My friend Jeff Burns and I were talking the other day, Jeff also handle trucking cases, and we were talking about how long it has been since the minimum levels of insurance were adjusted on trucks and the impact that had on the public. Jeff pointed out that:
Congress gave the Secretary of Transportation the authority to set the minimum level of insurance for tractor trailers, but the Secretary could go no lower than $750,000 for property carrying motor carriers. That was in the 1980 deregulation bill (The Motor Carrier Act of 1980). The idea was that since congress was deregulating and taking away a lot of the protections that had been present under the ICC the public deserved greater protection and that it created a barrier of entry into the trucking industry. In place of limited entry into the industry as had been the case under the ICC, Congress called for higher insurance, thinking that the insurance underwriters would not insure companies unless they were in fact safe.
The committee report stated:
"The carrier who wants to maintain high safety levels will be under pressure to cut his costs to meet the prices of his competitors will be under pressure to cut his costs by operating in violation of minimum safety standards…. Insurance companies are equipped to evaluate the performance of the motor carriers. The premiums they assess are in direct relation to the risks they assume. Therefore, an unsafe carrier will have an increased premium, and a totally unsafe carrier may not be able to obtain the insurance necessary to operate, or at best will be at an insurance cost disadvantage."
At that time there were around 27,000 authorized motor carriers. By the turn of the century, after deregulation, there were more than 500,000. Now, no one really knows but it is believed to be over 750,000.
It has been 29 years since the minimum insurance limit was increased. If you go to any present value calculator on the Internet and use a 4% inflation rate you will find that the present value of $750,000, 29 years from now, is about $240,000 in today’s dollars. To put it another way, you would need $3,120,000 in today’s dollars to equal $750,000 in 1980.