Nuclear verdicts threaten to implode the transportation industry and are now the single biggest threat to carrier profitability.
Defined as a settlement exceeding $10M, nuclear verdicts have been awarded in an unprecedented number of lawsuits as of late. It’s no longer uncommon to see $25M and even $100M+ settlements. As a result, runaway insurance premiums are now a concern for all transportation organizations and have even been the cause of both recent bankruptcies and insurance companies’ disinterest in writing new transportation policies.
It doesn’t help that trucking companies, including large and small fleet carriers, last mile delivery companies and moving and storage companies, are already running thin margins, averaging three to five percent profit. Add high insurance costs to the mix and there’s little left for fleet maintenance and upkeep. The result is poor vehicle conditions and spotty DOT compliance, which further exacerbates the cost of accident settlements and a plaintiff’s attorneys case.
What can fleet carriers do?
Even in this tough insurance market, with an abundance of vehicles on our roadways and hungry plaintiffs’ attorneys, there are still a number of ways transportation companies can get ahead of their risk.
- Become an insured of choice. Develop a culture of safety across your organization that includes a formal driver hiring policy and a robust safety program. If your safety program is one-size-fits-all, or copied from another organization, it’s likely not comprehensive or inclusive enough.
- Actually, practice what you preach. Staying true to your safety policy is just as critical as having one. If your safety program specifies in-cab telematics, make sure each truck has one. Don’t hire truckers outside of your own guidelines. If you don’t maintain your safety standards and one of your vehicles is in an accident, plaintiff attorneys will be vigilant. Any business can have a catastrophic loss, but it’s a lot less likely if you’re following a high level of safety.
- Train ALL employees, even the old-timers. Mandate training for all employees, but work to ensure that your older, experienced employees – whether dispatchers, drivers or operations personnel – are buying into your culture of safety. They know the roads, the short cuts and would rather still be operating vehicles as they have for years. Fleet safety has to become a core value for them just as it’s engrained in the younger staff.
- Buy excess umbrella limits. Although insurance premiums have become more costly, resist the urge to reduce your coverage. Make sure you’ve got enough to cover your business’ net worth and assets in the event of a catastrophic loss. Work with a transportation-specific broker and carrier for best pricing and limits and to understand the advantages of going with one excess policy over another.
Contact your HUB Transportation Specialist to find out how you can safeguard your fleet from nuclear verdicts by creating a culture of safety and securing the right coverage.