Meetings are happening in Congress this month that will change the trucking game.
As stipulated in the MAP-21 Highway Funding Act from 2012, the Federal Motor Carrier Safety Administration (FMCSA) has been looking into insurance liability minimums by truck carriers. The current minimum is $750,000 and was set in 1985. In their study, FMCSA adjusted this amount to inflation to see how it compares to today’s prices.
They adjusted first by the core consumer price index, an index that takes costs of a basic basket of goods and how that cost changes over time. Adjusted with this measure of inflation, the insurance liability minimum would be $1.62 million today.
They then adjusted by the medical consumer price index, an index that is based on costs of medical supplies and services instead of a basic basket of goods. Adjusted with this measure of inflation, the insurance liability minimum would be $3.18 million today.
By not adjusting the nominal amount to inflation, the amount of insurance coverage has been declining in real terms. $750,000 can buy much less today than it would in 1985.
With the information and findings of this study, FMCSA made an agency report to Congress in late April. The report, which can be found on their website, relies heavily on the economic data discussed. They also cited a study done by the Pacific Institute for research and Evaluation (PIRE). “The report found that the estimated upper decile/quartile range for liability awards in large truck crashes involving death or catastrophic injury is $9-10 million (in 2012 dollars).” This means that the highest 25% of the awards in these types of crashes is between $9-10 million.
All things considered, their report concluded, “the current financial responsibility minimums are inadequate to fully cover the costs of some crashes in light of increased medical costs and revised value of statistical life estimates.” They have now formed a rulemaking committee to further delve into the appropriate level of financial responsibility for the motor carrier industry.
In addition to the report, a committee on the issue in Congress is meeting with lawyers and other trucking industry representatives to determine the changes that need to be made in motor carrier insurance minimums. Further regulation of this sector has been happening for several years as Congress makes strides mend problems in the trucking industry. Other relatively recent regulations have closed loopholes, such as the use of independent contractors, to protect victims of a truck crash from unfair treatment.
This insurance investigation is the next step to ensure the safety of the interstate for all citizens
“CPI News Releases.” U.S. Bureau of Labor Statistics. U.S. Bureau of Labor Statistics, n.d. Web. 20 May 2014.
Dunn, Jill. “As Agency Studies, One Group Wants Increased Insurance Requirements for Carriers.” Overdrive Magazine. N.p., 11 June 2013. Web. 20 May 2014.
Examining the Appropriateness of the Current Financial Responsibility and Security Requirements for Motor Carriers, Brokers, and Freight Forwarders – Report to Congress. Rep. FMCSA, Apr. 2014. Web. 20 May 2014.
“FMCSA Starts Rulemaking to Raise Minimum Insurance Requirements — Occupational Health & Safety.” Occupational Health & Safety. N.p., 22 Apr. 2014. Web. 20 May 2014.
“How BLS Measures Price Change for Medical Care Services in the Consumer Price Index.” U.S. Bureau of Labor Statistics. U.S. Bureau of Labor Statistics, n.d. Web. 20 May 2014.
Jaillet, James. “FMCSA: Current Insurance Minimums for Carriers ‘inadequate,’ New Rule Coming.” Overdrive Magazine. N.p., 22 Apr. 2014. Web. 20 May 2014.
“News Item.” FMCSA. N.p., 18 Apr. 2014. Web. 20 May 2014.