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Bill to jack up trucking insurance minimum by 400 percent seen as long shot

By John D. Schulz, Contributing Editor
August 21, 2013

The way the trucking industry and several major shipper groups see it, the candidate for the author of the dumbest bill in Congress belongs to Rep. Matt Cartwright, D-Pa., a rookie congressman who wants to jack up the minimum injury and property damage insurance level for trucking companies by nearly 500 percent.
 
Rep. Cartwright, a personal injury attorney before winning his congressional seat last year, says the current truck insurance minimum has not been changed since the Motor Carrier Act of 1980 economically deregulated the trucking industry.
 
He wants it increased from its current $750,000 to $4.4 million under Cartwright’s bill, which is considered a longshot to pass the Republican-controlled House of Representatives. Still, Cartwright seems passionate about its merits.
 
“This legislation is essential to protecting our nation’s highways and ensuring victims receive the proper amount of compensation for their losses,” Cartwright said in a statement.
 
The American Trucking Associations and at least one leading industry chief executive strongly disagreed with the freshman congressman, saying current insurance minimums are adequate.
   
“I think it would be a big industry issue because of the number of small companies who might have to exit the industry because of this,” James Welch, chief executive officer of YRC Worldwide, told LM. “I don’t see it passing. I don’t think we need to go that high. Most of the reputable carriers carry sufficient levels of insurance. It would a big thing if it were to pass. But I don’t think it has much of a chance of passing.”
 
Industry officials say the market place for trucking insurance is working adequately without Congress’s interference. They say unsafe carriers generally have to pay higher insurance premiums while the larger, more well-capitalized fleets tend to emphasize safety more and have better safety records, and generally pay lower premiums.
 
For example, the five operating companies that comprise YRC Worldwide currently have in excess of 2,300 drivers who currently have streaks in excess of 1 million accident-free miles. Hundreds of those drivers have more than 2 million accident-free miles, with dozens exceeding the 3 million mile mark.
 
That’s the market place working, they say. Jury awards in a wrongful death truck fatality lawsuit have skyrocketed recently and one case in Illinois recently awarded more than $20 million for a truck involved in a twin fatality. So there is plenty of incentive already for truck fleets to operate safely, without increasing the level of insurance they carry, officials say. 
 
John Cutler, general counsel for National Shippers Strategic Transportation Council (NASSTRAC) and the Health and Personal Care Distribution Conference, called Rep. Cartwright’s proposal a solution in search of a problem.
 
“I have had several inquiries on this from shipper clients and my advice to them has been, ‘Hardly anything is going anywhere in Congress these days, but let’s keep an eye on it,’” Cutler told LM, adding that NASSTRAC and the health care conference have yet to take a formal position on the bill.
 
“We would probably oppose it,” Cutler added. “When you think about it, what the guy is staying is we have this fee that it hasn’t been raised or indexed for inflation and times have changed. Well, you can say that about thousands of user fees. How about the fuel tax? That hasn’t been raised since 1993. The idea of singling out the trucking industry alone doesn’t make any sense to us. I’m pretty sure shipper reaction would be along the same lines.”
  **
In another move that could potentially cause shippers’ freight rates to rise, the Association of Independent Property Brokers & Agents (AIPBA) has filed a federal lawsuit against the $75,000 bond provision of the Moving Ahead for Progress in the 21st Century Act,  commonly referred to as MAP-21. The brokers say that bond provision is illegal and anti-competitive.
 
“Simply stated, we believe this is a matter of collusion by other trade groups who effected this law under the guise of ‘fighting fraud,’ who pulled a sham on the United States government,” AIPBA President James Lamb said in a statement.
 
APPBA said it contends the new bond is not related to any legitimate government purpose, is at odds with the National Transportation Policy, and is a violation of AIPBA’s due process rights under the Fifth Amendment. Furthermore, it said the Federal Motor Carrier Safety Administration has violated the Administrative Procedure Act by not engaging in bona fide rulemaking to set the new bond amount.
 
“We are seeking justice through the federal court system for the various small business players in the trucking industry that would otherwise be adversely affected by the impact of the arbitrary new bond,” Lamb added. “We are confident the U.S. District Court will determine this section of MAP-21 is, in fact, unconstitutional, will issue an injunction shortly, preventing the Oct. 1 implementation by FMCSA.”
 
The new $75,000 bond amount would discourage entrants into the brokerage business and caused shipper rates to rise, Lamb added.
 
AIPBA says it represents 1,800 members, who are mostly small- and mid-sized independent truck brokers. More information is available at http://www.AIPBA.org.

About the Author

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John D. Schulz
Contributing Editor

John D. Schulz has been a transportation journalist for more than 20 years, specializing in the trucking industry. He is known to own the fattest Rolodex in the business, and is on a first-name basis with scores of top-level trucking executives who are able to give shippers their latest insights on the industry on a regular basis. This wise Washington owl has performed and produced at some of the highest levels of journalism in his 40-year career, mostly as a Washington newsman.


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