Insurance rates spike
Jan 14, 2002 12:00 PMA survey released today by the American Trucking Assns. (ATA) and its 50 federated state trucking associations shows that primary, or general liability, insurance rates increased by 32% for motor carriers renewing in 2001, with those renewing their policies after the September 11 terrorist attacks paying an average of 37% more.
According to the survey of 1,000 trucking companies, renewal rates for umbrella insurance in 2001 were pegged at an average 74% while rate increases after 9/11 climbed to 120%, with one company seeing a hike of more than 1,000%.
"This information from our members demonstrates the depth of the insurance crisis in the trucking industry," said William Canary, ATA president & CEO. "Considering the fact that trucking moves a majority of the freight in the U.S., a crisis like this is a real problem for the national economy."
Canary said that while some increases in costs were expected because of 9/11 insurance losses, the jump in the percentages of increases is perplexing because both government statistics and the industry's experience show that trucking companies are driving safer than ever before.
In response to the industry's insurance situation, ATA chairman David McCorkle has appointed an insurance task force to study the issue. The panel, chaired by Fred C. Burns Jr. of Burns Motor Freight, includes motor carriers of all sizes, representatives of the state trucking associations, and some of ATA's insurance industry partners. Its role is to highlight the trucking industry's insurance cost situation and to seek long and short-term responses.
"The best long-term solution is legal reform at the state and federal levels,” Burns said. “Jury awards not based on any common-sense reality are driving up insurance rates and continue to be completely out of hand. In addition, the 50 states have 50 different legal systems in which insurance companies and the trucking industry have to operate.
"Law enforcement and the insurance companies have a role here, too," Burns added. "We need stepped up, tougher enforcement of traffic safety regulations and insurance companies must begin denying coverage to unsafe carriers and drivers who don't belong on the road."
"We know that since 9/11 it is costing everyone more to do business. But ours is an industry where 80% of trucking companies have 20 or fewer trucks, where profit margins are slim, and where undue costs at one end threaten the entire business,” said Michael J. Riley, president of the Motor Transport Assn. of Connecticut and chairman of the 50-state Trucking Assn. Executives Council.
“We have to drive insurance costs down or our hometowns are going to lose some family-built, family-owned trucking companies and all of America's freight deliveries will slow down," Riley said.
For the short term, ATA is developing educational materials for state association members to assist them in providing and promoting better safety programs and practices, which can lead to lower insurance rates.
"Simply put," said Canary, "we move the American economy. If increased insurance rates put us out of business, America stops."