Commercial auto insurance rates up, despite lawsuit reform law intent

AUSTIN (KXAN) -- Commercial auto insurance rates rose for the second year in a row, new data shows. This comes despite a 2021 state law's goal of bringing down costs by making it harder to sue trucking companies, critics argue.

In the three years since a law targeting civil lawsuits against trucking companies passed (through June 30 of this year), commercial insurance rates for all vehicle types increased, on average, nearly 28%, according to a weighted rated change calculation and a new report released by the Texas Department of Insurance.

Since 2017, commercial rates have climbed by an average of 73%, according to TDI. The final numbers for 2024 are not available yet.

The law, House Bill 19, created a "bifurcated" trial process when suing trucking companies involved in accidents on Texas roads, which are already some of the most dangerous in the country. Under HB 19, civil lawsuits involving a commercial vehicle are essentially split into two trials. A jury must first find the driver negligent before it can consider, in a second phase, whether the company carries any blame -- and if so, how much.

Juries can only hear certain accusations -- for example, if a company was negligent in hiring or training an employee -- in a trial's "second phase." Attorneys said the law puts a "muzzle" on a victim's ability to tell their story in court.

Supporters said the law isn't meant to prevent “legitimate” victims from seeking justice but rather to prevent juries from “unfairly” punishing businesses through large so-called "nuclear verdicts."

The legislature tasked TDI with studying the law's impact on insurance rates, which was a selling point to lawmakers.

'Effect is not quantifiable'

Last year, TDI began surveying insurers that filed a rate change. Their responses fell into three categories: HB 19 has "no impact," the impact is "immaterial to rates" or it is "too early to determine" how significant the law will be, according to the report.

TDI said some insurers provided data related to the change in lawsuit rates but noted, "so far," it has yet to see "any impact" from HB 19.

"None of the insurers said that their rate changes were due to HB 19," the report found. "A few insurers thought that HB 19 may eventually positively affect rates, but the effect is not quantifiable at this time."

The average liability premium for all vehicle types increased 70% from 2017-2024. For trucks, tractors and trailers it increased 75% during that timeframe.

"Per any comment, we defer to the report," a TDI spokesperson said.

'Further tort reform must be pursued'

The Texas Trucking Association lobbied for HB 19. In 2021, TTA President John Esparza testified in front of state lawmakers that reforms were needed because "grossly inflated verdicts" were "driving up insurance costs" and "putting companies out of business." In a recent interview with KXAN, Esparza admitted it's "going to take some time to see whether HB 19 is going to be effective."

“It’s very difficult to see rates go down," he said. "But we’ve got to start with providing the environment in which they can.”

Esparza said he expects the law will help "slow" rising rates but, in a statement, doubled-down by saying the new figures are "precisely why further tort reform must be pursued today."

"We are living in an era where phantom medical damages, staged accidents, and third-party investors benefiting from the blatant abuse of our judicial system are commonplace," he said. "It's driving insurance companies out-of-state and trucking companies out-of-business. Unchecked, we can expect this type of lawsuit abuse to continue, and as you have noted, progressively gotten worse."

He said he wants lawsuit reform that ensures "actual victims" receive "thoughtful and fair compensation."

'Gutting legal rights'

Texas Watch, a non-partisan group that advocates on behalf of consumers, said the latest numbers aren't surprising.

"We've had 30 years of tort 'reform' in this state -- always with the promise of lower insurance rates," said Ware Wendell, the group's executive director. "That promise has been broken over and over. Insurance rates continue to skyrocket for drivers, patients, and small business owners who are paying more and more as greedy insurance companies continue to hike their rates."

Wendell testified against HB 19. His organization plans to fight efforts by the newly formed Lonestar Economic Alliance to expand the law during the next legislative session. Lobbyists have called for pain and suffering judgments to be capped, medical bills presented to juries to be regulated, and certain information -- like if a driver was drunk or unlicensed -- to only be heard if a civil trial reaches a "second phase." Texans for Lawsuit Reform has advocated for "claims for negligent hiring and retention" to be "jettisoned altogether" and poor training to only be disclosed in "unusual circumstances."

"Gutting our legal rights only hurts families," Wendell said. "It does nothing to improve safety or lower insurance costs."

The Alliance, which likened some civil suits to being held for "ransom," is made up of more than 650 members from industries that include insurance, transportation, agriculture, construction, finance, food and beverage, home services, housing, law, medical supplies, oil and gas and other trade associations, according to a news release and the group’s website.

"Special interest laws for careless trucking companies only make our roads more dangerous, driving up costs and stealing lives," Wendell said. "Our focus needs to be on reducing the number of crashes, not removing rights."