42% of settlements paid by carriers for accidents exceed insurance requirements, alliance says
Through MAP-21, Congress has mandated DOT to evaluate the adequacy of $750,000 level of insurance required of interstate carriers. (The Trucker file photo)
The Trucker News Services
WASHINGTON — Forty two percent of the dollar settlements paid by trucking companies to motorists injured in accidents may exceed the federal government’s minimum insurance requirement for trucking companies, according to a study conducted recently by the Alliance for Driver Safety and Security Inc. (Trucking Alliance).
The alliance is a coalition of trucking companies including Maverick Transportation, Knight Transportation, J.B. Hunt, Dupré, Boyle Transportation, Fikes Truck Line and Schneider National.
Through MAP-21, the surface transportation bill, Congress has mandated that the Department of Transportation evaluate the adequacy of the $750,000 minimum level of insurance required of motor carriers, an amount that has not been adjusted in more than 30 years, despite inflation and escalating medical costs.
To conduct its own study, member companies of the Trucking Alliance voluntarily tracked 8,692 accident settlements between 2005 and 2011.
The names of participating companies were deleted to ensure confidentiality before the data was submitted for analysis by Bickerstaff, Whatley, Ryan & Burkhalter Inc., an actuarial consulting firm.
“The uninsured exposure is significant because a large percentage of the motor carrier population maintains insurance at or near the $750,000 minimum,” said Lane Kidd, president of the Arkansas Trucking Association, who also serves as senior manager of The Trucking Alliance. “This uninsured exposure means that trucking companies must pay out the additional dollars from within the business or in the worst case, file bankruptcy to avoid paying,” said Kidd. “These statistics clearly show that the current minimum insurance level creates too much exposure for the trucking industry and injured motorists.”
John Lannen, executive director of the Truck Safety Coalition, commended the Trucking Alliance member companies for initiating this vital study.
Lannen said “the Trucking Alliance analysis clearly demonstrates that the current minimum of $750,000 per occurrence for a motor carrier fails to perform the basic functions that Congress intended: to promote safety operations and to protect the motoring public.”
Lannen added that the current minimum insurance requirements are “allowing under-capitalized and under-insured motor carriers to offload the crash risk and costs onto the families impacted and taxpayers in general.”
Kidd said the problem is highlighted when looking at the accident settlements on a “per occurrence” basis.
“At first glance, only 1 percent of the dollar settlements exceeded $750,000 but to determine true risk, it is the per occurrence average that made all the difference,” said Kidd.
The data shows that if all the trucking companies in the study had maintained the minimum $750,000 insurance requirement, 42.0 percent of their monetary exposure from these settlements would have exceeded their insurance coverage, Kidd said.
Conversely, 42 percent of the injury claims could have had no avenue for offsetting medical costs, Kidd said.
Additionally, the study showed that of the settlements that exceeded $750,000 of insurance, the uninsured liability exposure ranged from 37.5 percent at the $1 million insurance level down to 17.7 percent at $4 million of insurance coverage.
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