National Connections, Local Ownership
National Connections, Local Ownership

Trucking Industry Set for Another Hit on Carrier Insurance Rates

One might be forgiven for thinking that adding safety technology and training would lower carrier insurance rates. But the reality is quite different.

Carrier insurance rates are expected to increase in 2020 between 20 percent and 30percent for most freight carriers due to an uptick in fatal crashes in recent years, according to an article in the Wall Street Journal. This increase, coupled with a congressional bill and an impending fatal crash survey from the FMCSA, paves the way for rates to potentially keep going up.

In July, a bill was introduced on the floor of the congress to increase the minimum level of carrier insurance from $750,000 to $4,923,154. This is an increase that, according to the authors of the bill, would be required in order to have the carrier minimum cover the rate of inflation since the last minimum update. It is important to note that this bill was authored by a few congressmen whom in the past were lawyers litigating trucking accident claims. It begs the question: is this increase to benefit the law firms or is it actually needed? After the bill’s introduction, it was referred to the Highways and Transit Subcommittee for further review. And that is where it seems to have gone to sit.

Or did it?

New studies raise issues and concerns

Just this month the Federal Motor Carrier Safety Administration (FMCSA) released a statement that they have plans to implement a large truck crash study and are seeking comments from transportation providers as to how they should extract the data. However, other studies have already been conducted.

With all of the on board cameras and the safety technology put into large trucks these days, one would think insurance and accidents would have decreased. Unfortunately, here are some sobering statistics: carrier accident payouts have increased from $10 million dollars to in excess of $44 million in recent years regardless of the safety systems that have been available to the carrier market. With bigger social networking platforms and carriers’ safety ratings pubic information (CSA Scores), many cases are settled out of court which leaves payouts uncapped. Insurance underwriters now have fears of large settlements; thus they raise rates on the carriers.

In November, The National Highway Traffic Safety Administration (NHTSA) released a study citing that large truck crashes rose in 2018 12.5 percent from 2017 and the number of people killed in a truck accident rose 0.8 percent. With ELDs, how can this be? Interestingly, a FMCSA report found that 70 percent of fatal crashes involving a large truck were the fault of passenger motorists. Unfortunately, the moment a large truck is involved the litigation initiated brings everyone into the suit: the carrier, the insurance company, a broker (if there is one), and so on. This happens even if the passenger car caused the accident.

So, as a carrier what can you do?

Andrew Flynn of TCI Companies, a transportation company with corporate headquarters in Fontana, CA, noted that the company had their insurance rates rise about 20 percent in 2019. Andrew stated that TCI has focused on educating their customers about carrier insurance as it pertains to rates. The company has also undertaken more safety initiatives then they have in the past to ensure their drivers are driving and performing their duties safely and undistracted.

It would seem that with all the technology that has been introduced into the truck in the last few years, carriers are getting hit big time in the pocket. There is the cost to install safety technology in the trucks and the cost to educate and implement robust safety programs and incentives; there is driver education and wellness programs. And now, higher insurance premiums and required technology. No wonder the industry is having a hard time attracting potential drivers.

So what is our call to action? What can be done? The FMCSA has an open comment period for their impending Fatal Crash Study. You can find the information here. It may also be time to have our representatives in Congress author a bill protecting trucking companies from motorist-caused accidents. For now, the trucking industry will just have to absorb the cost and carry on.

Read Victoria’s earlier NationaLease blog on ELD concerns.


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