Trucking Groups Brace for Battle Among Members Over Raising Insurance Minimum
Washington D.C. – The debate over raising minimum insurance requirements for motor carriers is back… and in a big way.
This week, the House Transportation and Infrastructure Committee approved an amendment to the INVEST in America Act, a $500 billion highway bill, which would raise the minimum insurance requirements for motor carriers from $750,000 to $2 million.
The amendment was proposed by Rep. Chuy Garcia (D-IL) and has reignited a fierce debate within the trucking industry.
Previous legislative attempts as recently as last year to raise the insurance minimum failed.
In 2014, during the Obama Administration, the Federal Motor Carrier Safety Administration (FMCSA) initiated an Advanced Notice of Proposed Rulemaking (ANPRM) for the purpose of exploring an increase.
However, the Trump Administration was not inclined to proceed down this path.
In 2017, the FMCSA withdrew the ANPRM and cited “a lack of data from key stakeholders.”
Transportation Nation Network (TNN) has spoken to many trucking stakeholders this week and can confidently report the issue seems to be even more contentious this time around than in previous attempts, due in part to the current trucking business environment.
It’s no secret motor carriers have experienced crushing insurance premium increases in the last few years.
Add to this the rise of so-called “nuclear verdicts” and the challenges of operating through the COVID-19 national emergency, and you have a recipe for market consolidation.
That’s exactly what opponents of raising insurance minimums are arguing.
One very vocal critic is the Owner Operator Independent Driver’s Association (OOIDA).
After previously supporting the INVEST Act, OOIDA has now expressed its opposition following the approval of Garcia’s amendment in the committee’s markup.
“This amendment will do absolutely nothing to improve safety on our highways,” OOIDA President and CEO Todd Spencer said. “What this proposal will do is destroy small-trucking businesses in every corner of the country.”
While OOIDA’s opposition to the bill was expected after Garcia’s amendment was approved, the debate is just getting revved up within the membership of the Truckload Carriers Association (TCA).
Dave Heller, TCA’s vice president of government affairs, tells TNN there is some support among members to raise the minimum, but arriving at the right number could be problematic.
“Some will say it has to stay at $750,000 and some will say $1 million,” Heller explained. “It’s all over the board.”
He pointed to the fact the requirements have not changed since 1980, but still there is reticence to lift the minimum to $2 million right now.
“It’s not a good time, but we look forward to having that discussion,” he said.
Further, Heller was adamant any increase, no matter what the amount, must be accompanied by tort reform to reign in the massive verdicts being won by aggressive and creative trial lawyers.
Perhaps the biggest battle on this issue will once again be waged inside the American Trucking Associations (ATA) membership.
Mega carriers, of which ATA counts on significantly for its annual revenue, are more apt to favor increasing the minimum, even if representatives from those carriers don’t say so publicly.
Mid to small-sized carriers may favor an increase, but only a modest one.
Similar to the divisive twin 33′ trailer issue that pits truckload carriers against less-than-load businesses, the battle over raising the insurance minimum is a tug-of-war between the large carriers versus the mid to small-sized operations.
Kevin Burch is a 46-year trucking industry veteran and has served as Chairman for both ATA and TCA, which gives him a truly unique perspective.
He tells TNN he can see both sides of the argument, but raising the minimum to $2 million is “a huge jump.”
“I’d like to know how they arrived at that number,” he said. “I thought the insurance people were making money and now they want to make more money. It’s a big shock.”
Burch says ATA representatives are right now working Capitol Hill to find out the probability of the bill passing both chambers.
“ATA has a strong connection with Capitol Hill. They are trying to figure out who is supporting it and there’s a lot to it. A lot of these things are predicated on who wants to put what pork in what,” he explained.
However, Burch stressed that about 90 percent of the trucking industry is made up of carriers with 20 trucks or fewer, and legislators should be mindful of this reality.
“I like entrepreneurship,” he said. “Are we getting to that point where there’s just two or three carriers out there?”
ATA leaders have been quiet on Garcia’s amendment after initially praising the bill when it was introduced.
It will be fascinating to watch how this debate plays out inside these trucking groups in the days ahead, and you can be certain TransportationNation.com will be there to bring you the inside scoop.