New Rules for Hazardous Shipments

[n012944]

Here is an interesting article about the insurance problems that railroads are facing with TIH's.

 

http://www.businessinsurance.com/cgi-bin/article.pl?article_id=24140

 

Intersting article....It points out,that a major TIH accident could break a Class 1 railroad-no matter who was at fault.  If a class 1 topped out it's TIH insurance payout limit, (the figure $1 billion is usually tossed around), the insurance companies would probably stop writing the policies, and railroads would stop shipping TIH's.

One approach (I think it's not correct to call it a "solution") is to federalize the risk, like the Price-Anderson Act did for nuclear power beginning in 1957.  See http://www.nuclearpowerprocon.org/pop/Price-Anderson.htm, which lists pros and cons of this method.

RWM 

As long as railroads are forced to carry TIH's, I think that doing something along the lines of the Price-Anderson Act would be going in the right direction.  

[selector]

...You will note that one the posters here remarked earlier on the thread that anyone that disagreed with him was "silly" to do so even as he has factually misrepresented just about every aspect of the HazMat insurance situation. The gentleman who objected to "sarcasm" seemed to be unable to generate his gratuitous intervention on that one. That's fine. But then at least recognize the essential courtesy of avoiding a double standard.

And that does underscore yet another example of a minor remark being very selectively blown up into yet another distracting conversation that itself does far more damage to the thread than the original remark.

 

Let the person call those who disagree with him silly!  He could add that all our eyes are too closely set.  So what?  If he can't win his point without ad hominem fallacies (of relevance) then he sets himself apart from the serious debate and can be ignored...as irrelevant. 

And my eyes aren't too close-set.  They're too widely set if you ask me.

Where were we again?

Oh, yeah.  I am not prepared to intervene due to misinformation (particularly if I can legitimately and ethically be no more than a spectator due to my lack of ability in the subject), intransigence, repetitiveness (well, only if it starts getting on my nerves), obtuseness, or other problems linked to what must surely be a personality disorder in any one poster.  I can only act when, at face value, a comment is meant to injure or insult in some way.  Sarcasm, per se, and although the lowest form of wit, is wit none-the-less.

Personally, I acknowledge the sarcasm and throw it back at the person by asking him to expand or go into further detail about his point...if it's so important to him.  Launching your own brand of it doesn't dignify you or the thread...IMO.

-Crandell

[MichaelSol]

Let the person call those who disagree with him silly!  He could add that all our eyes are too closely set.  So what?  If he can't win his point without ad hominem fallacies (of relevance) then he sets himself apart from the serious debate and can be ignored...as irrelevant. 

And my eyes aren't too close-set.  They're too widely set if you ask me.

My initial comment on it was that Dale's comment was a pointless effort to distract from the thread, even as it may have been hypocritical. My comment was mild sarcasm. It was well deserved based on my experience with the individual. I stand by it based on the long established behavior of the individual. I appreciate your opinion on the matter, but your opinions on the matter are now occupying half of this page.

"Let the person call those who disagree with him silly!" Then let me be sarcastic upon the same  principle. The suggestion of ignoring such comments is belied by the continuing commentary. The suggestion works both ways, and if the advice is sincere, I would appreciate the equal consideration and returning this conversation to HazMat.

 

[nanaimo73]

My initial comment on it was that Dale's comment was a pointless effort to distract from the thread, even as it may have been hypcritical. My comment was mild sarcasm. It was well deserved based on my experience with the individual. I stand by it based on the long established behavior of the individual.

Michael,

It seems to me that Bert, and your other adversaries, have generally been behaving themselves since the creosote thread.

On this thread, Murph, Mr Wilcox and Mr Paulsen (Railway Man) were having a friendly discussion. As I read this thread, it looks like you wanted to turn it into a serious debate. What is wrong with having a friendly discussion? 

[Murphy Siding]

One approach (I think it's not correct to call it a "solution") is to federalize the risk, like the Price-Anderson Act did for nuclear power beginning in 1957.  See http://www.nuclearpowerprocon.org/pop/Price-Anderson.htm, which lists pros and cons of this method.

