Nuclear Verdicts and the Effects on Trucking Insurance

By October 31, 2019 Uncategorized

2019 may go down as the “Year of the Nuclear Verdict” in the trucking industry. According to this article from Freightwaves, a 540-unit hauler is ceasing operations after a $26.6 million judgement against it stemming from a rear-end collision where one of the company’s independent contractor drivers rear-ended and killed the parents of three children. Werner has been hit with two lawsuits in excess of $40 Million in just eighteen months. Nuclear verdicts are judgments of $10 Million or higher and often make the news. However, large verdicts in excess of $1 Million have become commonplace and rarely make the headlines.

Insurance companies have a difficult time adequately pricing auto liability coverage to account for nuclear verdicts. This has resulted in nine years of loss ratios in excess of 100% in the commercial auto segment, including a record 108% loss ratio in 2018. Larger fleets are being hit especially hard on primary auto insurance renewals, with double-digit increases becoming the norm.

Another result is the sharp hardening of the excess auto liability market. Insurance companies are slashing capacity, and the first $4 Million excess of the primary auto policy has become increasingly expensive. This year, rate increases of 25% are common, and some motor carriers may see rate increases of 50% – 100%.

The commercial auto insurance trend is not expected to improve in 2020 or beyond, so fleet company owners must prepare themselves for further increases. Some fleets are increasing their retentions on auto liability or are seeking alternative risk programs such as captives. We’re seeing fleets as small as 25 units with excellent loss ratios starting to explore alternative risk options in order to keep fixed insurance costs in check.

With a volatile trucking insurance market and increased costs pressures, it’s important to use all tools at your disposal to keep claims and insurance costs in check. As always, the trucking insurance professionals at The Daniel & Henry Company are here to help you understand what measures you can take to reduce risk and insurance costs. Please call us today at 1-877-406-5915 or email us at RuebsamJ@danielandhenry.com