One reason behind continuously dismal commercial auto insurance losses is a spate of “nuclear cases” that are plaguing the industry with multi-million lawsuits.
The amount of money and resources being put into the legal battlefield over commercial auto lawsuits is sizable and growing, and that landscape includes a slew of companies now focused solely on plaintiff litigation finance, putting even more money into this arena, according to Robert Woods, president of eClaims Management.
“In the past these cases that would have been $30,000 or $40,000 turn into these nuclear cases,” he said, referring to lawsuits that reach into the multi-million dollar payout range.
He was speaking on the subject on Monday at the 2017 Risk Management Summit: Unlocking Possibility.
The summit is being held at the Cosmopolitan Hotel in Las Vegas from Sunday through Thursday. The conference is hosted by Energi, a provider of risk management and insurance offerings to the energy industry.
Woods was speaking on a panel focused on transportation that was moderated by Brian K. McCarthy, CEO of Energi. McCarthy also provided updates on trends impacting small and middle market companies, and how those trends are affecting the insurance market.
Andrew Stephenson, a senior partner in Franklin & Prokopik, and John Ferrante, vice president of litigation management for eClaims Management, were also on the transportation panel.
The commercial auto landscape in 2016 hit depths the sector hasn’t seen in 15 years. The commercial auto combined ratio landed at 110.4 during the year, a 1.6 percent climb compared to 2015. The result reflects the worst underwriting performance for the sector since 2001, according to a Fitch ratings report.
Commercial auto has had the poorest underwriting performance results of any line of commercial insurance in recent history, according to a report by Conning, Commercial Automobile Insurance – Fix Me, Please (2017).
Stephenson said commercial auto lawsuits now often involve sophisticated plaintiff’s lawyers and medical providers, and he put the windfall of lawsuits in proportion to payouts traditionally reserved for highly litigious, big-dollar categories like medical malpractice.
“Commercial auto is the new med mal,” he said.
He added that in some commercial auto cases he’s been involved with, these increasingly sophisticated lawyers end up playing on juror sympathies to sweeten award.
“It’s anger and fear,” Stephenson said. “That’s driving these cases.
Ferrante said that the Southern portion of Texas, particularly around the border, has become such place for sympathetic juries.
“It really is the wild West down there,” Ferrante said.
McCarthy also hosted a panel centered around worker’s compensation.
Rick Taketa, president and CEO of York Risk Services Group, and Jim Leary, vice president of workers’ compensation management for eClaims Management, talked about ways to reduce fraud and how to help get employees back to work faster.
One way Taketa said to accomplish those goals is to avoid ostracizing or mistreating injured workers, even those who may be poor performers that employers would rather see head out the door.
“I think you are seeing a movement toward greater communication and greater empathy toward people who are injured,” he said.
Leary stressed that an emphasis should be put on taking preventative steps and using data to ferret out bad employee behaviors before they end up causing injuries.
“The key really is you’re thinking about intercepting behavior,” he said.
Other sessions on Monday included a number of “Industry Best Practices” panels: Propane and Home Heating Oil; Recycling & Scrap Metal; Renewable Energy; Construction Services; Tow Hauling; and Transportation.
Tuesday kicks off with a general session topic: How to Become a More Attractive Risk to an Insurance Provider. Other panels include: The Opioid Epidemic and Injured Workers; Cyber Protection Plans; and Innovative Marketing Strategies.