Sentry CEO Pete McPartland on the prospects of tort reform and developments in the commercial insurance market

Pete McPartland has been CEO of Sentry Insurance since 2012 and chairman since 2013. He joined the Stevens Point, Wisconsin-based mutual insurer in 2010 as president and chief operating officer after holding senior positions at various other insurers.

Pete McPartland has been CEO of Sentry Insurance since 2012 and chairman since 2013. He joined the Stevens Point, Wisconsin-based mutual insurer in 2010 as president and chief operating officer after holding senior positions at various other insurers. Sentry has nine business units, with significant operations in workers compensation, transportation, nonstandard auto and various other specialties. Mr. McPartland is also a past chairman of what became the American Property Casualty Insurance Association and advocates for tort reform in areas affecting commercial liabilities. He recently spoke with Business Insurance Editor Gavin Souter about the prospects of further changes to the civil justice system and developments in the commercial insurance market. Edited excerpts follow.

Q: With continued concerns in the industry over rising court awards, what is the prospect of meaningful tort reform?

A: On the state level, there are things happening that were noteworthy in Florida last year and Texas in 2021. States are starting to recognize the lawsuit abuse that has engulfed the liability environment. There isn’t a company that writes liability insurance that’s not dealing with that as a front-and-center issue.

Policyholders are realizing more and more the costs of litigation and how companies are reacting to that, so I think you will continue to see some level of tort reform on a state basis. I don’t think you’ll see it to speak of on a federal basis because of the divided nature of Congress. However, the recognition of third-party litigation financing has gotten a lot of traction nationally — the ability to invest in the U.S. litigation system. So, I’m cautiously optimistic there will be things done on the state and federal level in that regard. Nothing happens unless there’s recognition, and there seems to be recognition on that issue right now.

Q: What sort of reforms would be needed on third-party litigation financing?

A: Disclosure. Who are the investors? Where’s that money coming from? That would make the public aware, and it would inspire further reaction.

Q: Looking at some of the lines of business, commercial auto seems to have been a problem for a decade. Do you see any relief for policyholders?

A: Commercial auto is the most vexing line for us and is challenging for everybody. What that means is continued rate increases into the future.

What companies try to do is get pricing equal to, or hopefully a little more than, what they believe inflation is for that particular line of business, and it’s not keeping up. The things that have created this new normal in the liability world are not going to go away. You’re not going to see verdicts or judgments go down. So, I think we are in a situation going into the foreseeable future where the commercial auto line is going to be challenged. Of course, what eventually happens is that customers end up bearing the brunt of that, and that ignites reaction and finds its way into a political environment. But for the practical management of our commercial auto line right now, it is about getting rate increases that close the gap between the level of increases we’re getting and what we feel we need.

Q: On the other side of the coin, workers comp appears stable. How has the market achieved that, and is it likely to continue?

A: The things that have made it a healthy line by and large will continue. The thing that’s driven comp into a nice place for insurers, injured workers and employers is improvement in workplace safety over a number of years, and it keeps improving.

The other thing has to do with how the line works from a price and regulatory standpoint. Pricing needs are determined through work comp rating bureaus, NCCI being the largest one, and those rating bureaus have earned a lot of respect over many decades with regulators and legislators, so when they submit filings, there aren’t political consequences. The discussions are more rational.

Medical inflation has abated over the last few years, and that’s very important to the continuance of a stable comp system. That’s maybe the wildcard, but it’s in reasonably good shape.

Q: Where do you see growth opportunities for Sentry?

A: All aspects of our business have had growth opportunities, and we seize on those growth opportunities opportunistically based on the moment we’re in. We’ve done well in the nonstandard auto market for years, which will be an area of strong growth for us. We are big insurers of long-haul truckers. We are mindful, based on the liability environment, not to allow that to grow too fast, but it will continue to grow. We have a big book of small manufacturing business that does very well. It’s a pretty mature book, but it has some growth prospects. I could go on. It varies a little bit situationally, but all of them have growth prospects. When we

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