RWM 

As I read that, the act more or less set up the Government as the insurance carrier for nuclear power.  As long as tis were set up as a situation where the premiums paid the bills-no problem.  But even then, a reasonable person would have to allow the railroads to pass more of the premium cost onto the those upping the risk-the TIH industry.

[MichaelSol]

My initial comment on it was that Dale's comment was a pointless effort to distract from the thread, even as it may have been hypcritical. My comment was mild sarcasm. It was well deserved based on my experience with the individual. I stand by it based on the long established behavior of the individual.

Michael,

It seems to me that Bert, and your other adversaries, have generally been behaving themselves since the creosote thread.

And that's fine. I recover slowly, and my memory is long for those who show an incompatability with honest discussion. And if Crandell's suggestion as to ignoring disparaging remarks such as Murphy's is good advice, then it is good advice all around, and for some reason, he can offer it to me, but he cannot seem to offer it to you. So, here we will still are ...

On this thread, Murph, Mr Wilcox and Mr Portland (Railway Man) were having a friendly discussion. As I read this thread, it looks like you wanted to turn it into a serious debate. What is wrong with having a friendly discussion? 

Well, with eight people dead, 4,000 people out of jobs, and Murphy willing to throw just about all the facts under the bus in pursuit of what appears to be a predetermined conclusion that started out with little connection to the facts in the first place, and which went downhill from there, I don't know what is "friendly" or even "unfriendly" about discussing negligence and tragic deaths -- I think the characterization is inappropriate either way. I do happen to think it is serious business, and particularly when someone seems bent on corrupting the facts so thoroughly, to what purpose I do not know, but I do find it offensive on important public policy issues of great significance to corporations and injured persons alike. Opinions are fine; facts, I am a little more sensitive about, and he has been pretty hard on them, pretty much with his fingers in his ears singing "La La La" when any facts conflict with his obviously predetermined idea that somehow, the wrong people are being forced to pay for ... something.

I was one of the Counsel involved in litigation arising from the second largest chlorine spill in the nation's history, which occurred near Alberton, Montana in 1996, and so I do not come to the discussion excited by a press release and armed only with the "facts" it provided. The derailment and release of chlorine resulted in the evacuation of approximately 1,000 residents, hundreds of hospitalizations and long-term effects and one immediate death. I knew many of the affected people, and represented some of them. I visited one over this past New Years, and she was having a hard time getting around with her oxygen tank. Before The Spill, she was quite active; used to love to ride her horse, which was killed in the incident. I knew the Rail Link people quite well. The expert testimony on the various issues, including liability, went on for tens of thousands of pages.

Whether his misrepresentations are meant to be "friendly" is simply an odd description that I do not fathom. But this idea that shippers bear no burden of liability, that the cost of insurance is a huge burden, that railroads are treated unfairly, that "rates are over the edge", that "the other shippers" should be "kicking and screaming", and that it's "silly" to think it is a "non-issue for railroads" -- when no one even suggested such a thing -- I am sorry to say that he misrepresented the facts. I don't know why, but the strength of his efforts to do so was equally remarkable, and it seemed to be a horse race to just make up facts and disregard objective evidence. Very much unlike him.

Maybe its just me, but I find misrepresentations of facts in pursuit of agendas offensive. To that extent, I also find them incompatible with the notion of 'friendly" discussions.

Accordingly, I put forward some facts and some context. And I took some time to do the research. Apparently the only one here who does that. To distract from that conversation and in that context in favor of a completely inappropriate "oh good heavens, you used sarcasm," struck me, and still strikes me, in exactly the fashion that Crandell suggests -- but cannot seem to hear his own voice on the matter -- if you don't like it, ignore such comments and move on. I happen to think it is good advice, I am just intrigued by the notion that he only means it to apply in the singular.  And I think his motivations are admirable; the implementation just inconsistent.

Using the industry figures for insurance costs in 2006 -- 2007 has not yet been reported -- if Norfolk Southern upped its insurance coverage from $1 billion to $5 billion, it would lower the Company's net income from $1,464,000,000 to $1,429,195,920. That's still $148 million more than the Company earned in 2005. They could have protected the full value of nearly four years worth of net income with a 2.6% charge against current net income. That's not "over the edge" if they considered the risk a plausible one. The answer is self-evident.

