Long-haul truckers face security
and towing problems
By Phil Zinkewicz
A recent survey by the Professional Insurance Agents of New York (PIANY) asked members to identify the toughest lines of insurance to place in the property/casualty insurance marketplace. PIANY members were asked to rate the difficulty of placing each line on a scale of one to five, with five being the most difficult to place. According to the survey, the most difficult to place was long-haul trucking exposures, which rated a 4.2.
It's interesting to note that the survey results were released in May 2001, months prior to September 11. In other words, before the terrorist attacks, long-haul trucks were deemed by the property and casualty industry as volatile risks. And small wonder.
Tractors and trailers are at significant risk of theft. The Trucking Asset Protection Association reports that 85% of all business security losses are attributed to the theft or loss of products in transit. Cargo thefts account for more than $10 billion in merchandise losses each year, according to the Cargo Security Council. That is under normal circumstances. Add to that the new recognition of the threat of terrorism and bioterrorism, and the transport industry is now under fire more than ever.
Shortly after the terrorist attacks on the World Trade Center and the Pentagon, the FBI was on the alert for truck bombs. In the Washington area, district police were being trained in how to spot terrorists masquerading as truckers, and large trucks were banned from an area around the U.S. Capitol.
Traffic was stalled for hours in Washington, D.C., New York and New Jersey, as authorities required truckers to stop their vehicles and allow them to be searched for explosive devices and/or biochemical threats. The American Trucking Association, which represents nearly 3,000 trucking companies, has urged its members to be more vigilant about practicing security measures. In addition, drivers transporting hazardous materials have been given new security guidelines, which include information on possible ploys that could be used to hijack trucks. The drivers have been urged to check the security seals on their trucks each time they stop and not to talk about their cargo or destination with strangers. Moreover, companies have increased their use of electronic tracking devices to monitor trucks nationwide, and various bomb detection efforts are underway to protect against the truck transport of explosive devices.
Westwood, Massachusetts-based LoJack, a firm that calls itself the nation's only police-operated, stolen-vehicle recovery system, has devised a system that has led to the recovery of millions of dollars worth of stolen autos for more than 20 years, and is now making its services available to trucks and trailers. "The trucking industry needs help to combat the loss of their equipment and cargo," says LoJack President Joseph F. Abely. "We developed LoJack for Tractors and LoJack for Trailers to address this very important issue."
LoJack for Trailers was designed specifically for untethered trailers. Self-contained with its own battery, the LoJack unit does not require any external power source. "If a trailer is stolen, police are now able to track its whereabouts as soon as it has been reported," says Abely. "In the past, thieves who targeted cargo-filled trailers knew that, if they could hide the trailer for long enough to steal the cargo, they would be ahead of the game. Now the rules have changed. The LoJack unit is hidden in the trailer where thieves are not likely to detect it. The faster the police recover the stolen trailer, the greater the likelihood that the cargo will be intact."
As for protection against terrorists, Ancore, a Santa Clara, California-based technology developer and provider of advanced inspection systems for aviation security, border inspections and counter-terrorism, is providing security measures that will be beneficial to the trucking industry, according to Patrick Shea, chief operating officer. He says his firm's systems differ from its competitors' systems because his competitors offer a different type of x-ray technolog. "When you x-ray a piece of luggage at an airport or a truck on the road, you can see the shape of items and cargo," he says. "You might see the shape of wine bottles, for example. But our Thermal Neutron Analysis (TNA) uses low energy thermal neutrons to detect all known commercial and military explosives, including easily concealed plastic explosives, regardless of their shape or efforts to conceal them. If that bottle of wine actually contains wine, then fine. But if it actually contains a liquid explosive, our system will detect it. This state-of-the-art analysis takes place in a fraction of a minute," Shea says.
But truck, trailer and cargo thefts and terrorists threats aside, the long-haul trucking industry has another problem on its plate. It is a controversy in the trucking insurance arena over the cost associated with towing damaged vehicles away from the scene of an accident.
