By Jonathan S. Reiskin, Associate News Editor This story appears in the June 16 print edition of Transport Topics.
Some of the nation’s largest trucking companies are joining forces to oppose the Obama administration’s plan to eliminate a self-insurance option for motor carriers.
The proposal, a part of the Grow America Act, affects 47 companies nationwide, according to the Federal Motor Carrier Safety Administration, the agency that certifies the carriers are self-insured.
The Grow America Act is the administration’s four-year plan for $302 billion in surface transportation spending that was offered in late April.
“We strongly encourage Congress and the administration to leave this in place,” Tonn Ostergard, CEO of truckload carrier Crete Carrier Corp., said of the FMCSA program. “It’s been an important factor in our risk management for 27 years.” He added that the company has contacted some members of the congressional delegation from Nebraska, where Crete is based.
ArcBest Corp., formerly known as Arkansas Best Corp. and parent of less-than-truckload carrier ABF Freight, which uses self-insurance, said the sunset proposal is “flawed.”
“We believe that in order to ensure the continuation of a safe, efficient and reasonably priced transportation system, Section 5503 [the proposal] should not be included in any proposal considered by the Congress,” said David Humphrey, ArcBest vice president of investor relations.
“If the measure to eliminate carriers’ ability to submit proof of qualifications as a self-insurer does pass, it will increase the costs for carriers, which will undoubtedly result in higher rates. Obviously, we would hate for this measure to pass,” said Joe Weigel, a spokesman for truckload carrier Celadon Group, another self-insurer.
To qualify for FMCSA certification of self-insurance against property damage, a motor carrier has to prove adequate net worth that will cover any liability claims in the event of a loss, sound financial reserves and an adequate safety program, according to the agency.
But officials there oppose continuing the program, saying when Grow America was introduced that self-insurance does little to improve highway safety and is small and costly. Agency spokeswoman Donna Aggazio said it costs $9,000 a year to administer the program for each of the 47 motor-carriers, which are owned by 33 motor carrier corporations.
For instance, CRST International has three subsidiaries that self-insure.
Aggazio said the agency would prefer to spend the total $1.66 million in administration fees to certify carriers over four years on “broad-based safety-enforcement programs.” FMCSA does not underwrite insurance.
