SADOW: Further Tort Refom Is Needed To Save Louisiana’s Trucking Industry

Unless the Louisiana Legislature acts soon, trucking operators in the state will find themselves becoming extinct.

Over the past decade, industry costs have spiraled upwards dramatically, largely fueled by exploding liability costs. The average size of jury verdicts increased nearly 1,000 percent from 2010 to 2018, rising from $2.3 million to $22.3 million. Worse, runaway juries are stretching the bounds of liability, with the most notorious case being a 2014 incident where a passenger vehicle crossing the median and striking a truck, killing a child in the vehicle, yet the family successfully sued the trucking company and won a $90 million judgment, now on appeal.

Any interstate truck must carry $750,000 in primary liability. In Louisiana, for those who don’t leave the state, the limit starts at $300,000. Just for that minimum, the average annual rate is $13,143 per rig.

Yet with these “nuclear” verdicts driving up potential liability costs, one such incidence could drive all but the largest firms into bankruptcy. And to stave off this possibility requires buying additional umbrella liability insurance, which starts around $2,500 for the next million. As verdicts have skyrocketed, firms increasingly have to choose whether to become bankrupt more slowly because of huge insurance costs or to roll the dice and hope bad luck and a runaway jury don’t end it at a moment’s notice.

Of course, these additional costs to a great extent are passed along to consumers. And if operators still can’t make it, supply of them contracts and the reduced supply causes process to escalate further.

Prevention of this shouldn’t depend upon juries becoming any less Santa Claus. Trends of increased corporate mistrust, rising litigation financing and more social pessimism, or a sense that the system is broken, the industry insurance identifies as the cause. More accidents finding the trucking industry at fault for conditions it could prevent also doesn’t help.

Thus, legislation must temper the system to rein in excessive judgments. One model could be the more limited attempt addressing specifically timber hauling in last year’s SB 471 by Republican state Sen. Robert Mills, which took a comprehensive view of tort reform. Unfortunately, after passing out of committee the chamber never acted on the bill.

Last year, the Legislature introduced sensible reforms that over time almost certainly will keep lower individuals’ vehicle insurance rates over what otherwise would have transpired. The next logical step extends this to commercial trucking to keep adequate supply and pricing sensible of that service without reducing accountability of operators.

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