Page 22 - Georgia Forestry - Issue2 - Spring 2018

HAULING TIMBER ACCOUNTS FOR
25- 45%
Of OVERALL TIMBER HARVESTNG COSTS
we are paid today. Over the past several years, our insurance rates have gone up, and it doesn’t match the compen- sation we are receiving. It just doesn’t match up.”
How Significant is the Issue?
A study led by Dr. Joseph Conrad, assistant professor of forest operations at the Warnell School, showed that log truck liability insurance premiums in Georgia increased by 53 percent from 2011-2016. During the same period, premiums for other heavy vehicles (not log trucks) increased only by 12 percent.
The study also examined how Georgia compared to similar states in the South- east. Georgia is ranked first in the nation for volume of timber harvested, and Alabama and North Carolina are ranked second and third. In 2016, Georgia’s log truck liability insurance premiums were 17 percent higher than Alabama’s and 94 percent higher than North Carolina’s.
Georgia has experienced these increases despite a 70 percent decrease in total log truck accidents from 2006- 2012 and a marked decrease in accident severity during the same period.
Sanders Logging Company owns its own fleet of trucks to support its logging crews.
So, Why Are Rates
Still Increasing?
“There are a number of factors, but from the insurers’ perspective, log trucks simply provide high risk with very limited profit in many cases,” Dr. Conrad said.
Log trucks are inherently different than other commercial trucks. The trucks spend time on rough forest roads, and the operators require a significant amount of training and experience to operate safely. Combine those factors with a shortage of professional commercial drivers, and insuring log trucks becomes difficult.
In 2010, a crowded market of insurance carriers kept insurance premium rates low to win business. When rates declined and claims increased, insurance compa- nies suffered losses, causing as many as half of the insurance carriers to tempo- rarily or permanently cease offering log truck insurance in Georgia.
Even though the overall number of accidents and severity of accidents has decreased, the cost of insurance claims has steadily increased. The combination of litigation, increases in medical costs, and increases in vehicle repair costs result in far more accidents being “policy limit” claims. For some insurance pro- viders, the premiums collected for safe
trucks have not been sufficient to cover the claims from accidents.
How Do We Address the Issue?
Dr. Conrad’s report provided several rec- ommendations for addressing the issue of log trucking, and the Georgia Forestry Association will be working with the entire forestry community to determine the best possible strategy for the sector. The recommendations include:
1] Insurance Reform
Some states have seen success in passing legislation to fundamentally change how insurance coverage works. In 1973, the North Carolina Reinsur- ance Facility (NCRF) was instituted, which allows insurers to share risk on insurance claims that they would rather not cover. Any losses that occur are shared among member companies in proportion to their insurance under- writing in the state. The result, when combined with a better road network and fewer accidents, is that North Carolina experiences some of the lowest insurance rates in the nation.
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