Carriers Respond to Proposed Insurance Hike

The FMCSA offered the public a 90-day timeframe in which stakeholders could submit feedback on the agency's proposed insurance requirement increase-- 90 days and over 2,000 comments later, carriers and other trucking industry groups responded with a resounding "no."

The FMCSA published an Advanced Notice of Proposed Rulemaking on November 26th, 2014 regarding raising the minimum amount of liability insurance trucking companies must carry. The agency maintains that the current $750,000 liability insurance requirement isn't enough, stating that the number hasn't been changed since the 1980s and that the current amount isn't enough to cover medical expenses and accidents.

During the 90 day feedback window, the trucking industry voiced its opinion-- an increase in minimum insurance is not necessary and would hamper industry growth, especially since the increase would likely saddle carriers with higher insurance premiums.

While several large trucking interest groups (TIA and OOIDA) have voiced opposition to the increase for various reasons, other groups (such as The American Association for Justice Trucking Litigation and Trucking Alliance) support the proposed increase.

Logistec/TTS maintains that increasing the minimum insurance requirements for carriers would cause the industry much more harm than good. The largest component of the carrier market is made up of carriers with less than 10 trucks and increased insurance requirements would vastly increase their expenses.

In addition to the proposed increase in minimum insurance requirements, carriers must also contend, among other things, with:

• Increasing equipment costs due to demand and enhanced safety requirements
• Rapidly rising diesel cost coupled with miniscule fuel surcharge increases
• Additional insurance increases due to existing market conditions (without factoring in the FMCSA's proposed increase).

Given the fact that freight rates have remained largely stagnant over the past 10 years, carriers are seeing their expenses rise and their revenues evaporate. Should this trend continue, the shortage of drivers will become more dire as smaller carriers will be forced out of business.

The bottom line: the trucking industry cannot afford an increase in the minimum insurance requirement-- at least not without further hampering an already over-regulated industry.