Excessive legal settlements and soaring inflation costs are frustrating the trucking industry, despite technology and culture improvements enabling carriers to achieve new levels of safety, according to Werner Enterprises President and Chief Legal Officer Nathan Meisgeier.
Nuclear verdicts and settlements, or those that cost $10 million or more, are the most problematic, Meisgeier said Nov. 19 at the Stephens Annual Investment Conference in Nashville, Tennessee. But even smaller cases that used to impose a $50,000 liability are now reaching three or four times that amount, he added.
Even though Werner has made significant progress to lower risks, insurance inflation has created a perplexing trend, he said.
“Our safety culture is as strong as it's ever been,” Meisgeier said. “We talk all the time about nothing we do is worth getting hurt or hurting others, and that, plus the ... the investment in our safety, the tech on the trucks, those two things combined have driven our safety stats to 20-year records for us. Work comp accidents, way down. Auto accidents, way down.”
Regardless of its improvements, the carrier was faced with premiums doubling two years ago, he said.
“So what are we doing about it?” Meisgeier said. “Well, we're taking on more of the risk ourselves because ... we like the idea of betting on ourselves on that.” Additionally, “we're not going to stop investing in the safety tech on the truck,” he said.
Werner and the rest of the industry have faced notable increases, with marginal insurance costs for the industry rising 12.5% on average last year as other costs remain elevated and a two-year freight recession shows signs of improvement.
Commercial auto insurance increases in 2024
| Q1 | Q2 | Q3 |
|---|---|---|
| 9.8% | 9% | 8.5% |
SOURCE: The Commercial P/C Market Index, where average quarterly increases are based on consecutive quarters for premiums.
Even more, the industry is experiencing higher costs for less coverage, Meisgeier said.
“I heard somebody this morning say, ‘Pay twice as much for half as much insurance,’” he said. “We experienced that. I see a couple other truckers in the room nodding their heads in agreement.”
New laws have helped reform matters, though, the Werner exec said, referencing changes in Iowa and Florida.
Iowa legislation capped non-economic damages to $5 million for civil cases involving trucking-related injuries or deaths, and a Florida bill also signed into law last year provided a series of changes, such as specifying that medical damages are limited to reasonable and necessary care.
Werner is advocating for lawsuit reform around the country, but each state has its own rules, making the matter complex and intensive.
“In the contiguous United States, that's a 48-state battle,” Meisgeier said, “and we're taking that really to the grassroots.”
