STATEMENT OF TRUCK SAFETY COALITION ON WITHDRAWAL OF ADVANCE NOTICE OF PROPOSED RULEMAKING TO INCREASE MINIMUM FINANCIAL RESPONSIBILITY REQUIREMENTS FOR MOTOR CARRIERS
ARLINGTON, VA (June 2, 2017) – On behalf of families of truck crash victims and survivors, the Truck Safety Coalition is extremely disappointed with the Federal Motor Carrier Safety Administration’s (FMCSA, agency) withdrawal of a long overdue Advance Notice of Proposed Rulemaking to increase the minimum financial responsibility requirements for motor carriers, which has not been raised since it was set 37 years ago. The FMCSA’s decision to forego pursuing a commonsense approach to enhancing safety on our roads and leveling the playing field in our nation’s trucking industry is deeply troubling, but unfortunately it is yet another data point to demonstrate the agency’s dereliction of duty and lack of direction.
The fact of the matter is that the minimum level of insurance required by trucks per incident has not been increased since 1980. It has not been adjusted for inflation or, more appropriately, for medical cost inflation. The results of these decades of inaction are devastating. Families are forced to face the financial impact of under-insured truckers along with the emotional and physical destruction. The failure to raise the required amount of minimum insurance allows chameleon carriers to enter the market, with no underwriting, and simply close down and reincorporate under a new name following a catastrophic crash.
Yet, this issue is not unique to survivors and families of truck crash victims; it affects all taxpayers. Insurance is supposed to address the actual damages caused. When there is an insufficient payout, families are forced to declare bankruptcy or rely on government programs after being financially drained. The costs of healthcare, property, and lost income for all parties involved in a truck crash can greatly exceed $750,000 per event, and all of these costs are much higher today than they were in 1980. The unpaid costs are then passed on to taxpayers. In other words, maintaining the grossly inadequate minimum privatizes profits but socializes the costs of underinsured trucking.
Moreover, if the mandate for minimum insurance is to remain a significant incentive for carriers to operate safely as Congress intended, it must be updated to reflect the current realities of the industry. Because the minimum insurance requirements have not kept pace with inflation, the $750,000 per event has become a disincentive for unsafe motor carriers to improve and maintain the safety of their operations. Additionally, raising the minimum amount of insurance will motivate insurers to apply a higher level of scrutiny in determining which motor carriers they insure.
What is even more frustrating and confusing about this decision to walk away from this rulemaking is that the U.S. Department of Transportation (DOT) fully acknowledges that $750,000 is an insufficient amount to cover one person’s life. The Department uses a value of statistical life of $9.6 million. This is a figure the DOT defines “as the additional cost that individuals would be willing to bear for improvements in safety (that is, reductions in risks) that, in the aggregate, reduce the expected number of fatalities by one,” and updates to account for changes in prices and real income. Clearly, the DOT has determined that not only is a single life worth more than $750,000 but that it benefits the American public to ensure that these values are indexed to inflation.
The Federal Motor Carrier Safety Administration, the U.S. Department of Transportation, and President Trump should be embarrassed that they withdrew a commonsense rule that will improve safety on our roads and ensure families are adequately compensated for the pain and suffering they endure. This issue now falls to Secretary Elaine Chao, who is vested with the authority to raise this figure. These families do not need well wishes and condolences from policy-makers—they need change. The Secretary should take immediate action to increase the minimum insurance requirement and to index it to inflation. This way, the amount will be increased periodically and apolitically.