantly changing the risk profile of that vehicle without the owner lifting a finger. This is a huge shift, and our rating models need to be able to keep up.
This is why a tool like the VBS isn't a "set it and forget it" number. It's the start of a much more dynamic and informed conversation. It’s a bridge between the deep data analysis of actuaries and the real-world expertise of underwriters.
As we get more data on how these commercial vehicles perform on the road and what kinds of losses they're involved in, our understanding will only get sharper. It’s an exciting time, and I’m genuinely optimistic about where the commercial auto market is headed. As engineers keep building safer vehicles, and as we get better at understanding and pricing that safety, we're on the right track to creating a healthier market for everyone involved.
PS: If you want to dive even deeper into this, Gary Wang is co-hosting a webinar to discuss the details of the Vehicle Build Score on December 4, 2025, at 2 p.m. (Eastern). You can find more info at www.pinnacleactuaries.com.
