I was aware of the pressing issues surrounding trucking insurance, especially with the increasing absence rates in underwriting. Instant issue policies are becoming more common, especially within poorly performing fleets. I discovered a considerable gap in the regulatory framework allowing such policies to thrive—so significant it seemed a truck could easily fit through it. And according to the data, it seems someone has done just that—589,690 times, to be exact.
Having held a CDL for over 25 years and managed and owned fleets, I have consulted for Fortune 500 carriers and dealt with large private equity fleets. I’ve even testified as an expert witness in highway accident cases. Throughout my career, I believed I understood the intricacies of the American trucking compliance system. However, upon analyzing the data, my understanding deepened.
Evaluating 2.8 million insurer-carrier relationships using FMCSA data revealed a significant concentration of crashes. The top 5% of carriers by insurer portfolio risk are responsible for 31.9% of all crashes and 31.8% of fatalities. This alarming trend exists because no federal or state law mandates insurance companies to review a motor carrier’s safety record prior to issuing a policy. The federal minimum insurance requirement of $750,000 has remained unchanged since 1980, creating a framework where insurance acts as a financial barrier to entry, not as a safety check.
In my analysis of the FMCSA’s data, I discovered that the highest-risk insurer portfolios—which represent only 1.8% of carriers—account for 16.9% of crashes and 16.6% of fatal incidents. This stark contrast indicates a troubling discrepancy in safety oversight. In fact, 25% of carriers accounted for 70% of all truck crashes in the U.S.
The trucking insurance market can be divided into two segments: the 50 largest insurers and the remaining 3,680 smaller ones. The major insurers cover over 55% of carriers but contribute to only 27.7% of crashes. On the other hand, the smaller insurers, despite representing only 44.8% of the market, account for 72.3% of crashes, highlighting a dangerous segment of the market where oversight is minimal.
Crucially, no federal or state law compels insurance companies to evaluate a motor carrier’s safety before issuing a policy. This regulatory gap has been exacerbated by the 1986 Liability Risk Retention Act, allowing Risk Retention Groups (RRGs) to operate under the jurisdiction of a single state, creating inconsistencies in regulatory standards across the U.S. As a result, when poorly managed carriers are pushed into the assigned risk pool, they challenge the integrity of the residual market, which was never designed to handle such a volume.
To address these issues, it’s crucial to raise the minimum insurance requirements and implement mandatory underwriting standards. These standards should ensure that insurers conduct basic safety evaluations before binding coverage on for-hire motor carriers. The FMCSA has ample data at its disposal to facilitate changes in risk management, allowing for a more robust and responsible trucking insurance framework that can ultimately enhance safety on the roads.