Norfolk Southern estimated that the cost of Graniteville was $41 million, and something more depending on the outcome of a current lawsuit involving a factory that shut down permanently. The costs of the Alberton spill were considerably less than that.

The fact is, if Norfolk Southern were that concerned, it could have upped its excess liability coverage considerably, without significantly impairing the Company's earning capacity. They did not do so. That, and the fact that their President forgot to even mention Hazmat as a problem facing Norfolk Southern in his recent interview with Railway Age suggests to me that, if they are not willing to ante up some serious premium money, they are not as concerned as they let on in their "Press Releases".

And "not as concerned" is a term of art here. They should be very concerned, and I think they are from the safety standpoint, which is exactly where they should be concerned. That is the whole point of Negligence Law: to place a financial penalty on negligence, and the negligent entities, rather than subsidize negligence by liability caps or limiting liability entirely. But they themselves do not believe that the tangible "catastophic" risk is high enough to warrant the relatively low cost of insurance for it. That tells me what I need to know about the credibility of the claims made, which strike me as for political consumption entirely -- or for panicked railfans who take press releases more seriously than anyone who actually knows what one is.

I don't know of a single person or corporation that does not have an exposure risk to a "catastophic" incident that may exceed in value their entire net worth. It's a fact of life on Earth, and the railroads were, last time I checked, still on that Earth. The fact that insurance rates for the Class I railroads are substantially lower than the highest rates charged does, I think, provide an objective measure of the risk.

That the controversy comes at a time when railroads are historically far more able than they ever have been in history to cover that risk to virtually any extent they feel financially necessary simply adds to my feeling that a tempest in a teapot gains no more windpower or credibility just because it moves to a press release.

 

[Railway Man]

One approach (I think it's not correct to call it a "solution") is to federalize the risk, like the Price-Anderson Act did for nuclear power beginning in 1957.  See http://www.nuclearpowerprocon.org/pop/Price-Anderson.htm, which lists pros and cons of this method.

RWM 

As I read that, the act more or less set up the Government as the insurance carrier for nuclear power.  As long as tis were set up as a situation where the premiums paid the bills-no problem.  But even then, a reasonable person would have to allow the railroads to pass more of the premium cost onto the those upping the risk-the TIH industry.

It comes back to the common-carrier principle, under which the common-carrier assumes all liability for the safe movement of goods presented to it.  The railway industry's position is that the common-carrier principle never contemplated that some of the goods would be capable of causing catastrophic injuries, and it wants the federal government to reclassify TIHs as extra to the common-carrier obligations of the railways.  I haven't seen yet the chemical industry's position, if they have one, on whether they would support a federalization of the risk as is done in Price-Anderson, or whether they view that as a slippery slope leading to greater public pressure on their industry to find ways to do things with less hazardous methods -- and there is growing public pressure in that regard.  Think of it as an alliance of opposites: on the one hand the public segment that is "green" and on the other hand the public segment that is "anti-tax."  The one would dislikes the federalization of risk because it pushes back the day when we're chemical-free, and the other because it erects publically funded props under private business.  

RWM

[bobwilcox]

Perhaps it would be quicker to get to a tank car fleet carrying TIH that have a probability of an accidental release similar to the cars desinged for moving spent fuel from nucular power plants.  Does anyone know of any technical hurdles to desinging such a TIH car that would be virtually indestructable in an accident?  These cars could be brought into the fleet on a emergency basis if the railroads set a date in the near future that TIHs would not be accepted in inferior cars.

[MichaelSol]

But even then, a reasonable person would have to allow the railroads to pass more of the premium cost onto the those upping the risk-the TIH industry.

The reasonable portion of insurance coverage premiums attributable to Hazmat is 70%. A "reasonable person" would not be arguing [at BN] about 67 cents on a $1560 carload cost in the first place. The entire proposition is, in fact, unreasonable which is why you cannot find a single shipper that has, in fact, complained about it.

And the entities most responsible for upping the actual risk: the railroad companies.

The vast bulk of hazardous material claims against railroad companies comes from the single largest source of actual HazMat contamination: the railroad companies themselves, from diesel fuel and diesel engine oil from derailments and contamination of water supplies, watersheds, groundwater, and soil and air. The cost of those incidents and claims in a single year exceeds the entire cost of all "other owner" railroad related HazMat claims of the past decade.

