Coinciding with macro-economic trends, social inflation and an increase in third-party litigation funding, the severity of lawsuits against forestry & logging firms has escalated.
Higher inflation, supply chain issues and labor shortages have all contributed to skyrocketing claims costs for physical damage, collision and bodily injury coverage. Adding to these challenging times, an upsurge in costs for auto parts and skilled mechanics, coupled with the rise of third-party litigation financing and social inflation, have caused claim remediation expenses in the commercial auto space to run considerably large.
Social inflation, a term now widely used in the insurance industry, generally refers to several trends and developments, including:
- Societal views towards increased litigation
- The emergence and growth of third-party litigation funding, which enables plaintiffs - who, historically, have been discouraged in pursuing cases to trial due to large expenses - to resist settling cases before trial
- Plaintiff friendly legal decisions
- Larger jury awards
- Wavering tort reform
These trends are having a strong impact on escalating claim costs due to the perception that some parties are better positioned to bear the cost of an accident. Society’s increasing hostility towards big businesses1 is believed to be influencing juries looking for someone they perceive can afford to pay in the event of an accident resulting in a critical injury.
While is the rest of the insurance industry is under many of the same pressures, what exaggerates the difficulties in this space is that, unlike other industries where there are a multitude of carriers, forest and logging has seen a lot of players exit the market..
So what can your clients do to help adequately protect their organizations against these developments that are likely to continue on an upward trajectory?
- Choose the right insurer
It is vital that your clients secure quality coverage with a specialist insurer who has experience of operating in a complex market. Partnering with a strong and stable insurer with a long track record of consistency and stability in the market matters as lawsuits increase in severity.
- Continuous driver training and education
To reduce the likelihood of accidents on the road, firms should implement an ongoing training and education program with their drivers.
- Adopt cutting-edge technology
To reduce losses from log hauling and transport, your clients should use tools such as dash cams and telematics. These are becoming essential tools in enhancing safety practices and controls.