Impact of Litigation on Insurance Prices

Increasingly in disputed claims, plaintiff attorneys are attempting to portray commercial fleet operators as negligent. Not only are attorneys citing distracted driving as an issue, but they are also focusing on vehicle maintenance, driver data, and any information collected by the Central Analysis Bureau (CAB) which turns data from the Federal Motor Carrier Safety Administration (FMCSA) into actionable intelligence.

For example, there was a claim recently where the plaintiff’s attorney focused on one vehicle inspection (with one violation) to paint the entire account as being a terrible operator when, from an industry-standard perspective, the account’s safety record was better than average.

The jury decisions on damages in these cases have resulted in a significant uptick in the frequency and severity of commercial auto claims, which in turn, has impacted the longevity of many insurance programs for wheels-based accounts. When writing policies, underwriters need to not only consider an account’s specific risk exposures but also how those types of exposures have been addressed in the courts.

What can you do to help mitigate rising insurance costs?

Over the past few years, as the driver shortage has intensified, operators have implemented various strategies to address staffing issues. Some have built out robust driver training and oversight programs to help younger and less experienced drivers through their learning phase. Others have a probationary period where new drivers are supervised by a more experienced colleague until they’ve gained enough credibility to drive on their own.

These training efforts are designed to not only populate the driver pool but also do it in a way that minimizes risk on the road—a key practice that helps reduce overall risk exposures for commercial auto operators and helps keep insurance premiums stable.

The efforts to minimize risks, however, don’t stop with training and mentoring inexperienced drivers. Many operators are also implementing telematics to encourage safer driving among the whole fleet.

Telematics allows companies to gather data about vehicle location, driver behavior, and real-time engine diagnostics. Operators use these telematics solutions, and other technologies like in-cab cameras and GPS tracking, to proactively monitor their drivers.

If there are any bad behaviors exhibited in the data captured, the operators can take corrective action as soon as possible, and use that data as a teaching opportunity to get drivers back to higher standards from a safety perspective.

Insurance carriers are encouraging fleet operators to engage with telematics, especially if they’ve had to take on more risk to stay operational amidst the driver shortage. In some cases, insurers may require telematics before they will renew a policy or quote new business.

Telematics has been particularly important in cases where a driver might have a history of distracted driving. Underwriters want to make sure insureds have strict policies in place that say their drivers will not have their cell phones out while operating a vehicle or the driver’s risk termination. Telematics help ensures such a policy is monitored with proper follow-through.

Ask us about these strategies and how we can help you.

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