by Sean Killcarr
, in Trucks at Work
The Federal Motor Carrier Safety Administration (FMCSA) is engaged in a host of regulatory efforts at the moment, but one that’s getting off the ground right now that smaller carriers need to pay close attention to regards raising insurance requirements
At the 2014 Zonar Systems user conference I attended last week, Jack Van Steenburg – FMCSA’s assistant administrator and chief safety officer – noted that the pending rulemaking effort regarding insurance standards, which the agency calls “financial responsibility,” is being undertaken because the trucking industry’s current insurance requirement regulations date back to 1985 and are in need of updating.
It’s also worthy to note that FMCSA is looking into the issue of “financial responsibility” at the behest of Congress, which mandated a report on the subject within the Moving Ahead for Progress in the 21st Century Act or “MAP-21” highway reauthorization bill passed two years ago.
Many in the trucking industry aren’t happy that the agency may require motor carriers to carry higher insurance amounts – particularly the Owner-Operator Independent Drivers Association (OOIDA).
Todd Spencer, OOIDA’s executive vice president, noted in a recent statement that FMCSA acknowledges that more than 99% of commercial vehicle accidents are readily covered under current insurance requirements and that the agency y have not done an assessment of the financial impact that increased requirements would have on small businesses.
“Even though the agency’s report confirms that fewer than 1% of all truck-involved accidents result in injuries or property damage that exceed current insurance requirements, it seems pretty clear they plan to raise those requirements anyway,” he said.
Indeed, many think that mandating higher insurance rates for truckers – especially smaller carriers or independent operators – might be the proverbial straw that breaks the economic camel’s back. OOIDA for one contends that an increase in insurance would be a death nail for the small businesses that comprise over 90% of the trucking industry.
[For a good example of the cost pressures faced by independent truckers serving the nation’s ports, click here
“The amount of insurance carried by motor carriers has never been shown to have a correlation with safety,” Spencer explained. “The agency [FMCSA] seems to be bowing to the economic objectives of the personal injury attorneys and mega-trucking companies who have been campaigning for higher insurance requirements.”
OOIDA also believes that trial lawyers will see “windfall payouts” from the insurance increases, with bigger trucking companies – who Spencer said already use special exceptions in the law to avoid buying insurance on the open market – using such mandated insurance boosts as an opportunity to drive up business costs and do away with their small-business competitors.
As of now, though, no regulations regarding higher insurance coverage for trucking companies is on the docket. But the idea is definitely out there so it may only be a matter of time before a rulemaking effort gets underway.
To read more blog posts from Sean Kilcarr's award-winning blog, "Trucks at Work", click here.