Should "all the shippers" be "forced" to pay for that through their rates?

And how about those captive shippers, if "fairness" is your sincere motivation on this thread? On a "fairness" scale, at least those numbers are to the left of the decimal point.

 

[Railway Man]

Perhaps it would be quicker to get to a tank car fleet carrying TIH that have a probability of an accidental release similar to the cars desinged for moving spent fuel from nucular power plants.  Does anyone know of any technical hurdles to desinging such a TIH car that would be virtually indestructable in an accident?  These cars could be brought into the fleet on a emergency basis if the railroads set a date in the near future that TIHs would not be accepted in inferior cars.

Not heard of any hurdles.  For that matter I haven't heard of any designs, either.  I'll try to ask the TTC boys Monday.

RWM 

[selector]

Michael, thank you for your detailed reply a few posts up.  It tells me a lot about you and why much of what you discuss is so personal, even instensely so. 

No need to respond.

-Crandell

[erikem]

Perhaps it would be quicker to get to a tank car fleet carrying TIH that have a probability of an accidental release similar to the cars desinged for moving spent fuel from nucular power plants.  Does anyone know of any technical hurdles to desinging such a TIH car that would be virtually indestructable in an accident?  These cars could be brought into the fleet on a emergency basis if the railroads set a date in the near future that TIHs would not be accepted in inferior cars.

One difference between spent nuclear fueld and TIH is that the sent fuel is largely solid and a breach of the cask would probably not release more than a minor fraction of the contents. With many TIH's, breaching the tank would result in the release in the majority of the contents.

Another difference is that the walls of a spent fuel cask are necessarily thick to provide shielding. For gamma rays energies exceeding ~0.5MeV (the high energy gammas have greater penetration and thus are the critical shielding problem), the mass attenuation coefficient of steel is nearly the same as lead so it makes sense to use a thick steel wall for both strength and shielding.  A related issue is that a spent fuel cask can be much heavier than the spent fuel and still be economic, whereas the same is not true for most TIH cargoes.

[Murphy Siding]

One approach (I think it's not correct to call it a "solution") is to federalize the risk, like the Price-Anderson Act did for nuclear power beginning in 1957.  See http://www.nuclearpowerprocon.org/pop/Price-Anderson.htm, which lists pros and cons of this method.

RWM 

As I read that, the act more or less set up the Government as the insurance carrier for nuclear power.  As long as tis were set up as a situation where the premiums paid the bills-no problem.  But even then, a reasonable person would have to allow the railroads to pass more of the premium cost onto the those upping the risk-the TIH industry.

It comes back to the common-carrier principle, under which the common-carrier assumes all liability for the safe movement of goods presented to it.  The railway industry's position is that the common-carrier principle never contemplated that some of the goods would be capable of causing catastrophic injuries, and it wants the federal government to reclassify TIHs as extra to the common-carrier obligations of the railways.  I haven't seen yet the chemical industry's position, if they have one, on whether they would support a federalization of the risk as is done in Price-Anderson, or whether they view that as a slippery slope leading to greater public pressure on their industry to find ways to do things with less hazardous methods -- and there is growing public pressure in that regard.  Think of it as an alliance of opposites: on the one hand the public segment that is "green" and on the other hand the public segment that is "anti-tax."  The one would dislikes the federalization of risk because it pushes back the day when we're chemical-free, and the other because it erects publically funded props under private business.  

RWM

It seems to me at least, that at some point in the future, there may be a big showdown over TIH shipment, and liability thereof.  I don't think anybody on this thread is asking that railroads not haul TIH material.  Simply, it appears the discussion is whether the shippers who ship TIH should be shouldering more of the financial side of the liability(insurance) issue.  How could anyone be against safer hauling of TIH material,and against financial  responsibity of TIH liability problems?

[MichaelSol]

I don't think anybody on this thread is asking that railroads not haul TIH material.

Short memory.

 ...I can't see what other choice a railroad would have, other than to say no to those shipments (TIH's) ....

 

 How could anyone be against safer hauling of TIH material,and against financial  responsibity of TIH liability problems?

