Tag Archive for: nuclear verdicts

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Insurance – COVID-19 impacts Premiums and Renewals

The financial effect of the Coronavirus pandemic has been widespread among the citizens and businesses of the United States. As many people are being temporarily laid off, the economy has taken a swift downturn. Most people are only purchasing essentials.

Many businesses have been forced to close their doors because of the loss of revenue. Some may be closed for good.

Are you covered?

Let’s take a look at how the trucking industry will be affected by insurance costs after the national emergency.

Trucking companies may resort to cutting costs to recover from the economic slowdown we have experienced over the last several months. They must be careful, however, as some cost cutting measures could lead to diminished safety for their drivers. Decreasing staff could mean that drivers will have to run longer hours, leading to frequent driver fatigue.

It will also put more wear and tear on the trucks and trailers. There might even be delays in installing safety technologies like in-cab cameras or online training. These situations bring about increased claim activity.

How does that affect your company?

Insurance companies have to maintain a delicate balance between inflow of premiums and what claims they can afford to pay out. Just like in the trucking industry, if that balance is interrupted, the company has to adapt to stay afloat.

Insurance companies will experience changes in their loss ratio, which means will be paying out more than usual in relation to the premiums they receive. Those covered might see an increase in premiums and renewal costs as insurance companies try to recover from the additional losses.

If the loss ratio changes too drastically, underwriters may begin performing risk assessments on existing clients. They will be very selective about who they choose to take on as insureds. It may be difficult to find coverage for companies with a higher risk for accidents/incidents.

Underwriters are already cautious about making decisions when it comes to premiums, coverage, and renewals. The COVID-19 situation can have a serious effect on their current insurable metrics. Future determining factors are likely to include conditions to coverage based on in-cab cameras, safety culture, and availability of online training.

Responsible carriers will actively manage their risks. Investing in safety is the only way to win. Carriers who cut back on safety efforts to save money are setting themselves up for failure. Insurance providers may have to resort to raising their premiums or charging a higher down payment.

How should you respond?

Communicate your efforts with your current insurance partner. Let them know you have a plan on how to survive during the crisis. Include that you are focused on safety. Even though there are social distancing requirements right now, your safety training cannot be put on hold.

Find ways to adapt to the situation if safety remains a big concern. Technology allows safety training to be delivered directly to your drivers, wherever they are, through an online platform. Your current insurers will keep that in mind when performing your risk assessments.

While it is important for your insurer to be aware of the safety measures you are taking, it is just as important for your drivers. They will enjoy the convenience of taking online orientation, remote training, and monthly training classes from anywhere. And employers can retain their peace of mind knowing they are still focused on safety, even during trying times.

What factors affect a risk assessment?

Risk assessment factors usually fall into these two categories:

  • Tangible – things that are quantifiable such as loss run, miles, commodities, CSA scores, etc.
  • Intangible – things that are difficult to measure like company culture, awareness training, technology usage, security, etc.

What might a loss control professional ask about the intangibles?

Intangibles are difficult to measure. The amount you are charged will be up to your insurer’s discretion. Your best bet is to be prepared and make sure your drivers and employees are up to date on safety training. To give you an idea, here are some questions related to the COVID-19 pandemic they might ask:

  • Did you continue safety training through the pandemic?
  • How did social distancing requirements affect your orientations?
  • How did you lead safety efforts working remotely?
  • How did you help your drivers through this time?
  • How did you manage the waivers issued by the DOT and FMCSA?

Make sure you retain records of everything provided to every driver. The only way to prove that your company has a solid focus on safety is to have documented records. The documentation should be readily available in case you need to show that all drivers are adhering to your policies.

Are we at risk of losing our business due to insurance coverage issues?

Short answer: yes.

There are many examples of trucking companies hanging up their keys because of insurance costs. If premiums increase too drastically, it can become impossible to remain operational. Here are a couple of examples of that happening:

  • Carney Trucking – Insurance premiums doubled for this flatbed carrier. They had to close their doors after 27 years in business.
  • 101 Transport – This Wisconsin based carrier ceased operations after a 70% increase in premiums.

Is there anything I can do to protect my company?

Yes. That’s the good news! As always, be proactive in managing your risk. Your insurance broker needs to see your safety-focused efforts.

Remember that if it isn’t written down, it didn’t happen.

Always keep a record of what training was performed, when it was performed, and make sure your drivers sign everything. For years, “billboard attorneys” have been attacking the trucking industry, encouraging the general public to sue truckers.

And they are ruthless when it comes to safety.

During the pandemic, truckers have been running with relaxed regulations when carrying designated items. If an incident were to occur while a driver is over normal hours, a lawyer might view this as preventative. They could say the driver was negligent and possibly fatigued because he isn’t used to this much road time.

Document everything!

In case of litigation, your best defense is proving your company’s focus on safety. Always be proactive with your safety training and awareness programs. Make sure your drivers are familiar with all your policies (drug/alcohol testing, incident reporting, etc.).

