ATA survey documents trucking industry insurance crisis
Jan 15, 2002 12:00 PM
American Trucking Associations (ATA) and its 50 federated state trucking associations has released the results of a major survey of 1,000 trucking companies documenting the severity of the rising cost for primary and umbrella insurance.
The survey shows that primary, or general liability, rates increased by 32 percent for carriers renewing in 2001, with those renewing their policies after the terrorists attacks on New York City and Washington DC September 11, 2001, paying an average 37 percent more. Renewal rates for umbrella insurance in 2001 were pegged at an average 74 percent while rate increases after September 11 climbed to 120 percent, with one hike of over 1,000 percent.
"This information from our members demonstrates the depth of the insurance crisis in the trucking industry," said William J Canary, ATA president and chief executive officer. "Considering the fact that trucking moves a majority of the freight in America, a crisis like this is a real problem for the national economy."
Canary added that while some increases in costs were expected because the September 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 of Oklahoma-based McCorkle Truck Lines has appointed an Insurance Task Force to study the issue. The panel, chaired by Fred C. Burns Jr. of Burns Motor Freight in West Virginia 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. "Today, 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. "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."
Michael J Riley, president of the Motor Transport Association of Connecticut and chairman of the 50-state Trucking Association Executives Council, said: "We know that since 9-11 it is costing everyone more to do business. But ours is an industry where 80 percent of trucking companies have 20 or fewer trucks, where profit margins are slim, and where undue costs at one end threaten the entire business. 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."
For the short term, ATA is developing educational materials for state association members, of all sizes, to assist them in providing and promoting better safety programs and practices, better driver hiring, training, and monitoring systems, better safety incentive programs, better loss prevention systems--all of which can lead to lower insurance rates.
"Simply put, we move the American economy," Canary said. "If increased insurance rates put us out of business--America stops."