I think what people might be "against" are the misrepresentions you have consistently made on this thread that 1) those shippers had no liability insurance obligations at all, which was false 2)that "rates were over the edge", which was false, 3) that other shippers were being treated "unfairly" by sharing in the cost of general excess coverage liability insurance policies, which is false because in fact it is barely measurable by those shippers and 4) suggesting that railroads should not be a key part of the "financial responsibility" in those instances where the railroads caused the accident.

 

[Murphy Siding]

Perhaps it would be quicker to get to a tank car fleet carrying TIH that have a probability of an accidental release similar to the cars desinged for moving spent fuel from nucular power plants.  Does anyone know of any technical hurdles to desinging such a TIH car that would be virtually indestructable in an accident?  These cars could be brought into the fleet on a emergency basis if the railroads set a date in the near future that TIHs would not be accepted in inferior cars.

One difference between spent nuclear fueld and TIH is that the sent fuel is largely solid and a breach of the cask would probably not release more than a minor fraction of the contents. With many TIH's, breaching the tank would result in the release in the majority of the contents.

Another difference is that the walls of a spent fuel cask are necessarily thick to provide shielding. For gamma rays energies exceeding ~0.5MeV (the high energy gammas have greater penetration and thus are the critical shielding problem), the mass attenuation coefficient of steel is nearly the same as lead so it makes sense to use a thick steel wall for both strength and shielding.  A related issue is that a spent fuel cask can be much heavier than the spent fuel and still be economic, whereas the same is not true for most TIH cargoes.

I wonder if that's because, at this time,railroads aren't able to pass along all the costs associated with shipping TIH cargoes?  Do you suppose, if the railroads were able to set different rates, for different types of tanks cars being used for TIH cargoes, that there would be a natural incentive to use stronger cars?

[MichaelSol]

I wonder if that's because, at this time,railroads aren't able to pass along all the costs associated with shipping TIH cargoes? 

And who said that railroads "aren't able to pass along all the costs ..."? Please show the evidence.

In fact, they do pass along all such costs. Businesses do that. Even the costs associated with their own negligence. With record profits, railroads seem to be able to pass along at least a few such costs. The comments on this thread become increasingly detached from any kind of reality. Why?

[erikem]

Perhaps it would be quicker to get to a tank car fleet carrying TIH that have a probability of an accidental release similar to the cars desinged for moving spent fuel from nucular power plants.  Does anyone know of any technical hurdles to desinging such a TIH car that would be virtually indestructable in an accident?  These cars could be brought into the fleet on a emergency basis if the railroads set a date in the near future that TIHs would not be accepted in inferior cars.

One difference between spent nuclear fueld and TIH is that the sent fuel is largely solid and a breach of the cask would probably not release more than a minor fraction of the contents. With many TIH's, breaching the tank would result in the release in the majority of the contents.

Another difference is that the walls of a spent fuel cask are necessarily thick to provide shielding. For gamma rays energies exceeding ~0.5MeV (the high energy gammas have greater penetration and thus are the critical shielding problem), the mass attenuation coefficient of steel is nearly the same as lead so it makes sense to use a thick steel wall for both strength and shielding.  A related issue is that a spent fuel cask can be much heavier than the spent fuel and still be economic, whereas the same is not true for most TIH cargoes.

I wonder if that's because, at this time,railroads aren't able to pass along all the costs associated with shipping TIH cargoes?  Do you suppose, if the railroads were able to set different rates, for different types of tanks cars being used for TIH cargoes, that there would be a natural incentive to use stronger cars?

I was thinking more abstractly about the relative economics of shipping spent fuel versus TIH. In the case of spent fuel, the cost of shipping is relatively minor compared to the costs of long term storage, whereas the cost of shipping many TIH's  can be significant with respect to the cost of the material.

I seem to recall a lot of discussion in the 60's and 70's about shipping spent fuel. The RR's wanted to put the cars in special trains whereas the nuclear power industry wanted the cars handled as normal freight cars. Since my memory is far from perfect, don't take what I wrote as gospel. 

[Murphy Siding]

I was thinking more abstractly about the relative economics of shipping spent fuel versus TIH. In the case of spent fuel, the cost of shipping is relatively minor compared to the costs of long term storage, whereas the cost of shipping many TIH's  can be significant with respect to the cost of the material.

