To raise the insurance requirement or not to raise it, that is the question, or at least the gist of the 26 questions the Federal Motor Carrier Safety Administration is posing in an advance notice of proposed rulemaking to publish in the Federal Register on Friday, Nov. 28.
FMCSA is considering a rulemaking that would increase the insurance requirements on motor carriers, including liability coverage of bodily injury or property damage.
In addition to liability insurance on motor carriers, the agency is also considering establishing finance responsibility requirements for passenger carrier brokers and implementing financial responsibility requirements for brokers and freight forwarders. And finally, the agency is also considering revising existing rules concerning self-insurance and trip insurance.
The agency is taking a novel, yet not unprecedented, approach in the advance notice of proposed rulemaking in presenting 26 questions related to insurance requirements on motor carriers, passenger carrier brokers, freight forwarders and brokers, as well as self-insured and trip-insured motor carriers.
Leading up to the proposed rulemaking, FMCSA conducted a congressionally mandated study on the current insurance requirements. In the ANPRM, the agency acknowledges that for motor carriers, the current required level of $750,000 for general freight carriers and $1 million for hazmat operations is rarely exceeded.
“Catastrophic motor-carrier related crashes are relatively rare,” the ANPRM states. According to the agency’s commissioned study, less than 1 percent of all CMV crashes exceed the currently required insurance limits. However, the proposal states, claims that do exceed the current insurance requirements do so because of increased medical costs.
Other points of the study highlighted in the notice state that severe and critical injury crashes can easily exceed $1 million and that insurance premiums have been on the decline since the 1980s but that there is no comprehensive data on what premiums motor carriers would have to pay if the agency increases the insurance requirement.
Three additional studies are referenced in the ANPRM. One from the Pacific Institute for Research and Evaluation concluded that the required insurance should be raised to at least $10 million per crash.
A second study was conducted by the Alliance for Driver Safety and Security, a division of the Trucking Alliance. The Trucking Alliance is a group of large motor carriers, Maverick Transportation, Knight Transportation, J.B. Hunt, Dupre Logistics, Boyle Transportation and Fikes Truck Lines. That study also came out in favor of increasing the insurance requirement.
The third study was one conducted by the American Trucking Associations. That study broke ranks with the other two and revealed a less than 1 percent chance that claims would exceed $1 million and an even slimmer chance, 0.31 percent, that claims would exceed $2 million.
Diverting from a typical proposed rulemaking, in any phase, rather than lay out a proposed rule, the agency instead is seeking answers to 26 questions targeted to four broad considerations in addition to the possibility of increasing insurance requirements on motor carriers.
First, following up on the agency’s increase on broker bond requirements to $75,000, the agency is pondering if another increase is required and if there should be a process for updating that requirement. For example should it be tied to the consumer price index?
Second poses the question whether to extend the duration of trip insurance used by Mexico-based motor carriers to haul loads in the border zone from 24 hours to seven days, to combat fraud, and if the current amount of required insurance is enough.
The third consideration is on passenger carrier brokers. The agency is considering implementing a minimum insurance requirement on these brokers, too.
Finally, the agency is seeking input on the proof self-insured carriers provide to FMCSA that the motor carrier has an “adequate safety program.”
Click here to read the ANPRM and to see the complete list of 26 questions posed by the agency. A 90-day comment period on the advance notice of proposed rulemaking opens on Friday, Nov. 28. Docket number FMCSA-2014-0211will be activated on the regulations.gov website then.