Carrier Insurance Rule Hits Small Business Hardest

Are your insurance premiums going up? The FMCSA finally issued its Advance Notice of Proposed Rulemaking (ANPR), which proposes an increase in the minimum financial responsibility required of carriers, but the notice stops short of suggesting a dollar amount. Instead, the FMCSA is asking for input from trucking companies and other industry stakeholders.

The ANPR includes 26 questions that the FMCSA wants answered during the proposal’s public comment period, which ends Feb. 26. The FMCSA asks how much carriers currently pay for insurance, how much they expect their premiums to increase if the minimum is raised, and how the proposed rule would affect small carriers differently than large carriers.

Small Business Hit Hardest

Many of the largest carriers are self-insured, meaning they meet the financial responsibility requirement through bonds, letters of credit, or through some other financial means. Financial responsibility for small carriers and owner-operators generally equates to insurance coverage. The current minimum of $750,000 for general freight has been in place since 1985. The FMCSA noted when it first took up the question of financial responsibility that, had the current minimums kept pace with inflation, the minimum would be about $1.6 million today as measured by the consumer price index. Measured against the medical consumer price index, it would be $3.2 million. That wide range makes it difficult to speculate on what the new minimum might be.

Increasing the minimums would hit small carriers and owner-operators hardest, as it would lead to higher insurance premiums, already one of the biggest business costs for a carrier. Commenters in our last story about carrier insurance said that they pay anywhere from $4,000 to $13,000 per year on insurance premiums for one rig. The increased costs would force many out of business, even as demand for trucks is high and rates have risen significantly.

Not Worth the Cost

The current driver shortage and tight capacity already limits the trucking industry’s ability to keep up with high demand from shippers. Raising insurance premiums would add another check on capacity growth and only addresses settlements tied to the very few catastrophic accidents that occur each year. Even the studies submitted by organizations that support raising the limit found that it’s rare for a crash to exceed the current limit. The Trucking Alliance, a group of seven large carriers that are lobbying to raise the limit, found that only 1 percent of the claims it studied were settled above the current minimum.

ATA and OOIDA both oppose the measure, and ATA’s study of data from two of the 10 largest trucking insurers found that there’s only a 0.7% chance of crash resulting in a settlement above $1 million. The ATA study included ten times as many settlements as the Trucking Alliance’s, and it found that the average cost per crash is $11,229.

To comment on the FMCSA proposal and answer the agency’s questionnaire, go to                 www.regulations.gov.

After nearly a year and a half of asking Congress for it, the trucking industry got its wish Tuesday evening: A potential rollback of some of the more restrictive elements of FMCSA’s 2013-implemented hours-of-service rule for truck operators.

Congress likely will send a bill to the White House in the coming days that includes a provision that will put a stay on enforcement of two key elements of the 2013 rule: The requirement that a driver’s 34-hour restart include two 1 a.m. to 5 a.m. periods and the provision limiting the use of the restart to one time per week. The suspension of enforcement will last at least until Sept. 30, 2015

If the $1.1 trillion spending bill — which prevents a government shutdown and funds most government departments through next September — passes both chambers of Congress and President Obama signs the bill into law, enforcement of those provisions shall be halted immediately, according to the bill.

The Consolidated and Further Continuing Appropriations Act, 2015, as the bill is called, was produced by the House Appropriations Committee Tuesday night, and it has received praise from the Senate Appropriations committee, too.

Large omnibus spending bill is expected to be unveiled early this week, and it’s expected to include the so-called Collins Amendment (introduced earlier this year) as a bill “rider.”

The rider, deemed to be a controversial one for lawmakers working on the bill, would suspend the requirement that a truck operator’s hours restart include two 1 a.m. to 5 a.m. periods. It also would remove the once-per-week limit of the use of the restart.

Major trucking groups like the American Trucking Associations, the Owner-Operator Independent Drivers Association, the Truckload Carriers Association and trucking associations in all 50 states — along with dozens of other industry associations, says ATA — support the inclusion and passage of the Collins Amendment in the omnibus plan

Department of Transportation head Anthony Foxx, however, issued a letter of his own this week to Congress asking them not to include the Collins Amendment in the bill. The restart provisions, he writes, were “developed based on sound data and analysis. The evidence clearly shows that truck drivers are better rested and more alert after two nights of sleep than one night.”

ATA, however, says the amendment would give the industry “needed relief from unjustified and risk-raising regulations.”

“This isn’t a rider being added in the middle of the night at the 11th hour as some would have the public believe. This reasonable solution allows the government to do the research it should have done ahead of time and gives the industry the flexibility thousands of fleets and millions of drivers are pleading for,” Graves said.

Likewise, the Owner-Operator Independent Drivers Association is sending letters to members of Congress drumming up support for passage of the bill with the restart rollback included.

OOIDA notes in its letter that in a membership survey conducted last year, 46 percent of respondents said they felt more fatigued since the new rules took effect in July 2013 and 65 percent said they were earning less money