This spring, I emceed a panel discussion at the Motor Carrier Insurance Education Foundation's annual convention in Orlando. This year, over 700 people attended the conference, from trucking retailers and wholesalers, to carrier and program insurance providers. It was great to see many industry colleagues. I thank my three panel attendees that joined me on stage from organizations who, collectively, have more than 200 years of insuring truckers in our industry.

The topic of the discussion was the destructive impact of late-reported claims. Our panel discussed a high-level view of how litigation funding, social inflation and nuclear verdicts have emerged and escalated in the past 15 years. In highlighting a significant correlation, it's relevant to note that most years have been unprofitable in commercial auto during that same timeframe. In fact, S&P Global reports that 14 of the last 15 years reveal combined loss ratios exceed 100%. The lone profitable year was 2021, mostly attributed to lighter traffic on the roads during Covid.

However, it was argued at the conference that even that year resulted in loss results emerging later in subsequent years for accidents occurring during that time. Were reserves adequately accounted for in 2021? Was even that year unprofitable? Regardless of that debate, the industry has continued to face challenges for a significant number of years. It's of little debate that social inflation and litigation funding have increased settlements during this timeframe.

In past quarterly updates, we've focused on what clients can do from a safety perspective to help lessen judgements and increase their viability as a preferred insurance customer — sharing data and installing safety devices, for example, to mitigate rising insurance costs.

Late-reported claims weaken the defense your insurance carrier provides to you. By the time they get involved, key evidence may be gone, witnesses may disappear, memories may fade, dashcam footage may be overwritten.

Another thing that we ask clients to do to further protect themselves is to report their claims directly and immediately to their insurance carrier. The commercial auto policy notes that one of the duties of the insured is to report claims "promptly." We heard from several insurance carriers and programs at numerous conventions this spring that they need that prompt notice immediately and directly to them.

Why is that important? In a standard ISO commercial auto policy, the insurance carriers have the right and the duty to defend the insured against a suit seeking damages for bodily injury and property damage that the insurance policy applies to. We've heard from numerous carriers that claims continue to be reported late, by third parties, or even by attorneys representing the claimant.

Late-reported claims weaken the defense your insurance carrier provides to you as their duty under the policy. By the time they get involved, key evidence may be gone, witnesses may disappear, memories may fade, dashcam footage may be overwritten. Higher loss payouts drive up a client's loss history, meaning you're less attractive at renewal time and possibly for years to come. Clients with poor loss ratios typically face higher premiums in the future as well as stricter policy coverage terms. Late-reported claims can also exacerbate nuclear verdicts.

Carrier underwriters also look for a pattern of late-reported claims when evaluating commercial auto clients. In loss run reports, they specifically check the gap between the loss date and report date; those delays signal poor claims management and weak operational discipline. A history of late reporting can mark your fleet as higher risk, leading to tighter underwriting, higher premiums or even declined coverage.

Together, we can drive change as an industry. We encourage all retailers to advise their clients to report claims immediately and directly to the carrier providing the insurance. It's something we can control as an industry that will have a positive impact in further protecting clients, mitigating rising future insurance costs. It's also part of our due diligence, so commercial auto carriers and program providers remain in business and viable options for future years.

We thank you for your business with RPS. We appreciate the opportunity to continue to find solutions for our clients, whether in the admitted insurance world or the rapidly growing E & S space. RPS is here for you!

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