"Towing bills are often in the tens of thousands of dollars and end up costing the insurance industry millions in excess charges," says Jeri Rouse Looney, a lawyer and specialist in insurance and transportation with the law firm of Lord Bissell Brock. The law firm has offices across the country as well as in London. Looney, who works in Los Angeles, was recently appointed to sit on the National Truck and Heavy Equipment Claims Council's (NTHECC) newly formed towing committee.
"The council, which consists of insurance company representatives in the trucking insurance field and independent claims adjusters, is a vehicle whereby participants can discuss issues relating to trucking industry claims and find ways to deal with those claims intelligently," Looney explains. "Especially in the area of towing, it is important for the insurance industry to combat the problems that exist and develop both ethical and effective solutions."
What are the problems? Well, when a truck and trailer become involved in a serious accident--one in which the truck and trailer are overturned and freight is thrown all over the highway--the truck, trailer and freight must be removed from the scene as quickly as possible and taken to a secure storage area. If the driver has been taken away and the trucking company has no prearrangement with a towing service, then the investigating police agency has to make some arrangements for towing the damaged property. One problem is that, in this type of situation, towing rates can vary widely.
In most states, towing companies have a distinct advantage in billing disputes with carriers and insurance companies. The towing firm has a legal right to keep possession of the truck and trailer and sometimes the cargo in order to obtain payment for the services rendered. Of course, the more time it takes to retrieve the vehicles and cargo from the towing company, the more costly the incident will be to the carrier and its insurance company. In effect, the towing company is holding the vehicles and merchandise "hostage," although towing companies don't see it that way.
Towing companies say that one reason they charge high rates is because trucking is getting safer. There are fewer crashes, but towing overhead is still on the rise. In addition, they say, police investigators' demands for a speedy removal from the accident scene in order to clear traffic lanes push up the towing companies' costs of doing business.
Nevertheless, the battle between trucking firms and towing companies continues to rage. One Chicago-based towing company is being accused of price-gouging and bad faith for refusing to release freight taken from trailers that had become stuck under low bridges or that were involved in traffic accidents. Officials from two different trucking companies say they were forced to pay as much as $12,000--nearly twice the going rate--to recover freight after several recent incidents in Chicago.
In New Jersey, a trucking firm has charged a towing company with fraud in connection with the holding of about 32,000 pounds of freight from a disabled trailer on the New Jersey Turnpike.
"We're not saying that the entire towing industry is dishonest," says Looney. "But there are some unscrupulous tow companies that are charging way too much for the removal and storage of a trailer and its contents. Some charge by the pound, rather than by the incident, and of course that raises the costs to very high levels."
Another questionable practice, according to Looney, is when a towing company brings five or more trucks to the accident scene--some of which are not necessary. "Maybe one or two trucks are actually used, but the towing company charges for all of them. Then, of course, there is the hostage situation. In these cases, the trucking company usually pays the excessive bill just to get the trucks and trailer back, repair them and then get them back on to the road. They can then sue to get back some of the money paid, but again that's time consuming and costly."
Looney says that the purpose of the NTHECC's new towing committee, on which she sits as legal advisor, is to address these problems and find solutions. She says that one of the most effective tools available to the council is education. "For example, we are trying to educate trucking insurance industry executives about the importance of keeping records to identify the towing company 'cowboys' that are out there. We want to educate law enforcement authorities as to some of the unscrupulous practices of some towing companies," she says.
However, one additional problem for the trucking insurance industry may be beyond its control, according to Looney, and that is the general state of the economy. "The economy was doing poorly before September 11, and now things are getting worse. If sales go down across the country and there are fewer shipments, it could hit trucking firms in their pocketbooks. The industry has come a long way in terms of safety, and accidents are down, but if their incomes are reduced, it could change things for the worse."
It appears, then, that long-haul trucking will continue to be a volatile line for the transportation insurance industry and agents will continue to have troubles placing that line of business. *