Nuclear verdicts against trucking companies are putting insurance premiums into overdrive. A nuclear verdict is defined as a jury award in excess of $10 million, according to a January 15 article in The Wall Street Journal titled, “Growing Insurance Burden Weighs Heavily on Truckers.” Trucking panel counsel members are monitoring this situation closely.
CaseMetrix, a reporting service for settlement and verdict data, indicates that the average verdict against a trucking company in 2012 was about $2.6 million. In 2017, that figure was just over $7 million. Now the average verdict is more than $17 million.
Below is a representative list of trucking nuclear verdicts from recent years.
- $280 million was awarded to a Louisiana family by a Georgia jury in August 2019 for a fatal 2016 trucking accident.
- $260 million was awarded to a family in Texas after a man was killed when his van collided with a tractor-trailer positioned across all four lanes of a highway.
- $165 million verdict was awarded and affirmed on appeal in New Mexico after a 4-year-old child was killed when a FedEx tractor-trailer collided with a pickup truck.
- $101 million was awarded to a plaintiff with severe injuries caused by the alleged negligence of an FTS International Services truck driver found to be operating under the influence of drugs.
- $90 million was awarded to a family who lost their 7-year-old child and whose 12-year-old child was left paralyzed due to the alleged negligence of Werner Enterprise.
- $53 million was awarded by a California jury to two brothers whose pickup truck was hit by the driver of a CRST truck.
As the average verdict size continues to sky-rocket, trucking insurance premiums are growing at a corresponding rate. Trucking companies are facing up to a double-digit jump in premiums, and rates are forecast to continue to increase in 2020.
One carrier, A.L.A. Trucking of Indiana, reported an increase in rates from $340,000 to $700,000 in the span of just one year. This surge in costs ultimately caused them to go out to business, laying off 41 drivers and 15 other employees.
Fleetwood Transportation Services Inc., a Texas carrier with about 100 company trucks, shut down on December 31, 2019 after it was unable to renew its insurance at affordable rates the company, according to media reports. Fleetwood was dealing with the after effects of a 2019 fatality in which a driver under the influence killed a woman and her teenage son. The 60 year old company also recently lost a large account that generated 30 percent of total revenue. Together, the operating environment forced the company to close.
The increase in insurance costs resulting from nuclear verdicts is behind an emerging trend across the trucking industry. Some carriers have been forced to go out of business, while others have resorted to extreme cost-cutting measures to stay solvent. At the same time, the American Trucking Association’s “ATA U.S. Freight Transportation Forecast to 2025” predicts “further growth not just for trucking industry, but for the entire freight economy.”
Pressure from insurance premiums has forced trucking companies to place a greater focus on safety. Carriers are now “utilizing equipment with collision avoidance systems, using speed limiters on their tractors (excessive speed is one of the leading causes of truck crashes), adopting hair testing to identify lifestyle drug users, and even avoiding traffic lanes where a pattern of large verdicts have occurred,” according to an executive at the transportation and logistics practice for risk advisory and insurance brokerage firm Aon PLC.
Implication for Trucking Panel Counsel Members
We first wrote on the topic of nuclear trucking verdicts in an October 2016 blog post titled, “AIG and Zurich Throttle Back on Truck Insurance.”
There are several important implications for trucking panel counsel law firms.
- A law firm should avoid being overly dependent on any one trucking company client, or the trucking industry generally. The increase in bankruptcies and closures of trucking companies could result in the sudden loss of an important revenue stream. (Of course, this is true generally in the insurance defense sector. An over-reliance on one or two key clients is a risky business strategy.)
- Law firms that are trucking panel counsel members might be able to help trucking insureds and their carriers conduct an internal safety audit and look for ways to strengthen litigation avoidance measures and improve safety practices.
- Trucking panel counsel defense firms can enhance their leadership position by increased marketing communications on trucking-related safety topics. Blog posts, client alerts, LinkedIn social media posts, speaking engagements, and article publication are a few ways for a defense firm to gain a competitive advantage.
Insurance Defense Marketing Consultant for Law Firms
If your insurance defense law firm is asking how you can get on more insurance panels, give us a call. We have helped more than 170 insurance defense law firms in 37 states pursue new insurance panel counsel clients.
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Contact Margaret Grisdela, an insurance defense marketing consultant, at 561-266-1030 or via email. Connect with Margaret Grisdela on LinkedIn.
Disclaimer
This article is provided for educational purposes only. It is not to be interpreted as legal advice or an opinion in regard to any topic discussed. The article should not be used as a substitute for legal advice from a licensed attorney in your state. Every situation is different and circumstances vary widely depending on the governing state law, policy provisions, and related considerations.