Most importantly, you must be able to prove they have been provided with proper safety training and equipment. Eliminate all reasonable doubt. Carriers need to focus on documenting training and information exchange, especially for upcoming insurance renewals.

Let’s say it again: If it isn’t written down, it didn’t happen.

 

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Nuclear Verdicts: Three Steps for How Your Firm Can Avoid Them

A truck driver's dash while driving including a gps unit | nuclear verdicts

Nuclear verdicts quadrupled last year, leaving hundreds of carriers out of business and thousands of drivers out of jobs.

And while there is a great appetite out there for the “deep pockets” of the trucking industry, with a few tweaks to your training and documentation system, you can insulate yourself from them.

How can I protect my company from nuclear verdicts?

Nuclear verdicts can put a trucking carrier out of business, and any gap in training or documentation is an opportunity for a plaintiff’s attorney to make the case against your company. Protect your company by establishing a culture of safety and documentation.

A Look Inside an Attorneys’ Nuclear Verdict Playbook

Plaintiffs’ attorneys have a sophisticated bag of tricks, in which they comb through data to discover vulnerabilities in carriers’ processes and procedures. They use these data analytics to make decisions on whether to go to court or settle or when to drop a case altogether.

Attorneys look at a variety of data, including CSA scores, logs, and reporting inefficiencies, then drill down on those issues to prove their cases and win millions of dollars for their plaintiff. Attorneys have data analysts ready to get the next nuclear verdict, so trucking companies need to be armed and ready, protecting their vulnerabilities and ensuring that all processes and procedures are above par.

The “Dirty Five”

Attorneys have a well-known attack strategy for nuclear verdicts, using the “Dirty Five” against drivers. These are five categories that are known winners for nuclear verdicts:

  • • Driver Fatigue
  • • Distracted Driving
  • • Driving Under the Influence
  • • Poor equipment maintenance
  • • Inexperienced or poorly-trained driver

Your Nuclear Verdict Playbook

If attorneys have a playbook for getting nuclear verdicts, you should have one for avoiding them. Gone are the days when a robust safety program was a “nice to have.” Welcome to the days of “establish your program, or you’re out of business.” 

Infinit-I Workforce Solutions has published a new whitepaper, which details our strategy on a data-driven approach to avoiding nuclear verdicts. Read the whitepaper and learn about how a culture of safety and accurate, detailed documentation can save your company from nuclear verdicts, extravagant insurance premiums, and bankruptcy.

Infinit-I Workforce Solutions’ Checklist to Avoid Nuclear Verdicts

If you’re not quite ready to commit, we are offering a checklist to get you started on nuclear verdict prevention. Follow the steps below to protect your company and your drivers.

  1.   Avoid accidents in the first place by creating a culture of safety that utilizes short, frequent, consistent online safety awareness training partnered with real-time documentation.
  2.   When accidents do happen, mitigate liability and the likelihood that the case goes to trial by making sure that 1) the driver is prepared to begin your company’s defense at the site of the accident, and 2) your office is prepared to quickly produce consistent documentation and a safety portfolio that discourages litigation
  3.   If the accident goes to trial, make sure that driver training, company policies, licensing, and medical records are thoroughly documented, reducing the threat of nuclear verdicts

Key Takeaways:

  • • Nuclear verdicts are on the rise, and trucking companies must be hyper-vigilant to reduce risk exposure.
  • • Create a culture of safety using Infinit-I Workforce Solutions’ training toolkit and documentation system.
  • • Plaintiffs’ attorneys have a data-driven approach to snagging nuclear verdicts. You need a data-driven playbook on how to avoid them.
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The effects of nuclear verdicts on the trucking industry

A close-up of police lights at night | Nuclear verdicts

In 2019, trucking bankruptcies quadrupled due to nuclear verdicts. The strategy seen in courtrooms time and time again involved plaintiff’s attorneys pleading to the juries’ “better angels” to award families millions of dollars as a result of a crash with a truck. This is with or without the trucker’s fault and seems to have no relationship to the actual incident or its severity.

What is a nuclear verdict?

A nuclear verdict is defined as a judgment in excess of $10 million as a result of a truck-related crash. Nuclear verdicts also indicate a disproportionate relationship between the settlement and the actual economic or physical damages incurred by the plaintiff.

Nuclear Verdicts in 2019

In the first half of the year, 640 carriers went out of business because of nuclear verdicts, according to the Wall Street Journal. The problem has been noticed by major publications, including Business Insider and Bloomberg, calling 2019 a Recession for the trucking industry.

And while the American Trucking Association is working on proposed legislation to combat nuclear verdicts, that will be years in the making. 

The Ripple Effect of Nuclear Verdicts

Nuclear verdicts don’t just affect certain trucking companies; they affect us all. From job loss to insurance premium prices, the downstream effect of nuclear verdicts is affecting the entire trucking industry.

In 2019 alone, tens of thousands of drivers lost their jobs due to carrier bankruptcies as a result of nuclear verdicts. With that level of job loss, it’s no wonder 2019 was deemed a trucking recession. Imagine if tens of thousands of people were put out of work in any other industry as a result of rampant lawsuits with no reform in sight: 10,000 investment bankers, 10,000 plumbers, 10,000 doctors…you get the idea. There would be protests, legislation drafted, and major structural changes implemented. But the cultural narrative regarding “big trucks” in this country, even though they are a driver of America’s economy, is that truck drivers and truck companies are dangerous on the road.

