Sunday, March 18, 2018

FMCSA withdraws ANPRM on increasing insurance minimums

Friday, June 2, 2017

WASHINGTON — The Federal Motor Carrier Safety Administration said Friday it was withdrawing its November 28, 2014, Advance Notice of Proposed Rulemaking (ANPRM) concerning increasing insurance minimums for commercial motor carriers, freight forwarders, and brokers.

The FMCSA is authorized to establish minimum levels of financial responsibility for motor carriers at or above the minimum levels set by Congress.

In the ANPRM, FMCSA had sought public comment on whether to exercise its discretion to increase the minimum liability insurance, and, if so, to what levels.

After reviewing all public comments to the ANPRM, FMCSA said it had determined that there is insufficient data or information to support moving forward with a rulemaking proposal at this time.

The current insurance minimum is $750,000, although many motor carriers carry more than the minimum.

FMCSA said commenters did not provide sufficient cost or benefit data and the agency was unable to obtain sufficient data on industry practices with respect to the level of liability limits in excess of the agency’s minimum financial responsibility requirements, and the cost of such premiums and the frequency of, and the amount by which bodily injury and property damage claims exceed policy liability limits.

The anecdotal and hypothetical data provided by commenters are not sufficient to allow the agency to perform a systematic cost-benefit analysis that would be required to raise motor carrier minimum financial responsibility through a rulemaking, the agency stated.

Based on the information provided, FMCSA said it was not able to determine (1) potential increases in insurance premiums associated with increased financial responsibility limits, or (2) or the impact of an increase in minimum financial responsibility requirements on insurance company capital requirements set by insurance regulators to ensure there are sufficient reserves to minimize the risk of insolvency and protect consumers.

Moreover, FMCSA said it was not able to calculate economic benefits from having more financial resources available to assist crash victims associated with increased minimum financial responsibility limits.

Response on the part of trucking interests was fairly swift.

David Heller, vice president of government affairs for the Truckload Carriers Association, said while TCA supports the notion that motor carriers be required to possess minimum liability insurance coverage and that many of its members have obtained coverage well above the federal minimums, “the difficulty with this rulemaking is defining what would be a reasonable amount for all carriers.  Our industry, which represents carriers of all sizes ranging from one-truck operators to fleets with equipment numbering in the thousands, has shown that in many instances, a one-size-fits-all proposition is not entirely appropriate. What one carrier could accept as a reasonable rate may prove costly for another carrier with an entirely different scope of operations, yet identical safety record. 

“The inability to clearly define what would be a new proposed minimum makes it difficult to predict the ramifications it would have on small carriers and large carriers alike, to say nothing of the independent contractor.”

The Owner-Operator Independent Drivers Association (OOIDA), which had vehemently opposed the ANPRM, said in reaction that “Small-business truckers have succeeded in getting a potentially devastating proposed regulation withdrawn by the Federal Motor Carrier Safety Administration.”
 OOIDA noted that the organization and its members had told Congress that the initiative “would place significant financial burdens on motor carriers without any improvement to highway safety.”
The association also said that more than 99 percent of crash damages are covered under current financial requirements.   
 OOIDA’s Director of Government Affairs Mike Matousek said such an increase “would put small truckers out of business.” He added that the announced withdrawal is significant in that the agency usually just leaves a docket open if a proposal is no longer being advanced.
The issue of raising the minimum liability insurance first burst on the scene when Rep. Matt Cartwright, D-Pa., in mid-2013 introduced legislation that would have raised the required insurance minimum for motor carriers $4,422,000 per truck, an increase of almost 500 percent.

Congress established the current insurance minimum in 1980.

Before being elected to Congress in 2012, Cartwright was a member of the law firm of Munley, Munley and Cartwright, a firm that specializes in accident and injury claims. After Cartwright was elected, he resigned from the firm, which is now called Munley Law.

In present dollars, adjusted for the increase in the cost of medical care, it takes more than $4.4 million to provide for the equivalent of the $750,000 in the original law, Cartwright said when he introduced the bill.

“This is a matter of public safety. Tragically, more than 100,000 people have been killed in commercial vehicle collisions since 1980,” Cartwright said.  “This legislation is essential to protecting our nation’s highways and ensuring that victims receive the proper amount of compensation for their losses.”

In April 2014, FMCSA reported to Congress that current financial responsibility minimums for the commercial motor vehicle industry were inadequate to meet the costs of some crashes and announced it would initiate the rulemaking that now has been withdrawn.

The agency said that while catastrophic motor carrier crashes are rare, the costs for resulting severe and critical injuries can exceed $1 million and that current insurance limits do not adequately cover these costs, which are primarily because of increases in medical expenses and other crash-related costs.



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