Sounds like a penny wise pound foolish risk management decision to me. Let’s say for instance that the recent derailment happened in a small community along the route and 20 people were killed and another 30 injured with burns averaging 30-40% of the body. Average death settlement in the 500K range and injury with pain and suffering probably in the 750k range. That one theoretical scenario would amount to $10,000,000 for the death claims and another $22,500,000 for those injured plus the property damage.
Also this is ethanol we are talking about, which requires specialized foams to extinguish, not just water. Do all communities along the rail routes have the resources to fight a major incident?
Granted the shipper would not be the only one on the hook but as all of the parties to the transaction from the lessor of the tank car to the shipper and the railroad understand the hazard and choose to ignore it to save money, my guess is that the punitives on this scenario would go into the 100’s of millions. Wise up, invest the money now or you will end up going down the road that Ford Motor Company did with the Pinto.
We are lamenting the non-adoption of DOT-117s by the industry in general as mentioned in the headline. Our firm commissioned a fleet of DOT-117s in anticipation of the changeover to the newer version with much more robust tank shells, with full insulation and jacketing. However, when our newly built cars arrived in late 2015, the entire leasing world was in a nose-dive due to falling crude oil prices and now many of these cars are in storage while the older DOT-111s are wreaking havoc with the pricing. Anecdotal stories are that owners of these soon to be obsolete cars are offering $1 rentals at the end of a lease so they don’t have to pay to move and keep the cars in storage. This is predatory pricing of the highest order and only the shipper benefits from extremely low pricing on lease rates.
As this forum is on an insurance industry publication, it is high time the insurance industry acted in putting on a serious premium for shippers and railroads that continue to use DOT-111s when there are thousands of brand new DOT-117s sitting idle. Shameful. Do we have to wait for a disaster to occur and shippers are sued for using the older “less safe” cars when they could have been using the internationally mandated newer cars. Saving a few thousand dollars over the course of a contract won’t look like such a good idea when a jury award for willful negligence is added to the general property & casualty costs of a settlement.
This a call out to insurers to be the catalysts of getting the sunset on the DOT-111s advanced and covering their own risks in the process by ensuring that shippers and railroads use every available DOT-117 tanker car before putting the 111s into service.
Sounds like a penny wise pound foolish risk management decision to me. Let’s say for instance that the recent derailment happened in a small community along the route and 20 people were killed and another 30 injured with burns averaging 30-40% of the body. Average death settlement in the 500K range and injury with pain and suffering probably in the 750k range. That one theoretical scenario would amount to $10,000,000 for the death claims and another $22,500,000 for those injured plus the property damage.
Also this is ethanol we are talking about, which requires specialized foams to extinguish, not just water. Do all communities along the rail routes have the resources to fight a major incident?
Granted the shipper would not be the only one on the hook but as all of the parties to the transaction from the lessor of the tank car to the shipper and the railroad understand the hazard and choose to ignore it to save money, my guess is that the punitives on this scenario would go into the 100’s of millions. Wise up, invest the money now or you will end up going down the road that Ford Motor Company did with the Pinto.
We are lamenting the non-adoption of DOT-117s by the industry in general as mentioned in the headline. Our firm commissioned a fleet of DOT-117s in anticipation of the changeover to the newer version with much more robust tank shells, with full insulation and jacketing. However, when our newly built cars arrived in late 2015, the entire leasing world was in a nose-dive due to falling crude oil prices and now many of these cars are in storage while the older DOT-111s are wreaking havoc with the pricing. Anecdotal stories are that owners of these soon to be obsolete cars are offering $1 rentals at the end of a lease so they don’t have to pay to move and keep the cars in storage. This is predatory pricing of the highest order and only the shipper benefits from extremely low pricing on lease rates.
As this forum is on an insurance industry publication, it is high time the insurance industry acted in putting on a serious premium for shippers and railroads that continue to use DOT-111s when there are thousands of brand new DOT-117s sitting idle. Shameful. Do we have to wait for a disaster to occur and shippers are sued for using the older “less safe” cars when they could have been using the internationally mandated newer cars. Saving a few thousand dollars over the course of a contract won’t look like such a good idea when a jury award for willful negligence is added to the general property & casualty costs of a settlement.
This a call out to insurers to be the catalysts of getting the sunset on the DOT-111s advanced and covering their own risks in the process by ensuring that shippers and railroads use every available DOT-117 tanker car before putting the 111s into service.