Insurance Hikes Will Hurt Small Business
Insurance hikes are likely for independents with authority and all sized truck carriers. After months of debate and speculation, it was announced that FMCSA is looking to a hike up the minimum required primary liability for independents and carriers of all sizes. The current minimum as of today is $750,000, which is actually below what a lot of shippers and brokers require for conducting business. ($1M)
What about insurance premiums? FMCSA continues to bring up $1.62 million, which would be the minimum amount today if it had been indexed with inflation. That estimate is over an increase of 100 percent. If FMCSA bases it on inflation, you’ll be required to carry such a minimum. If insurance hikes are based on inflation, this could spell trouble for many small independents and carriers across the country.
The Owner-Operator Independent Drivers Association has already expressed their displeasure with insurance hikes. “The amount of insurance carried by motor carriers has never been shown to have a correlation with safety,” stated Executive Vice President Todd Spencer. “The agency seems to be bowing to the economic objectives of the personal injury attorneys and mega-trucking companies who have been campaigning for higher insurance requirements. Trial lawyers will see windfall payouts in the increases, and big trucking companies – who already use special exceptions in the law to avoid buying insurance on the open market – see an opportunity to drive up business costs and do away with their small-business competitors.”
Over 90 percent of the trucking industry is made up of small businesses across the country. Raising insurance hikes on this many independents and carriers will certainly without a doubt have negative affects on the industry. FMCSA already announced that 99 percent of commercial vehicle accidents are readily covered. When your discussing 100 percent insurance hikes, that is just ridiculous.
2014 has been impressive for many carries in the country, even around the world. The trucking industry has a great two year outlook, likely longer. This type of move, no question that would end that progress. Not only that, it would kill small business and small carriers in North America. I just feel like it’s a bad move, one that can easily be avoided.