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Risk in Context

Four Ways to Rein in Vehicle-Related ‘Nuclear’ Verdict Risk

Posted by Richard Bleser December 10, 2015

Motor vehicle accident statistics are startling: In the US, a motor vehicle collision occurs every five seconds and a fatality every 12 minutes. More than $230 billion is spent annually on collision claims —  nearly 2% of US GDP. And things are not expected to get better. More vehicles than ever are competing for dwindling road space, much of which is deteriorating.

Not surprisingly, collisions and vehicle insurance premiums are up. To make matters worse, we’re seeing more extremely large or “nuclear” verdicts against vehicle fleet owners and operators. Media headlines tell an alarming story:

  • $165 million: “Santa Fe Jury Awards Crash Victims Record Settlement” (2015).
  • $100 million: “Largest Ever Single-Family Personal Injury Settlement in Illinois” (1999).
  • $24 million: “Canadian Accident Victims Receive Record Settlement” (2003).
  • $21 million: “Beverage Company Hit With Distracted Driving Judgment” (2012).

The financial burdens are irrefutable as judges continue to allow vicarious liability suits and dispense criminal punishments for negligent entrustment in the US and corporate manslaughter in the UK.

Insurers’ Response to Nuclear Verdicts

Obtaining favorable coverage terms is becoming increasingly difficult. In the wake of several shocking collisions and resulting “nuclear verdicts,” auto liability premium increases are a hot button issue for companies with fleets. The astronomical settlements also have led to rising workers’ compensation premiums directly correlated with auto liability. Underwriters are assessing insureds’ current fleet safety programs and many are recommending the establishment and enforcement of minimum fleet safety standards.

Minimizing Exposures for Fleet Operators

Protecting your corporate brand, safeguarding the health and well-being of your employees and other drivers on the road, and increasing your marketability to insurers should be priorities given actual and potential cost explosions.

You can protect your business by reducing its vehicle exposure risk and losses. To rein in the risk of nuclear verdicts, consider taking the following four steps:

  1. Train, recruit, and retain qualified drivers. Are experienced drivers behind the wheels of you vehicles? Do you ensure regulations related to driving hours and fatigue prevention are adhered to? Do you offer formal defensive driver training?
  2. Eliminate personal use of business vehicles. Do you allow employees to take company-issued vehicles home for personal use and are family members allowed to drive them?
  3. Bolster vehicle maintenance. How often are your vehicles inspected? Do drivers know how to perform their own regular inspections?
  4. Mitigate driver distractions. Texting, talking on the phone, even changing the music or using a navigation system can take driver attention away from road. How are you educating your drivers about the dangers of distracted driving?

Fleet safety management should be at the top of risk managers’ to-do lists. While no international governing body has undertaken the task of putting universal road safety processes into law, it is more important than ever to remain proactive and implement policies that can not only keep your people and other drivers safe but also protect your organization’s reputation and bottom line.

Related to:  Marsh Risk Consulting

Richard Bleser