IT IS DAUNTING to think about all we’ve faced in the last 15 months. While some things will never be the same, what remains unchanged is the challenges our industry faces.
The House Transportation and Infrastructure Committee approved an amendment to the INVEST Act, which raises the minimum required insurance liability limits for motor carriers from $750,000 to $2 million. Currently, most carriers have at least $1 million of coverage. The American Association for Justice (AAJ) called on the FMCSA to raise minimum required insurance liability limits to $4.6 million.
Although many believe that raising the minimum required insurance limits too sharply could force smaller carriers and owner-operators to close, after nearly 40 years of no change, reviewing the minimum requirements could be considered logical. It is in the public interest for carriers to have sufficient limits to cover serious, negligently caused injuries. However, increases in the minimum insurance requirements must be based on negotiated rulemaking.
Raising minimum insurance limits treats the symptom of increasing claim costs, not the disease. The disease is twofold: an out-of-control personal injury legal system; and a need for greater safety focus among segments of the trucking industry.
An effort to curb claim inflation addresses gross abuse of the legal system and focuses on helping accident victims instead of enriching attorneys. The effort to curb claim inflation also addresses insurance premium inflation, which is spiraling out of control. ATRI reports that insurance premiums rose 12 percent between 2017 and 2018, costing carriers approximately $0.08 per mile.
Without addressing lawsuit abuse, raising minimum insurance limits is a bandage covering up a broken system. If limits are raised to protect those seriously injured due to negligence, eliminating unscrupulous grafts from the legal system is also necessary.
Truckers must understand that this is not going away. The insurance market will continue to wipe out carriers who do not care about safety. With the approval of this amendment, it is time we double down on our commitment to establishing cultures of prevention to control risk, protect the public, and maintain a core competitive advantage.
We must educate shippers about how skyrocketing insurance costs impact rates and tell our story to legislators as they consider efforts to reform the system. Education on the impact of insurance costs is vital at the state level, where much of the reform will occur.
Our industry has played an important role these last 15 months. Truckers are a resilient group, and persevering through the pandemic has proven this to be true. The trucking industry is truly essential in every way.