My mistake.  I thought you meant the weight of the specail cars themselves would make it unable to carry enough cargo to be economical.

[TimChgo9]

So, the cost to all shippers, if I follow this right, is 96 cents to subsidize, if you will, the insurance of the Haz-Mat shipments on the railroad.  Someone correct me if I am wrong, I have read all six pages of this thread, and the memory is full of Michaels facts and figures. 

That being said, isn't insurance purchased, on any level, to protect against a "catastrophic" event?  The motivation behind buying, say, car insurance would be to protect yourself in the event of a "catastrophic" loss of your car (be it accident, theft, and fire).  Having the car insurance to cover repairs from less serious events is, in my opinion, a side benefit.  

Insurance is purchased against the possibility of something going horribly wrong, not the certainty.... Logic would dictate that if there was a certainty that something catastrophic would happen, then no one in their right mind would insure anything, if they were betting, so to speak against the odds that everything would be alright...  Put another way, I buy my car insurance to protect my car and myself in the event something goes wrong.  I have been driving since age 19, so I have 23 years behind the wheel, or 22,195 days.  I have had to file claims on 3 accidents, and 1 theft in that time period, so, I had 4 bad days out of 22,195, with only one of them being "catastrophic", i.e. the car theft, which resulted in the loss of the car.  So, by my reasoning, that makes my odds 1:5548.75 that I would have something go wrong, and 1:22,195 that I would have a "catastrophic" event.  Now, would my insurance company insure me or anyone else if there was a certainty that everytime I laid my hands on a car there would be something bad happening?  On one level, there is a "certainty" that "someone" will have to file a claim, but, it's at a risk level that is acceptable.  That is the reason why my car insurance cost equals about 1.2% of my family's income.  Those risks are readily shouldered by me (car owner) and insurance companies. 

The point I am getting at, is that with all of the miles traveled every year by TIH/PIH car loads, and the number of accidents that have occurred (Both minor and catastrophic) results in an acceptable risk.  One must bear that in mind.  The accident on the NS that has been bandied about here, was a tragedy for all involved.  The fact that an accident did occur is all the fodder some folks need that have an agenda.  Regardless of all of "safe" miles traveled by the haz-mat cars, there are those who will point to one incident and use that as "proof" that the method employed is inherently "unsafe". 

To say that insurance companies will "no longer be covering" haz-mat shipments, (not a direct quote, but inferred from the previous insinuations) then, that would be tantamount to admitting that the insurance companies then believe that there is a near certainty that something will go very wrong. I can see insurance companies denying coverage on a case-by-case basis, but not as a whole.  Also to say that railroads will eventually stop shipping these chemicals does not make any sense either.  Relocating of production facilities closer to the customer makes sense on some levels, but somethings will continue to go by rail.  How else would it get there? By truck?  If we were at a point where the stuff was just determined to be too dangerous to ship by rail, then that would stand to reason that any mode of transportation would be considered unsafe. 

But, back on the topic of cost vs shipper.... where I come from, 96 cents is a bargain.

[Murphy Siding]

     Tim:  You make some good points.  Using your car insurance analogy, consider a few points:  Our oldest son just turned 17.  His car liability insurance costs more than Mom and Dad's *full coverage* car insurance on 2 vehicles.  I know insurance is supposed to be all about spreading the risk, but how would you feel when your insurance rates go up, so my son's rates can stay low?  I think most drivers would have a problem with that idea.  That *little bit extra* they would be asking you to pay on my son's behalf, is like the *little bit extra* that non TIH shippers pay, to cover extra insurance for the TIH shippers.  A difference, is that the shippers aren't being asked, they are being told.

     The other thing that comes to mind, is the idea of 100% probability of a catastrophic event.  Isn't that what life insurance is-a 100 % chance of dying.  Insurance companies are taking the (calculated) risk, that they will take in more in premiums than what they pay out in claims.  I'm sure it works the same with railorad insurance.  From what I've been reading, the railroads are concerned about *when* a big/ugly is going to happen, not simply*if* it's going to happen.  The real possibilty of huge lawsuits over a TIH accident could put a railroad out of business, even if the railroad is not at fault.  That is why they are trying to get the TIH shippers to contribute more to the cost of liability insurance, as I see it.

