Experts Recommend Mitigation Strategies Like Ensuring Safety of Equipment, Smart Insurance Policies, Relationships With Attorneys
Connor D. Wolf
SAN DIEGO — The trucking industry has been facing surging unfavorable verdicts and insurance costs as biases and policies drive up costs beyond economic reality, according to a panel of experts Oct. 28 at American Trucking Associations’ Management Conference & Exhibition.
“A variety of factors including global events, natural disasters, economic conditions, legal trends and rising claim costs are impacting corporate insurance expenses,” said Pamela Blass Bracher, deputy general counsel at ATA. “With costs increasing per mile and new insurance capacity entering the market slowly, motor carriers face ongoing challenges in procuring insurance and managing their risk program.”
Bracher added that claims are remaining open for longer, and plaintiff attorneys are quicker about filing lawsuits, forgoing pre-suit claim demands and settlement talks. She said this has resulted in an increase in average loss severity for both indemnities and expenses, while insurance companies raise premiums, reduce coverage and withdraw from certain markets in response.
“Traditional economic drivers, such as wage inflation, medical cost trends and [consumer price index] growth, no longer explain the pace at which liability claims are escalating,” Bracher said. “To accommodate rising insurance costs, trucking companies have employed strategies, and they’re rethinking their total limits. Legal dynamics, including tort reform and state judicial elections, continue to shape the industry landscape. Raising public awareness of litigation trends has never been more important.”
Bracher pointed out that these insurance policies don’t just reflect carriers’ risk profiles; the emotional and psychological biases of jurors across the country are now factoring into premiums too. She said this underscores the need for the insurance industry to better explain how litigation dynamics impact cost and availability.
“It’s a supply and demand question, just like all of us are dealing with in the trucking space right now,” said Nathan Meisgeier, president and chief legal officer at Werner Enterprises. “In auto liability, frankly, in any corporate insurance market, it starts with a supply and demand question. … As insurers have started to shrink the policies that they’re willing to write, as the number of insurers available to us shrinks, that’s a supply side part of the dynamic.”
A nuclear verdict that went against Werner was overturned by the Texas Supreme Court this June. (Werner Enterprises)
Werner was the defendant in a fatal highway accident that occurred in Texas in 2014. A Werner tractor was struck by a pickup truck whose driver lost control on icy roads and crossed the median. The jury initially awarded $89.7 million in damages to the plaintiffs in 2018. After one unsuccessful appeal, the decision was overturned by the Texas Supreme Court this June. The carrier pointed to the fact that the truck driver stayed in his lane and was below the speed limit.
“But even before the Werner verdict happened in 2018, we had a year where our rates went up significantly, and our loss run was frankly stellar,” Meisgeier said. “There’s part of the analysis that is not controlled. And so, the overall macro is happening to you, and you can’t control that part. What can you control? You can control things like what kind of equipment are you running? You can control things like, what do your policies say? You can control things like, when you’re getting data off of your telematics system, are you doing anything with it, or are you just putting it in a storage container somewhere for a plaintiff lawyer to mine someday?”
Meisgeier also stressed the importance of ingraining safety into company culture. That means making sure every driver knows that nothing is worth the risk of hurting themselves or others and that people and loads aren’t being pushed too hard. At the foundational level, he said it boils down to good training across the company.
“We’re viewed as all one industry, it’s all together, and we’re very different sizes and have very different experiences, but our value of safety and safety toward the motoring public is really important,” said Kristin Glazner, chief administrative officer at Wabash. “The second item being, regardless of the size of the company you are, really knowing your lawyers.”
Glazner added that carriers should retain lawyers that understand their culture and values. She recommended carriers use lawyers to inspect whether any of their operations and procedures increase liability risks. If a carrier has an upcoming case, she said the legal team should learn from their lawyers about the nuances, like what the judge is like, to calibrate a better approach. She also highlighted the importance of getting help from associations and groups like ATA.
“Tort reform is really important,” Glazner said. “That’s not something that can just happen federally. Do we want that to happen federally, absolutely. There are things, particularly in the product liability space, that would be very helpful to have it federally. But most of the tort reform … is very state to state, and how states view negligence. That is an important activity, it’s a journey, that work may never be done completely.”
