Two views
Should federal minimum insurance levels for cargo trucks be increased?
A provision in a 2012 transportation law known as Moving Ahead for Progress in the 21st Century or MAP-21, called for the Federal Motor Carrier Safety Administration to conduct a study examining minimum insurance requirements for trucking companies and report back to Congress. That report is expected to be released in 2014.

In a letter to Land Line, Lane Kidd, president of the Arkansas Trucking Association and senior manager of the Trucking Alliance, says yes, levels need to increase and he says he’s got a study that supports that.

Kidd States:

I read with interest a recent column written by Steve Bixler in your October issue on how effective your OOIDA staff is in representing your interests in Washington, D.C. I agree with Mr. Bixler. I’ve met some of them and they work very effectively.

However, I wish Mr. Bixler had used a different example to illustrate his point on why the OOIDA Capitol Hill staff is so important. He claimed that the Trucking Alliance Inc., a coalition of eight trucking companies, one of which is primarily an owner-operator fleet, supports a bill by Congressman Matt Cartwright to increase the minimum liability insurance of trucking companies from $750,000 (set 32 years ago) all the way up to $4.4 million. His claim isn’t true. We do not support Congressman Cartwright’s legislation. Congressman Cartwright knows we don’t support his legislation and his staff will confirm that if anyone wants to call them.

Mr. Bixler is, however, correct on one point: The Trucking Alliance does support increasing the minimum $750,000 insurance requirement to some higher amount in order for a trucking company to operate on our nation’s highways. Any trucking company owner that only maintains a $750,000 insurance policy in today’s litigious society is woefully underinsured and puts himself, his family, and his business at risk of collapsing in the event his truck is involved in a fatal accident.

Mr. Bixler writes that since less than 1 percent of accident claims exceed $750,000, trucking companies should only insure at the minimum level. He is referring to our study and he misses the point. Most of us have homeowner’s insurance. In that policy, we insure the full value of our home. We do so because, however unlikely they are to occur, a tornado might destroy it, or a fire might burn it down. Probably won’t happen; it’s even unlikely. But it might. So we insure the full value.

Likewise, a trucking company owner who only insures his business at $750,000 is not insuring the full liability to himself, his family, or his business should the unlikely occur – and one of his trucks is involved in a fatal accident. Those accidents throw a trucking company owner into a different realm of risk.  

We studied 8,000 accident claims of our member companies in the Alliance that dated back to 2008. All but 90 claims settled for less than $750,000. But that doesn’t determine risk. Ninety (90) of the settlements settled for millions more than $750,000, even into the tens of millions. There’s your risk; not in what will probably happen, but what might happen. That is pure actuarial risk. In fact, when factoring those 90 claims into the overall figures, the average cost per claim far exceeded the $750,000 policy, 42 percent of them in fact. So, to ignore risk because it probably won’t happen to you? That’s not good business.

But to claim that the Trucking Alliance supports increasing the amount to $4.4 million? That’s absurd and we don’t support that legislation. We welcome the conversation. But that figure is too high and we do not support it. Period. 

In response, Jim Johnston, president of OOIDA says “C’mon Lane, get real.”

Johnston States:

Regarding your issue with Steve Bixler’s op-ed that appears in the October issue of Land Line Magazine – it is Mr. Bixler’s opinion that members of the Trucking Alliance are supporting the bill.

In your letter of Oct. 15 to Land Line, you state that it is “absurd” to say the Trucking Alliance supports increasing the amount of the federal minimum insurance level to $4.4 million and members of the Alliance “don’t support the legislation.” Mr. Bixler does not specifically state that you support increasing the amount to $4.4 million – only that the Trucking Alliance is supporting the bill.

It’s really not that absurd for Mr. Bixler and many others to believe the Alliance supports the bill when your Trucking Alliance website has a press release with a headline that proclaims “Trucking Alliance Commends Rep. Cartwright for Raising Minimum Financial Requirement Levels Issue in Congress.” It plainly states that the Alliance “applauds” Cartwright.

You say in your letter that you wish Mr. Bixler had used a different example and I’m sure that’s true. What you guys do is better done in the shadows, without public recognition.

You noted in your letter that you welcome a conversation about this. We are especially scratching our heads over your Trucking Alliance’s study – the one that is the centerpiece of the lobbying materials used by personal injury lawyers traipsing around Capitol Hill trying to garner support for the Cartwright bill.

The study states that 42 percent of accident settlements paid by carriers between 2005 and 2011 exceeded the $750,000 minimum – 42 percent?

C’mon, Lane, get real.

OOIDA has been in the truck insurance business through its subsidiary Owner-Operator Services Inc. since 1975. Most truckers have $1 million in coverage, and it’s our experience that less than 1 percent of crashes involving trucks actually see a claim above $750,000.

Anyone with even the slightest knowledge of truck liability issues should be smart enough to know that increasing truck insurance limits will only result in chumming the waters to attract even more sharks to the feeding frenzy of truck liability claims, thereby increasing costs for everyone.

You make the point that a trucking company owner who insures his business for only $750,000 is not insuring the full liability to himself, his family or his business. The fact is that very few, if any, small-business truckers have assets in excess of $750,000 or $1 million. If they do, it should be their decision and not the federal government on whether, and to what extent, they wish to cover those assets – and that can be accomplished with an umbrella general liability policy.

If your group truly were interested in helping the industry, you should be pushing for higher limits for autos, which in most states can purchase limits of less than $40,000. Far more people, including truckers, are killed and injured in accidents caused by auto drivers than by truck drivers. Those limits won’t even cover the cost to replace the truck, let alone injuries to the driver.

It’s obvious to us that your group’s efforts on this – as well as EOBRs and speed limiters – are a direct attack on small-business truckers. While others may believe these efforts are directed at benefiting the entire industry, you should be aware that we do not.

We believe this bill would only increase costs of small-business truckers like OOIDA members. While many large carriers long considered other large carriers their biggest competition, we know that many have come to realize that the real rivals for freight are the little guys. With that in mind, it’s obvious that large carriers and groups such as the Trucking Alliance see this bill as simply another good opportunity to put the bite on their small-business trucking competitors. LL