Insurance premiums, in general, are experiencing an increase in rates due to the backlash of the pandemic. Though the industry experienced downsizing and some employment loss during the initial stages of the pandemic, the trucking industry has recovered faster and continues to be one of the few sectors to experience minimal long-term business fallout from COVID-19. If anything, trucking has experienced the opposite. The industry has been a driving force in empowering the U.S to adapt to these times with deliveries of vaccines, medical supplies, and consumer goods. So why then are we seeing an increase in premiums for trucking insurance and even congressional mandates?
The Electronic Logging Device mandate went into full effect on December 16, 2019. The rule was originally mandated by Congress as part of MAP-21. MAP-21 was a piece of legislation signed into law in 2012 aimed at updating several aspects of federal highway and vehicle laws and regulations for the 21st century. It took the Federal Motor Carrier Safety Administration (FMCSA) over three and half a years to finalize the electronic logging device rule. The rule then had a delayed phase-in, with larger carriers having to adopt electronic logging devices early and the smallest companies only having to meet the requirement more recently.
Among the many concerns that have confronted businesses in the wake of the coronavirus pandemic, the issue of business interruption coverage has often loomed large. Many businesses had to shut down operations or at least greatly reduce their operations to comply with state lockdowns and avoid potential civil liability resulting from causing someone’s exposure to the virus. The losses companies faced as a result of these shutdowns easily numbered in the hundreds of billions of dollars.
Trucking companies have faced increasingly large jury verdicts resulting from accidents in recent years. At the same time, the insurance market has tightened, causing rate increases across many lines of commercial insurance. Trucking companies have already faced significant premium hikes over the last few years and were likely to see more of them even in the absence of any major regulatory action.
On May 14, 2020, the Federal Motor Carrier Safety Administration updated the rules and regulations related to hours of service requirements for the trucking industry. The FMCSA regulates the numbers of hours in day and week that a truck driver can work and also mandates a certain amount of rest time and days off. These regulations exist to limit the number of serious accidents caused by fatigue involving tractor trailers.
A significant new regulation regarding the trucking industry has just had its effective date delayed by two years. The Entry-Level Driver Training (ELDT) rule was originally scheduled to go into effect on February 7, 2020. Instead, the Federal Motor Carrier Safety Administration has pushed back the rule’s implementation to February 7, 2022.
In the aftermath of California’s aggressive attempts to crack down on the “gig” economy, other states have moved as well, though often in different directions. While many states have moved to pass laws specifically designed to protect the status of “gig” workers, New Jersey is in the process of passing its own attempt to regulate these workers. Indeed, the proposed New Jersey legislation would go so far that it would classify almost all workers in the state as employees and make it incredibly difficult for someone to claim independent contractor status.
It was expected that California’s Assembly Bill 5 passed late last year would spawn tons of litigation. The law radically changed how workers from uber drivers to television show writers were classified. Those negatively impacted by the law aggressively lobbied for changes and exemptions while planning litigation should their lobbying efforts fail.
Emissions are a big issue in the transportation industry. As environmental regulators seek to drive down total emissions due to concerns over climate change and air quality, the industry must respond with improved engineering and try to balance the various costs of increased regulation. It is highly unlikely that the scope of these regulations or their costs will decrease over the coming decade.
As more and more states legalize marijuana use for recreational and medicinal purposes, employers face a significant conundrum. Employers have to decide how to treat positive marijuana tests within their business. For those employers in safety-sensitive fields, ensuring that employees can pass drug tests is necessary for continued operations and limiting liability.