FMCSA Abandons Study Regarding Increased Insurance Minimums for Brokers and Motor Carriers
Overwhelming opposition to ANPRM forces its shelving.
Today the FMCSA announced that it will not be moving forward with its ANPRM (advance notice of proposed rule) regarding increasing the minimum insurance requirements for motor carriers, brokers, and freight forwarders. The agency reached its conclusion after receiving over 2,000 comments on the November 2014 ANPRM. According to the FMCSA, the majority of commenters opposed increasing insurance minimums.
The ANPRM requested that carriers and brokers answer questions regarding their insurance premiums, how those premiums are determined (safety, driver, or credit history), and whether discounts were available based on the amount of vehicles in their fleet. The proposed rule was shelved after the FMCSA reviewed the results.
From the Federal Register:
“Based on the information provided, FMCSA is not able to determine (1) potential increases in insurance premiums associated with increased financial responsibility limits, or (2) 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.”
Currently the minimum coverage requirement for most carriers is $750,000, while carriers who specialize in hauling hazardous materials must carry either $1 or $5 million in insurance depending on which substances they haul. These minimum levels have been the same since 1985.
The FMCSA sought to write new minimum insurance rules to account for inflation as well as increased medical claims costs and related expenses. The ANPRM cited several studies including a 2013 Volpe Transportation Systems center study that stated severe crashes usually result in damages of over $1 million.
We at Logistec/TTS see this announcement as positive news for the transportation industry. Raising insurance levels is unnecessary and will cause substantial operating costs to those carriers who can least afford the increased insurance costs. Furthermore, insurance continues to increase on an annual basis. Since most insurance claims are less than $750,000, raising the insurance minimums would only serve as an added burden to an industry that is already under heavy regulation.
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