C.H. Robinson and Landstar each lost more than a tenth of their market value on 28 October. C.H. Robinson closed down 11.14% at $127.60 on the day its third-quarter release showed adjusted earnings per share up 28.6% to $1.80. Landstar fell 17.76% to $138.80 after reporting a day earlier. FreightWaves tied the selloff to insurance and claims. What freight broker insurance costs will do in 2027 is still open: C.H. Robinson says its auto liability renewal will be finalized by the end of December.
Claims jumped in the quarter, premiums are still open
Landstar’s miss traces to specific lines. FreightWaves reported earnings per share of $1.42, 24 cents under consensus, after $13 million of adverse claims-reserve adjustments and $8 million of unfavorable development on two prior-year claims. Insurance and claims reached 9.4% of revenue from its business capacity owners, up 220 basis points from a year earlier.
C.H. Robinson gave less detail. Chief financial officer Damon Lee told analysts that claims expenses are typically linear through the year but “periodically, some quarters are higher than others,” and that year-to-date insurance and claims remain below 50 basis points of total revenue. Management put auto liability insurance at 25 basis points of gross revenue.
FreightWaves corrected its first version of the story to say the companies reported higher claims, not higher premiums.
Two legal events set the backdrop
On 14 May the Supreme Court held 9-0 in Montgomery v. Caribe Transport II that a state negligent-hiring claim against a broker survives the federal preemption statute, because states keep authority over motor vehicle safety.
In July a Dallas County jury returned a $604 million verdict in Lipe v. Lupus Superior over a March 2021 crash in Jackson, Mississippi that killed three people. It put 45% of the fault on the driver, 32% on the carrier Lupus Superior and 23% on C.H. Robinson. Plaintiffs argued the broker should carry 51%, and law firm Scopelitis wrote that attributing the driver’s fault to the broker “would appear to leave” C.H. Robinson potentially facing the full weight of the award through joint and several liability if the verdict is not overturned or settled. The same firm reports that the carrier had sat above federal intervention thresholds in two safety categories for close to a year or longer, and that C.H. Robinson allegedly did not use those scores when vetting it.
C.H. Robinson’s chief legal officer answered that Lupus Superior held a Satisfactory federal safety rating and had safely delivered nearly 270 loads for its customers. On 16 October Judge Dianne Jones affirmed the verdict, with about $107 million of pre-judgment interest according to TD Cowen. CDLWire reports the company is expected to appeal.
What a shipper can do before December
CEO Dave Bozeman told analysts that some customers are moving volume to larger brokers with significant insurance coverage and strong carrier vetting, and called C.H. Robinson’s own insurance tower a differentiator. On freight broker insurance costs for 2027, he expects its auto liability premium to rise by less than what other brokers will absorb, though he has no figure yet.
Ask the broker what it checks on a carrier beyond the Satisfactory rating, and whether its liability cover responds to a negligent-hiring claim. In Lipe, the carrier held a Satisfactory rating while two of its safety scores sat above intervention thresholds.
Cargo insurance is a separate question. Navo’s explainer on the standard cargo clauses notes that Clause 4.5 of the 2009 Institute Cargo Clauses (A) removes loss caused by delay, even when a risk insured against caused the delay, except expenses payable under Clause 2.