ATLANTA — Among its recommendations for initiatives to decrease truck driver shortages, the Georgia Senate Study Committee on Truck Driver Shortages has suggested a repeal of the state’s direct-action statute.
The statute allows those who are injured, or have damages as the result of a truck driver-related accident, to list the the carrier’s insurance company as a party to a lawsuit.
Georgia Insurance Commissioner John King said Georgia is one of four states — including Kansas, Louisiana and Wisconsin — that allow such statutes. The state doesn’t allow an insurance company to be named in lawsuits in any other industry, he said.
During a series of committee meetings since August, trucking companies and attorneys said that when an insurance company is listed as a party on a trucking-related personal injury or wrongful death lawsuit, jurors are more likely to rule for significantly higher amounts in settlements.
“Law schools have been teaching this for years and years that jurors tend to misuse liability insurance information, and that’s why we don’t let them know that,” said Grant Smith, an attorney for from Dennis, Corry, Smith & Dixon, LLP in Atlanta.
He referenced several cases he has represented in which jurors awarded two to three times more than plaintiffs were requesting, and in those cases, the driver’s insurance company was listed as a party to the lawsuit.
Grant said the statute is a solution to a problem that doesn’t exist since insurance companies already have agreements with trucking company drivers and are inclined to pay the settlement on the driver’s behalf in most cases.
“Our supreme court has looked at this issue and the sole reason for allowing plaintiffs to join a personal injury lawsuit insurer is to ensure the collectibility in judgment,” he said. “In every case I’ve seen, if the case goes to a verdict, either the insurance company pays the judgment or they appeal it and at the end of the appeal, they pay the judgment.”
Opponents of direct action said the statute negatively effects companies and ultimately, consumers.
They argued that higher judgements in court settlements for insurers of trucking companies can cause insurances rates for drivers to significantly increase, an increase in shipping costs on consumers or, ultimately, could cause smaller trucking companies to go out of business.
John Sambdman, of Samson Tours, a charter bus transportation company, said insurance costs related to commercial driver’s licenses are being driven by “nuclear verdicts.”
He referenced a case in which his company was sued after a mother and daughter crossed a street to get on a parked bus. The child died and the mother was seriously injured after being hit by a car, he said.
“We were at a legal stop. We were 40 or 50 feet away. We get sued,” Sambdman said. “And because of comparative liability, there was a legal loophole that if you only have one defendant on the case no matter how much I’m liable —even just 1%— I’m liable for 100% of the damages that are awarded by the jury.”
Sambdman said his company had to pay out $5 million in damages in the case and the company’s insurance rate went up by 90% the following year.
“I had to change carriers. So I went from $15,000 a unit on motor coaches to $24,000,” he said. “And now I’m looking at going up to $40,000 per unit for insurance just because of the nature of nuclear verdicts in this state.”
The minority report from the committee opposes the recommendation to do away with direct-action statute. It suggests that a repeal of the statute does not address workforce shortages as required of the committee.
“Repealing the direct-action statute fails to address the underlying issues fueling our truck driver shortage and jeopardizes the safety and legal protections of Georgians,” said committee member and Democrat Sen. Islam Parkes of Duluth. “It’s crucial to maintain this statute to ensure that trucking companies and their insurers are held accountable for road safety and fair compensation in accidents.”
The report indicates the direct-action statute is necessary to address trucking companies evading liability for accidents caused by their drivers. It suggests that insurance companies are easie
r to find than an individual and is often the only remedy.
“Truck drivers predominantly live in their vehicles and are therefore extremely difficult to find to serve with a lawsuit,” the minority report states. “Trucking companies themselves also routinely ‘go out of business’ and reform under a new name, allowing them to hide from liability and accountability.”
Other recommendations from the Georgia Senate Study Committee on Truck Driver Shortages
The direct-action repeal was one of more than a dozen recommendations approved by the committee, which was authorized by state senators this year to develop recommendations for meeting the increasing demand for truck drivers.
According to the American Trucking Associations’ 2022 Driver Shortage Update, high trucker retirements, underrepresentation of women in the trucking industry, drug test passage rates, the driving history and criminal background of applicants, lifestyle disadvantages and truck parking issues are all factors effecting the supply of truck drivers.
ATA reported that trucks moved nearly 62% of the value of surface trade between the U.S. and Canada and nearly 84% of cross-borer trade with Mexico.
During the next 10 years, ATA estimates that 1.2 million new truck driver will be needed to replace drivers leaving the industry and to accommodate growth.
The Georgia Chamber Foundation estimated that Georgia had more than 25,000 job postings for tractor trailer drivers over the past 12 months among 1,900 employers.
In part, recommendations from the committee include providing scholarship opportunities or tuition or fee-free opportunities for training programs, addressing difficult applications and insurance requirements, expanding commercial driver’s license training facilities and testing sites, encouraging the Department of Corrections to implement CDL training programs for inmates and expanding truck parking.
Matt Markham, deputy director of planning for the Georgia Department of Transportation, said nationally, drivers on average spend nearly one hour looking for truck parking, resulting in a loss of $5,500 in annual compensation.
“Effectively addressing and resolving the truck driver shortages impacting our state is imperative to maintaining Georgia’s role as a vital economic hub in the Southeast,” stated Majority Leader Sen. Steve Gooch, a Dahlonega Republican. “This brings us one step closer to ensuring that the workforce demand in our state is fulfilled.”
Clinton Mora is a reporter for Trending Insurance News. He has previously worked for the Forbes. As a contributor to Trending Insurance News, Clinton covers emerging a wide range of property and casualty insurance related stories.