    

[tree68]

When you pay for insurance, you are sharing the risk with all other policy holders.  That's the insurance company's gamble - that they will take in more in premiums than they pay in claims.  They could easily just charge everyone the same premium.  It would be higher for those currently considered a low risk, and lower (very much so, probably) for the high-risk drivers (under 25, male, and single, although the girls are catching up). 

But they've embraced a concept of relative risk, based on experience, and everyone has bought into it (unless you have a teenage son).  Because they are selling to individuals, vs a single large entity, they can do so.  This has powerful marketing possibilities.  If I give you a discount for being a safe driver, you'll buy insurance from me instead of the other guy.   That also encourages you to be a safer driver, since you'll lose the discount.  In the end it balances out.

If you are an industry or a railroad moving thousands of cars, you aren't insuring the individual cars or movements.  If you did, the cost would become astronomical, as would the administration therefore.  Placement and handling rules notwithstanding, a hazmat car is just another car in the train.  As was seen in a California derailment several years ago, you don't need hazmat to have a heck of a train wreck.

My fire department had a "blanket" policy a while back.  Two buildings (one since razed) under the same policy.  Had we insured them separately, the cost would have been higher and we wouldn't have gained much.

 

[MichaelSol]

That is the reason why my car insurance cost equals about 1.2% of my family's income. 

...

The fact that an accident did occur is all the fodder some folks need that have an agenda. 

And this thread has "agenda" written all over it, even as it has not been just light on facts, there has been considerable misrepresentation of facts.

Most families spend about 4-5% of the income on insurance against disasters of one kind or another. The BN spends less than 0.05% (five hundredths of 1%) of its gross income on its "disaster" insurance. If it truly believes in the inevitability of the risk, it isn't spending much to insure against it.

Similarly the fact that the Class I railroads pay a rate that is only 20% of the highest rates charged for similar insurance belies the melodramatic presentation on this thread that it "isn't a matter of if, it is a matter of when." The professionals in risk management at the railroads and at the insurance carriers apparently just have a different take on the matter than the gentleman who believes that "at some point in the future, there may be a big showdown ...".

Why he has been so willing, so adamant, about declaring that disaster is just around the corner, even while being willing, even enthusiastic, to misrepresent the fundamental insurance facts about the situation, is a complete mystery to me. I doubt that I am the only one here wondering why the facts are so elusive to him, but his agenda becomes more adamant even as the facts are developed contrary to the position he has taken.

In my 45 years with State Farm, I've never made a claim. But my insurance cost is triple what it was just 15 years ago. Am I paying a "share" of someone else's catastrophic claims? You bet I am, and I'm paying something on State Farm's huge losses in Hurricane Katrina as well. That's why it's called "State Farm Mutual". That's how insurance works and aside from the gentleman's refusal to acknowledge virtually any facts at all that might interefere with his conclusions, he misunderstands the concept of "insurance" from the outset.

It is a benefit to all shippers that the railroad remain in business. The railroad purchases insurance against risk, and much of that risk is for the railroad's own negligence. The chemical shippers are required, in addition to the railroad's own insurance, to carry incident insurance as well. Do all shippers ultimately benefit from that protection? It is difficult to argue that they don't receive a very direct and tangible benefit, of exactly the kind the poster argues is in jeopardy: the ability to stay in business. They don't want to pay 96 cents for that benefit? That's where the argument, on this thread, went south several pages ago: the abject absurdity of that proposition. The poster refused to recognize the definitive answer to his own question of why other shippers weren't "kicking and screaming," and the fact is that he invented an issue that, for the other shippers, wasn't an issue. There may be a lot to kick and scream about but 96 cents isn't one of them. Eight dead people came to mind.

And that goes to a further misunderstanding. The railroad will always operate. An entity that has failed to provide sufficient insurance coverage against its own negligence may lose financial control of the system in Bankruptcy Court, there's nothing special about railroads from that aspect. It happens all the time, even as excess claims against a corporation are adjudicated in that forum routinely after insurance has been used up. 

The system does provide an incentive to providing sufficient liability coverage. It also provides a powerful incentive to continue improving safety and, if the "threat" of a disaster and its "could be, might be" costs are a motivator, the railroads have done a pretty good job of responding to that incentive.