FMCSA: Insurance companies stonewalling on truck accident claim data

Setting minimum insurance requirements for trucking companies and brokers is the responsibility of the federal government, but a lack of data from insurers is keeping government regulators from figuring out how much current levels should be raised.

In a report to Congress released this week, the Federal Motor Carrier Safety Administration emphasized that the costs of catastrophic truck or bus crashes have increased significantly over the past 40 years. FMCSA also noted that while such crashes are rare, the costs of resulting property damage, injuries and fatalities can “significantly exceed” minimum levels of financial responsibility.

But the information it needs to get a better handle on the adequacy of current levels of financial responsibility for accidents involving bodily injury and property damage — $750,000 for general freight carriers, $75,000 for brokers and freight forwarders — is not available, FMCSA asserted, because many lawsuits stemming from such accidents are settled out of court.

“Moreover, much insurance company information is proprietary,” the agency stated in the report.

“Accordingly, FMCSA is able to provide only a limited assessment of the appropriateness of the motor carrier financial responsibility requirements at this time. In order for FMCSA to adequately assess the sufficiency of the financial responsibility requirements, the agency would need access to more detailed information from the insurance industry, including anonymized claims data. To date, efforts to obtain this information under existing legal authorities and through requests for voluntary disclosure have been unsuccessful.”

No account for inflation

In a 2013 report on trucking insurance requirements, FMCSA concluded that insurance limits did not adequately cover catastrophic crashes, due mainly to increased medical costs. Things have only gotten worse since.

“The decreasing real value of the current minimum levels of financial responsibility is effectively removing the function of insurance in covering catastrophic crashes,” FMCSA warned in the current report.

FMCSA data revealed that from 1985 to 2019, the medical consumer price index (CPI) increased at a significantly higher rate than the core CPI. For the purposes of freight insurance coverage, the adjusted CPI levels have moved well beyond the monetary coverage minimums that were put in place in 1985 (see table).

FMCSA explained in the report that it had attempted to address the problem in 2014 — and potentially increase minimum insurance requirements — in an advance notice of proposed rulemaking. Despite receiving 2,200 comments on it, the agency withdrew it in 2017 due to “insufficient data or information to support moving forward.”

Nuclear fallout

Some of the biggest supporters of raising insurance minimum limits have been trial lawyers. Responding to an American Transportation Research Institute report in 2020 on big-money “nuclear” verdicts by juries in truck accident cases, the Academy of Truck Accident Attorneys argued that trucking companies holding the minimum required coverage do not have the ability to pay the costs associated with catastrophic accidents — shifting the financial burden on to taxpayers.

Trial attorney-backed legislation that would have raised insurance levels from $750,000 to $2 million was initially included in last year’s infrastructure bill. However, it was negotiated out of the final package signed into law by President Joe Biden in November. The Owner-Operator Independent Drivers Association was happy to see the provision taken out.

“In fact, increasing insurance minimums would likely force many owner-operators — who are collectively among the safest, most experienced drivers on the road — out of the industry because premiums would become unaffordable,” OOIDA President Todd Spencer stated in response to similar legislation introduced in 2019. “As a result, [the legislation] would actually decrease highway safety, not improve it.”

Related articles:

• Nuclear verdicts jump more than 300% in 7 years
• How a $1.25 million insurance liability hike may affect owner-operators
• The Moneyball effect: Controlling out-of-control insurance premiums

Click for more FreightWaves articles by John Gallagher.

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