APCIA report highlights harmful impact of rising commercial automobile litigation
A new report from The American Property Casualty Insurance Association (APCIA) highlights the harmful impact of rising commercial automobile litigation on businesses and consumers in Texas.
The report, titled Trends in Attorney Representation: Texas Commercial Automobile Insurance, was conducted by the Milliman actuarial firm and examined thousands of claims over a five year period. It concludes that larger losses in Texas grew at a faster pace than other losses. During the same period, attorney representation increased, even on smaller claims, and the relative costs of resolving claims were significantly higher for claims with attorney representation.
The report found that the number of commercial auto liability claims over $500,000 in value grew by 60 percent in Texas from 2015 to 2019. Attorney involvement in commercial auto liability claims continues to rise in Texas, increasing over 14 percent compared to 2015. Attorney involvement also continues to increase in commercial auto liability claims, reaching nearly 40 percent of all claims.
The report states that when an attorney is involved in a commercial auto claim in Texas, both the average time to report claims (17 v. 31 days) and resolve them (165 v. 516 days) are considerably longer than when no attorney is involved.
The report also found that the average commercial auto claim payout, for commercial auto claims with attorney involvement, is increasing faster than the costs for claims without an attorney. In 2019, the average total loss with attorney involvement was 17.1 times higher, while the average cost for adjudicating a claim was 52.8 times higher.
“Increasing attorney involvement in commercial auto claims is a real concern in Texas. Consumers are led to believe through aggressive advertising that they need to sue in order to be compensated for losses. The real winners when this happens are the lawyers. Studies suggest that most claimants do not actually improve their recoveries by involving an attorney, but they do incur higher costs, and it takes much longer to resolve their claims,” said Lee Ann Alexander, APCIA’s state government relations vice president. According to an Insurance Research Council study, hiring an attorney for a claim may actually result in lower settlement amounts, require more time to resolve, and involve more – and often potentially unnecessary – medical care.
“Lawsuit abuse is a top concern for insurers,” said Alexander. “APCIA is working with policymakers, industry leaders, consumers, and the business community to enact meaningful reforms that address lawsuit abuse and restore balance to the civil justice system. Our primary focus is a balanced civil justice system – one that is fair to all participants, promptly resolves legitimate claims, and increases certainty and predictability for all participants.
“APCIA and our members are also actively engaged in advancing technology to make commercial and personal vehicles safer, supporting policies to reduce distracted and impaired driving, and improving and modernising the nation’s infrastructure to ensure the safety of our roads.”
Alexander added that APCIA urges public policymakers to support trucking liability reform. “Senate Bill 17 and House Bill 19, both currently being considered by the Texas Legislature, provide for meaningful reforms to improve the state’s litigation environment and benefit consumers and businesses,” she said. “APCIA also supports the critical reforms in SB 207 and HB 1617 which will provide transparency about inflated medical bills to jurors in commercial vehicle cases.”
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