Gallagher’s recent analysis of commercial insurance trends highlights several significant challenges that trucking fleets are expected to encounter by 2025, including escalating claims costs, risks associated with artificial intelligence (AI), and geopolitical instability.
The cost of insurance claims is escalating due to heightened litigation, substantial jury verdicts, and broader definitions of liability. This phenomenon, termed social inflation, tops Gallagher’s list of trends for Q1 2025.
Gallagher notes a record number of “nuclear” verdicts (over $10 million) and “thermonuclear” verdicts (over $100 million), driven by a growing public sentiment that businesses can absorb high damage costs. The increase in litigation financing means that more third parties are covering plaintiffs’ legal expenses in exchange for a share of any financial recovery from the lawsuits.
“Social inflation is impacting commercial auto liability through larger jury awards, escalating lawsuits, and more aggressive legal tactics. Legislative changes favoring plaintiffs and rising public expectations for higher compensation from businesses contribute to the increasing claims costs,” the report states.
AI Adoption
While AI can enhance operational efficiency, Gallagher warns that the implementation of new technology introduces unforeseen risks. The firm emphasizes the necessity for organizations to adopt strategies that balance sound, risk-driven decision-making with the need to stay competitive through technological advancements.
Despite insurers being slow to react to AI-related risks, the number of claims associated with these exposures continues to rise. As policies evolve, fleets will need to address these risks with affirmative coverage or exclusionary clauses.
Supply Chain Disruptions
A 2024 Gallagher survey indicates that business owners remain concerned about ongoing supply chain disruptions. This trend is anticipated to continue into 2025, with interruptions arising from product recalls, extreme weather events, cyber attacks, and critical transport route shutdowns. Inflation has further increased manufacturing and transportation costs, with cargo theft becoming a growing concern, particularly for in-demand items like food, beverages, and electronics.
Catastrophe Losses
The commercial insurance market is adapting to a shifting risk environment as catastrophe (CAT) losses increasingly originate from secondary perils such as storms, hail, flooding, and wildfires in the U.S. While hurricanes have traditionally driven many CAT claims, recent disasters like the 2024 California wildfires signify a shift in underwriting priorities.
Geopolitical Risks Add Uncertainty
With over 70 countries conducting elections in 2024, geopolitical tensions are escalating, creating pressure not just in North America. Increasing political unrest, regulatory changes, and global conflicts heighten risk exposure, with potential disruptions to supply chains, abrupt regulatory shifts, and market volatility, all impacting businesses’ financial stability and insurance requirements.
This evolving landscape may lead insurers to tighten terms and raise reinsurance costs, ultimately affecting business owners. To mitigate these impacts, Gallagher advises fleets to evaluate potential regulatory changes in their operational areas, particularly for those doing business internationally, and to cooperate with brokers to identify effective risk transfer solutions.
