Legal System Abuse Abuse Hammers Truck Insurance

The American trucking industry has been shaken to its foundations. The welterweight of external challenges has created failure of about 88,000 trucking companies by 2023. That's 10 percent of the nation's trucking companies. The main culprit was a large increase in operating costs, led by increased driver wages and charges, which resulted in a large increase in truck insurance costs. These challenges have fueled a vicious cycle of border compression and inflation in trucking costs. If rising operating costs are not controlled, all Americans will bear the brunt of the trucking industry's woes in the form of higher prices for all types of trucking.

The trucking industry is among the country's largest economic sectors. It is productive $941 billion in gross revenue and employs 8.4 million workers. It it transports 73 percent of all US propertymeasured by weight. The trucking business is also highly competitive, with hundreds of thousands of players, from independent owner/operators with one or two trucks, to regional shippers, and publicly traded giants that trade long haul trucks with tens of thousands of drivers. and power units. Heavy truck competition is evident in it he is young profit margins, ranging from two to six percent, less than half of the S&P 500 companies margins. With such thin margins, a large increase in costs can push a trucking company into unprofitability, and it has.

What is Commercial Auto Insurance and why is it important?

Commercial vehicle insurance is an insurance product for vehicles that are not private passenger vehicles. With different of New Hampshire, all states require trucking companies to carry third party liability insurance for bodily injury and third party property damage liability. In addition to 18-wheel trailers and box trucks, commercial vehicle insurance buyers are bus companies, livery (taxi and limousine companies), and specialty vehicles such as dump trucks, garbage trucks, cement mixers, tow trucks, etc. al.

One of the most important challenges for commercial vehicle operations is the increase in truck driver wages, driven by a shortage of drivers. Wages for truck drivers have historically been equal downaverage $55,990 per year., less than $59,384 all-activities national average. The driver shortage has been pushing truckers to raise wages at rates higher than inflation.

A second challenge for truckers is the abuse of the legal system in trucking accident cases, which has resulted in the awarding of court awards, which has driven up the cost of commercial liability insurance. Some cases resulted in awards in the tens of millions of dollars; some even exceeded one hundred million dollars. For example, in an accident involving a Werner's truck where the police found that Werner and its driver were not negligent, Werner was forced to do so prepare for $150 million. This came on the heels of another a suit against Werner where the jury returned an award of $91 million.

Should Social Inflation be to blame?

In recent months there have been several studies released that analyze whether social inflation has been driving trends in seeking credit insurance. The two most recent ones are with In Switzerland Re again RANDI Organization. Inflation in society is a case of civil lawsuit awards rather than an increase in consumer prices.

RAND's analysis of litigation trends, decisions and insurance claims presents data-based evidence consistent with the expected effects of inflation on society. For those who don't have time to read the entire 104-page study, the main findings are:

• The annual number of new cases filed per capita increased by about 10 percent between 2012 and 2019 in the 19 states where data was available (nb, the analysis ended with 2019 data because 2020 and subsequent years were negatively impacted by Covid , deviating trend).
• Plaintiff win rates increased significantly during the study period for all types of cases.
• Inflation-adjusted awards per claimant increased at an average CAGR of 7.6 percent between 2010 and 2019.
• Inflation-adjusted strains on high-limit policies increased at faster rates than low-limit policies.

A 2023 underperformance review of motor insurers proves just how unprofitable commercial motor insurance was for insurers. A combined ratio of more than 100 percent means losses and costs that exceed the premium. The combined Commercial auto rate has been below 100 percent in only one of the last 12 years.

Source: IS&P Capital IQ Pro

Commercial Auto Insurance Front Street

Because the commercial auto insurance product continues to be in the red, steps need to be taken, especially at the government level, to restore stability to the commercial auto market. This should include:

• We present a summary of pain and suffering and punitive damage awards
• Limiting phantom damage
• Examines the impact of third-party litigation funding on commercial auto

The good thing is that there was good development In the tort of a truck accident lawsuit:

• Awards for pain and suffering are limited to $5 million Iowa
• Seat belt use is admissible as evidence to In Indiana
• Disclosure of third-party litigation funding to Montana
• Comparative negligence, minimum statute of limitations and limitations on phantom damages In Florida

Progress on such programs would be good for trucking companies, insurers and all of us inflation-stressed consumers. Going in the other direction – increasing operating costs borne by trucking companies – will have ramifications that will extend beyond the trucking industry.

Articles
Default