How Increased Trucking Awards are Impacting Your Premiums

Trucking companies are losing more and more money to lawsuits. In fact, trucking awards totaling $10 million or more have increased by 15% in the past four years. And that’s bad news for insurance rates.

This phenomenon has happened because more third parties are financing litigation against trucking companies in exchange for stakes in the settlements. And that, combined with corporate mistrust and a general sense of social pessimism, contributes to greater jury award losses.

According to Advisen loss data, major jury awards constituted 35% of all trucking company losses over $1 million from 2017 to 2021. That percentage is a significant jump from the previous eight years when awards of more than $10 million only accounted for 20% of all losses over $1 million. (Awards over $100 million have increased, as well, but they are still relatively rare.)

Additionally, Advisen Front Page News reports that recent truck accidents have led to jaw-dropping lawsuit payouts, including $11.8 million, $38.8 million, $43.5 million, and $1 billion.  

Trucking awards have also increased sharply compared to settlements handled out of court. The median cost of settlements remained fairly stable from 2010 to 2021, fluctuating between $1.5 million and $3.5 million. Trucking awards, in comparison, rose to a median cost of $11 million from 2015 to 2021. 

Yet, it’s important to note that the 2021 trucking award numbers may be skewed because not all case data had been collected by reporting time. They may, in fact, have later fallen to more moderate levels as cases were added.

So, how much do these trucking awards impact trucking insurance rates? To put it mildly—a lot. Large auto losses endanger the trucking industry’s overall profitability, which significantly affects excess trucking liability. As a result, rates are increasing, capacity is decreasing, and, occasionally, multiple insurers get involved in the lower excess layer levels.

Consequently, many companies are having difficulty insuring their fleets. So, they’re cutting excess insurance, which could put their businesses at risk for bankruptcy if an accident ever occurs.

If you struggle to pay increased insurance premiums for your fleet, call us. Bobtail Insurance Group experts will review your insurance needs and help you find the best possible coverage solutions.

This article should be used for informational purposes only and should not be considered financial advice. © 2022 Morgan, Trevathan, & Gunn, Inc. All rights reserved.