Not everyone in Washington, D.C. took a four-day Thanksgiving break. In fact, the Federal Motor Carrier Safety Administration ("FMCSA") chose Friday, November 28 to announce the launch of a comprehensive review of federally mandated transportation insurance requirements. The review was docketed as FMCSA-2014-0211, Financial Responsibility for Motor Carriers, Freight Forwarders, and Brokers, and published in the Federal Register at Volume 79, pages 70839 through 70843.

While FMCSA labelled its announcement as only an "advance notice of proposed rulemaking," it would be a mistake to view this docket as a mere fact-finding exercise with no preconceived outcome. The only apparent open question for the FMCSA is not "whether" current levels of liability insurance for trucking and bus companies should be increased, but "how much" the increase should be. It also would be a mistake to overlook issues other than liability insurance limits raised in this docket.

FMCSA has already provided a report to Congress regarding liability insurance, detailing its view "that the current financial responsibility minimums are inadequate to cover the costs of some crashes" (79 Fed.Reg. at 70840-41). In this docket, the Agency asks commenters to answer 17 questions (id. at 70842-43) on topics including:

  • current insurance premium levels,
  • how these would change if minimum coverage levels were increased,
  • how insurance premium rates are determined,
  • how often crash costs exceed current insurance minimums,
  • what increases in the minimums are necessary to "adequately protect against uncompensated losses associated with crashes," and
  • the likely impacts of increases on the percentage of accident cases that settle before trial.

Having posed what obviously are commercially sensitive questions, the FMCSA then seeks suggestions on how it could get motor carriers and their insurers to disclose such data. The Agency could possibly modify its boilerplate policy (id. at 70839) of posting the full text of all comments, without any provision for protecting confidential business data. Absent such protection, commenters could face not only commercial harm but also antitrust exposure. After all, public release of some of the data the Agency is requesting could be interpreted as "price signaling" to competitors.

Aside from liability insurance minimums, the November 28 notice raises the following issues that could bring significant changes to existing transportation insurance markets:

  • whether FMCSA should publish regulations on handling claims against the surety bonds or trust funds that freight brokers and forwarders must maintain,
  • how sureties and trust funds should provide notice that a broker or forwarder is failing financially,
  • whether changes should be made to the current system of allowing Mexican border commercial zone carriers to purchase single-day trip insurance,
  • whether bus brokers should be subjected to bond or insurance requirements under existing, but currently unused, FMCSA authority, and
  • whether motor carriers applying for permission to self-insure should be subjected to "enhanced" requirements as to the adequacy of their safety programs.

As to the final issue mentioned, FMCSA previously proposed legislation to do away with the self-insurance option – which it deems to impose a disproportionate burden on staff time. With little prospect of legislative action, raising the issue in this docket may be the Agency's way of discouraging self-insurance applicants.

Comments on all of the above are due on Thursday, February 26, 2015, ninety days from publication of the notice in this docket.

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