In the United States, the trucking industry employs 7.3 million people and moves 10.5 billion tons of goods every year on average! With this much influence in the U.S comes an even bigger burden of liability. The Federal Motor Carrier Safety Administration regulates the standards of protection for the trucking industry to ensure increased safety for the employees, the goods being carried, and other drivers on the road.
While the delivery economy has been on a steady uptick for many years, with companies like Uber, Amazon, and PostMates leading the industry, it’s no secret that the Covid-19 Pandemic has brought the economy to an entirely new level. Many restaurants that were forced to close down opted for delivery instead of totally shutting down shop. What started as a trial period to make up for the intense restrictions across cities and states, turned into a permanent and very successful business strategy for many.
Many factors influence the rate of car insurance that's given to an individual or business. An individual's age, driving history, location, make and model of vehicle, and the purpose of the vehicle can all affect the insurance costs. Though these have been the standard factors for decades, as the world adapts to new ways of operating, the insurance industry is seeking ways to keep up with modernized operations.
While most people think of motor accidents as tragic and financially threatening, a growing population of criminals look to them as a chance to commit insurance fraud and receive financial gain. Years ago the occurrence of staged accidents was a small threat that received little attention-but times have changed. In a recent report on the trucking industry, experts warn that insurance fraud is a serious and prevalent threat to the trucking industry. Staged accidents can involve sophisticated tactics that may be hard to recognize, especially if an involved individual is under the distress of a recent accident. Though people may assume staged events are one-off events, some criminal groups will plan and execute up to multiple accidents in a short period of time.
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 Federal Motor Carrier Act of 1980 placed a number of requirements on interstate truckers at the same time it led to widespread deregulation of the industry. One of these requirements involved proof of financial responsibility. To ensure the safety of the public against damage caused by motor carriers who may not have the liquidity to pay resulting claims, the law requires that motor carriers be able to demonstrate the ability to pay any claims up to a statutory minimum.
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.
The insurance industry is still doing what it can to react to the COVID-19 pandemic. This means situations are changing rapidly within certain sectors of the insurance marketplace. 2020 was already projecting to be a difficult year for insurance markets prior to COVID-19, with property and auto insurance rates seeing significant increases and many carriers reducing capacity in coverage areas like directors and officers liability insurance. The pandemic has only accelerated some of these movements.
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.