Recent studies have shown insurance claim litigation is on a steep incline. Those studies have also shown that litigation “funding” is also becoming more prevalent, both in the USA and more recently, Canada.
What does that mean to you, as a Carrier? It means the best way for you to avoid costly litigation, is to prevent a costly claim in the first place. How do you do that? A.R.E. (AUDIT READY EVERYDAY).
If you are consistent in your approach to compliance, safety, hiring practices, and have a comprehensive Company Policy Manual that is followed, you can insulate your company from high cost litigation. Most importantly, document everything. If it isn’t in writing, it didn’t happen. Driver qualification files; are they compliant to DOT/MTO regulations? Are they complete and accurate? Are they consistent in their content? Are reference checks done and abstracts ordered from the source? Did you follow your documented hiring criteria and procedures? Are all DQ files identical and consistent in form and manner? Orientation and documented on boarding time on the new hire’s progress is important. If the new hire was to have an event during his on boarding (probation) and your documented procedures are not done, this could cripple your defence and put your company directly in the cross hairs of a plaintiff attorney. Documented and followed procedures will not only lead to a pass during an audit with the MTO and DOT, they will also help you in court. They can even, sometimes, keep you out of court. They can prove to be what we call exoneration before litigation.
Further robust safety practices include cameras as cameras tell a better story. They provide factual data in real time and data points are better than emotional recall. Cameras can help avoid a court situation in one of two ways. Cameras can provide proof of unemotional actual events showing the driver was not responsible for the incident and avoid a costly suit. On the other hand, cameras can show that the driver was, in fact, responsible and then it is a cut and dry admission of fault with no further investigation needed. The insurer would then pay, settle and close the claim before it reaches court.
It is important to note that all of the above needs to not only be documented but also acted upon. Data without action equals negligence every time. If you are documenting and gathering all of the information required but not acting on it by providing follow up and due diligence, then it is of little use in a defence. An example of this would be a post accident exercise for the driver set by the carrier. In the event that the driver isresponsible for a rear end collision and the carrier documents the event to ensure there is a well populated file, however, does not provide remedial training for speed and space management or defensive driving and simply puts him back in a truck then that will be considered negligent on the part of the carrier. Not only can it be a killer in court but it also speaks to the carrier’s safety practices and safety culture.
An often overlooked, but immensely important part of the trucking industry is Training Providers. Transportation Training Schools are an integral part of the proliferation of the trucking industry. Often times these schools are portrayed in a negative light and it is infuriating to think that all schools are painted this way. My experience with the many school members of the Truck Training Schools of Ontario is that they are dedicated to the best practices and have the highest standards when it comes to training. When a student graduates from a reputable school and goes to drive for a reputable carrier we generally get the best outcome. When a carrier consistently hires students from these schools and on boards them with a well thought out and executed plan it is a consistent recipe for success for all involved. It will also be looked at favourably by any court, if the processes are consistent and the students are mentored well, should they have an event. The TTSAO, as an organization, has put immense time, effort and man hours into making the trucking industry safer and should be applauded for thoseefforts.
Let’s talk about court and more specifically nuclear verdicts. As mentioned at the beginning of this article, claims litigation is at an all time high. Nuclear verdicts are defined as a jury awarding a verdict in excess of $10,000,000 that is significantly higher than would be expected given the Plaintiff’s damages. These awards are not grounded in social or financial reality however they are more likely driven by juror anger and frustration. They are delivered to “send a message” or act as a deterrent, if you will. This is completely wrong, as emotion is not Law. Studies have shown that lately most juries are comprised of Millennials, born between 1981 and 1997 who are avid social media users. Social media can have a large impact on how people, regardless of age, think and interact with the world. It is also worth noting that millennials and younger generations have experienced slower economic growth since entering the workforce and are more likely to express frustration toward a “corporate” defendant and hence are more apt to award higher verdicts. Higher verdicts translate to higher insurance costs, sometimes untenable insurance costs, and can literally drive a carrier out of business. Nuclear verdicts are also driving out insurance providers. There has been a substantial decrease in insurers willing to provide transportation insurance simply due to these nuclear verdicts. Higher claims costs are also a factor in insurers exiting the market. Trucks are more expensive to buy and therefore more expensive to repair or payout in the event they are deemed a total loss.
It can be a vicious circle when it comes to finding affordable insurance for carriers. First a carrier has to prove they are eligible for the insurer to spend their capital on insuring them. Then if they are deemed eligible, the rates can sometimes be unaffordable. Furthermore, even if it is affordable for them, they cannot obtain higher limits to protect themselves from Nuclear Verdicts, as reinsurance companies have all but stopped offering this type of insurance. For the few reinsurance companies still offering higher limits, the rates are crazy! It has forced some carriers to go without these protective limits, which in itself can be terrifying if you stop and think about it. There are carriers out there with hundreds of trucks running with minimum limits. However, due to the market conditions, they have little choice, if any at all. Recently, the FMCSA has put forth a recommendation that the minimum limits to cross border be raised from $750,000US to $3,000,000. This will force cross border carriers out of the business altogether and only serve Plaintiff lawyers in starting their lawsuits at a higher claim amount. This is very frustrating for all involved and as atransportation professional for the past thirty five years, I can say that I have never seen such upheaval in our industry.
On a more positive note, I would like to address our industry and how it has handled the pandemic. I am very proud of how the industry has once again shown their resilience and fortitude during such a trying time. Everyone from dispatch, safety directors, back office staff to our drivers have, all stepped up in a manner that is unsurprising to me. Carrier owners have implemented great safety protocols to keep all parties safe and it is a true testament to an honourable profession. I am truly humbled and inspired to be part of this industry, especially when I am witnessing their drive and dedication to keep our country moving. It is so easy to complain about lockdown measures and inconveniences. But we have food in our grocery stores, and parts in our plants as well as much needed medical supplies in our hospitals. None of which we would have if not for the transportation industry. In a world that is experiencing a devastating situation, I am very grateful to the transportation industry and will continue to support it in every way I can.
Please join me in applauding our men and women that continue to sustain us and put themselves in harms way everyday they “go to work”.