This is why trucking companies must be hyper-vigilant. 

Preventable Risk

Hyper-vigilance in this day and age means assessing and managing preventable risks. When nuclear verdicts are on the rise, so are insurance premiums. Now it is more important than ever to protect your company and your drivers through regular maintenance and safety training.

According to the FMCSA, last year, driver error accounted for 87 percent of crash risk, while 10 percent was caused by preventable maintenance. With the added scrutiny on trucking companies and the prevalence of nuclear verdicts, it is more important than ever to address those preventable risks to avoid losing your business altogether.

How Can Nuclear Verdicts Affect My Company?

Currently, insurance premiums are rising year over year by 50 – 100 percent, even for smaller carriers. Carriers of all sizes are being affected by nuclear verdicts, with insurance companies mitigating losses on the front end. Some insurance carriers even are getting out of the business altogether.

When profit margins hover around 5 percent, the doubling of insurance premiums can be injurious to trucking companies, even forcing some companies into bankruptcy.

To read more about the downstream effects and help on calculations for future cost models, check out our whitepaper.

What Can I Do to Avoid a Nuclear Verdict?

  • • Driver training is the single best thing you can do to protect your company from a nuclear verdict. Contact one of our experts today about customizable training for your drivers.
  • • Establish processes and procedures for truck maintenance across your enterprise, even for contractors. 
  • • Documentation, documentation, documentation. If you don’t document it, it didn’t happen. Make sure all your training and maintenance records are stored and updated properly.
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How Reporting Reduces Insurance Costs and Litigation Risk for Transportation Firms

How Reporting Reduces Insurance Costs and Litigation Risk for Transportation Firms

Nuclear verdicts are on the rise, now more than ever. With these verdicts totaling $10 million or more each, this presents a real threat to your business.  In fact, the rise of nuclear verdicts has resulted in many trucking companies going out of business, and many insurance carriers are exiting the trucking industry completely. With insurance costs and litigation risk for transportation firms soaring around every turn, it is more imperative than ever to enforce safety policies and procedures, and have clear documentation.

And while the national inflation rate is about 2 percent, insurance rates are actually increasing by 50 – 100 percent year over year for trucking companies, due to nuclear verdicts. 

What is litigation risk?

Any roadside incident presents the opportunity for litigation. With the appetite for litigation at an all-time high, it is important to train drivers on how to avoid these incidents by using your safety protocols—the more robust your safety program, the smaller the risk for litigation.

Nuclear Verdicts and Their Impact

In October 2019, Country Wide RV Transport (CWRV) was one of the latest trucking companies that fell victim to a nuclear verdict. The second-largest RV and motor-home transportation provider in the country, they employed nearly 600 drivers and contractors, all of whom were informed right before the holidays that they would no longer have jobs. The driver who caused the accident was an independent contractor, but the company was still held liable for damages to the tune of $26.6 million.

In the largest nuclear verdict of 2019, and, in fact, in history, a jury awarded a $280 million verdict in only 45 minutes of deliberation. Was the accident tragic? Absolutely. Was it the truck driver’s fault? Absolutely. Was the verdict inordinately high? Absolutely.

Fatalities are decreasing, yet nuclear verdicts are increasing. 

Each year for the last decade has seen significant increases in litigation resulting in nuclear verdicts, with an extreme uptick in the last two years. Plaintiffs’ lawyers have discovered a gold mine in cases against trucking companies, and you better believe they are hard at work mining every dollar, or in this case, every million that they can possibly get. So while your company is hovering at a 5% profit margin, you’re funding plaintiffs’ lawyers’ fancy vacations. 

You can’t afford it.

Insurance costs are rising rapidly, even for squeaky-clean trucking companies. Insurance providers understand the litigation risks associated with the industry and lose a great deal on nuclear verdicts. Many insurance providers don’t even cover trucking companies anymore due to litigation risk.

What can you do about it? 

With nuclear verdicts and insurance costs on the rise, you can’t afford to take any chances. This is not going away and, in fact, is only getting worse. 

The best leg you can stand on in court is your culture and history of safety, with airtight documentation. Juries, judges, lawyers, and insurance companies become very interested in your culture of safety and history of documentation when a settlement is on the line. 

Learn more about building and maintaining a culture of safety

To get the most out of your safety program and prevent excessive insurance costs and litigation risk, you need a program that is easily accessible to drivers and offers real-time, cloud-based documentation.

Not sure where to start?

Check out our whitepaper on controlling insurance costs, which will help you understand:

  • • What part of your risk exposure you can control
  • • What you can actively do to mitigate your risk exposure
  • • How your company can proactively work to establish a culture of safety that can help reduce accidents, improve defensibility in court, and give access to the best possible insurance rates

Download the Controlling Insurance Costs whitepaper now!

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