Insurance Business ReviewJUNE 20248IN MY OPINIONIn the vast landscape of the insurance industry, one trend looms large on the horizon, impacting claims and frequency like never before: labor shortages. The United States finds itself grappling with a workforce crisis that extends its tendrils into diverse sectors, from hospitality to manufacturing. Among the industries bearing the brunt of this shortage are trucking and logistics, where the situation is particularly dire. As we delve deeper into the heart of this issue, we uncover the multifaceted reasons behind it and explore the ripple effect it creates within the insurance claims space.Labor Shortages: A Growing ChallengeThe labor shortage dilemma is multifaceted and holds consequences for multiple industries. In the realm of trucking and logistics, the shortage has intensified due to several intertwined factors. The first among these is the high demand for new drivers. As seasoned drivers retire from the field, companies must recruit new talent to fill the gap. However, this high demand has not translated into equitable compensation, leading to high driver turnover.Pay inconsistencies and lack of benefits in the trucking industry discourage many potential drivers from pursuing a career in this sector. This bleak outlook deters new entrants, compounding the shortage crisis. According to the American Trucking Association, the shortage is expected to escalate, with approximately 160,000 commercial driver positions forecasted to go unfilled in the next decade.The Consequences: Claims and FrequencyThe shortage of experienced drivers in the transportation industry has dire consequences for insurance claims and frequency. Companies are often forced to hire less skilled drivers due to the scarcity of experienced ones. As a result, the likelihood of accidents and subsequent insurance claims increases. The following factors contribute to the elevated claims frequency and severity:1.Social Inflation: A rising trend in lawsuits and inflated jury verdicts has inflated the cost of insurance claims. This Preston LaFrance is a seasoned Claims Director at One80 Intermediaries, boasting a distinguished track record in the logistics insurance industry. His expertise extends across various domains, including Criminal Intelligence, Nonprofit Organizations, Government, Law Enforcement, and Criminology. Preston is a finance professional with a strong foundation, holding an Associate's degree in Criminal Justice/Police Science from the University of Phoenix.In his role as Claims Director, Preston exercises direct oversight over all facets of claims operations within the transportation and courier space. His responsibilities encompass comprehensive review and analysis, managing reporting, claims/data analytics, and serving as a pivotal liaison between underwriters and Third-Party Adjusters utilized by Carriers partners.Prior to joining the insurance industry, Preston served as a police officer for 25 years before retiring from the City of Beachwood, Ohio in 2017.INSURANCE CLAIMS AMID LABOR SHORTAGES: TRUCKING AND LOGISTICSBy Preston LaFrance, Director of Claims, One80 IntermediariesPreston LaFrance
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