The transportation industry plays a vital role in the movement of goods and people, but it also faces various challenges, including the risk of litigation. With the rise of nuclear verdicts and social inflation, it is crucial for transportation organizations to understand how they can effectively manage these risks.
Nuclear verdicts, which are jury awards exceeding a certain amount, have become increasingly common and substantial in recent years. These verdicts pose serious risks to the financial stability of transportation companies. Additionally, social inflation, which refers to changes in societal attitudes and the legal environment, contributes to larger claim sizes and further compounds the issue.
Rising costs and insurance premiums:
Escalating litigation costs add another layer of complexity to the transportation industry. As nuclear verdicts become more prevalent, insurance companies are forced to pay larger sums, leading to higher premiums for transportation organizations.
Statistics show for the transportation industry the number of verdicts exceeding a certain threshold has significantly increased, and the costs of litigation have risen. These trends highlight the importance of implementing effective risk management strategies in the transportation industry.
Strategies to manage litigation risks:
- Implementing caps on damages: Similar to the healthcare industry, transportation organizations can consider implementing caps on non-economic damages to limit the size of jury awards.
- Regulation of litigation funding: Increased transparency and regulation of litigation funding can help prevent frivolous lawsuits and reduce the financial burden on transportation companies.
- Pretrial screening panels: Establishing panels to review the merits of transportation-related claims before they proceed to trial can help reduce the burden on the legal system and potentially lead to more efficient resolutions.
- Alternative dispute resolution: Encouraging mediation and arbitration can help resolve disputes more efficiently and cost-effectively, reducing the need for lengthy and costly litigation.
- Effective communication and collaboration: Maintaining open communication and collaboration with insurers and insurance brokers can optimize insurance coverage and develop strategies for resolution. Early intervention tactics, such as mediation and settlement negotiations, can help resolve claims quickly and prevent costly legal battles.
Check out our TPA services flyer for more information on claim litigation and management. Together, we can help ensure the future financial security of your transportation business.
