Is the Trucking Insurance Industry Becoming Toxic?

Trucking companies, insurers, and employees have been having a rough couple of years. Tax law changes have cheated drivers out of their per diem, making their taxes skyrocket. Insurance rates climb ever higher as large payouts cripple insurers. Some have placed the blame on Litigation Finance, claiming that enabling plaintiffs has had a negative impact on insurers. But is that fair?

Fleet Owner reports that higher insurance prices show no sign of slowing. Mehdi Arradizadeh explains that insurance rates for trucking companies are typically determined by looking at accident prevention, mitigating risk, and an evaluation of safety within the company culture. Other factors, like geography, can come into play with some areas being worse for insurers than others. Now, insurers fear that any claim could quickly become a multi-million-dollar settlement or verdict.

Arradizadeh went on to stoke fears that insurers might not even insure trucking companies anymore if they have to keep paying out. He claims that plaintiff-side lawyers are disregarding reasonable liability in favor of seeking a high payout by generating anger and fear from jurists. Some have suggested that Litigation Finance exacerbates this. But what reputable funder is going to bankroll a case without merit? One might be tempted to suggest that insurers worried about payouts should take that up with their underwriters rather than with those who seek to increase access to justice.

Underwriter Chris Mikolay explains that proper use of algorithms and research should prevent insurers from overpromising in a policy. He points out that “problems” are really just disguised opportunities, and that insurers simply need to find ways to outsmart the market—perhaps by avoiding claims rather than complaining that the payouts are untenably large. Mikolay suggests that getting one’s house in order is the best way to avoid high settlement amounts.