Safety in the trucking industry truly has not kept pace with the volume of commercial trucking activity now on the roadways. With NAFTA and the tremendous trade between the US and Mexico, and the oil boom in west Texas Permian basin and south Texas Eagle Ford shale regions, the number of trucks on the roadway, the pressure to deliver, and the difficulty finding quality drivers, plus the stress on life and family, makes for a volatile mix.
A recent verdict demonstrates the reaction of ordinary jurors to this problem. An industry publication reported:
Jurors hit Werner Enterprises, Inc., a large truckload carrier and logistics provider, with an $89 million judgment for a fatal accident on Dec. 30, 2014, near Odessa, Texas, more than 500 miles from Houston, the core of Harris County. According to court records, a pick-up truck carrying a family and travelling on eastbound Interstate 20 lost control and spun across a grassy median onto the westbound side, where it collided with the oncoming Werner rig. A 7-year-old boy died and his 12-year-old sister suffered catastrophic brain injuries. A third child and the mother—who was not driving—were also hurt. The tractor-trailer driver, who was a student driver at the time, espaced injury. An instructor in the cab and the driver of the pick-up also avoided injuries.
According to Werner, the tractor-trailer had no chance to avoid the pick-up once it careened on to westbound I-20. Its driver was operating below the posted speed limit, did not lose control of the rig, and brought it to a complete stop after impact, Werner said. The driver did not receive a citation, nor did the investigating officers find the driver culpable, werner said.
Attorneys for the family saw it differently. They maintained the driver and instructor knew the weather conditions along that stretch of I-20 were bad and getting worse, and that they should have either slowed the rig to a crawl or pulled off the road. Instead, the driver's speed was clocked at 50.5 mph at the time of impact, well above what it should have been under such adverse conditions.
Insurance companies are responding either by exiting the commercial trucking insurance market or by offering substantial discounts to strategies that reduce accidents. Still, this does not seem to be moving the needle for accident frequency and severity in the regions hardest hit by such actions. That is really the key takeaway for people living in those regions.
In 2015, Zurich and AIG unit Lexington, both key players in different segments of truck insurance, effectively exited those markets. Last November, Westfield Insurance, another big motor carrier underwriter, departed. Many who remain have changed their underwriting strategies. More insurers are raising their minimum driver insurability ages to 25 in response to the claims, according to Matthew Little, senior vice president at McGriff, Seibels and Williams, an insurance and risk management concern in Atlanta. Owner-operators, especially those new to the industry, are having challenges finding coverages they can afford.
Under federal law, every licensed motor carrier must carry at least $750,000 of coverage. The coverage requirement can be as high as $5 million for vehicles with more than a 10,001-pound gross vehicle weight (the combination of tractor, trailer and cargo) and hauling certain types of commodities. Many large fleets carry so-called excess insurance that can pay off as much as $30 million for an incident. Those coverages are often bought in $5 million increments, or "layers" in industry parlance.
Such a $750,000 policy will not cover the expense of a fatal accident in many cases. Still, without other easy to get assets, it may be necessary to settle for such despite a severely expensive injury or death. It is still easy to get insurance, and easier still the more safe and technologically savvy a commercial fleet is. The fact is that there are safety precautions that can be used not only to limit the risk fo an accident, but limit the severity of the collision. This is in addition to things that can verify whether the driver was alert or asleep, or whether the other driver took actions or failed to take actions that contributed to the accident. Cameras can be critical in establishing those facts to prove or defend a case.
In general, coverage today is abundant and available, albeit with higher premiums and deductibles. Truckers try to mitigate the premiums increases by buying "corridor" policies where they absorb a higher deductible in the event of a pay-out.
In addition, underwriters have become savvy at understanding the role information technology plays in improving a carrier's safety and risk profiles, Reiser said. For example, a carrier sits in good stead with an underwriter if it can show that 90 percent of its fleet is equipped with technology that helps reduce accident risk by 78 percent, he said.
Collision-avoidance technology offers the biggest I.T. bang for the buck because it helps reduce the risk of rear-end incidents which compose most of the larger claims, Reiser said. Cameras are a valuable feature, but the cost of equipment, installation, and operation may be off-putting to some fleets, he said.
For fleets, understanding and, if necessary, improving their grades under the federal government's "CSA" carrier-benchmarking program is critical, experts say. Like the CSA process or not—and many fleets do not—underwriters use them as a key criterion to determine if they will offer coverage and on what terms.
The lesson is clear. Trucking companies that are penny wise and pound foolish with regard to their safety policies and technology will see themselves at risk of massive liability for a trucking accident in the event of a preventable severe injury or fatality.
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