FMCSA Asks Trucking Fleets for Information About Insurance Rates, Coverage Levels

This story appears in the Dec. 8 print edition of Transport Topics.

The Federal Motor Carrier Safety Administration has turned an advance notice of proposed rulemaking on minimum insurance levels into a survey of trucking and insurance industry practices.

The notice, published Nov. 28, gave few clues as to what new levels of insurance coverage FMCSA might be considering.

Instead, the notice asks carriers and brokers to voluntarily answer questions about their current premiums and about how rates are determined — perhaps by things such as driver safety records, credit histories, or whether carriers get discounts for the volume of vehicles in their fleets.

FMCSA also asks: “What percentage of fleets, based on size and the type of operation of the carrier [passenger, property, hazmat] already have liability coverage that exceeds the minimum financial responsibility requirement and by how much?”

Currently, for most carriers, the minimum coverage requirement is $750,000. Fleets specializing in hazardous materials must have either $1 million or $5 million in coverage, depending on what they haul.

The minimum levels have been in place since 1985, and in April, FMCSA said it would write a new insurance rule because “inflation has greatly increased medical claims costs and related expenses.”

One insurance broker, Ryan Erickson, a vice president in the Portland, Oregon, office of McGriff, Seibels & Williams, told Transport Topics most carriers already have coverage exceeding federal requirements.

“I would say we generally see most smaller motor carriers carrying $1 million,” Erickson said. “There’s not a lot of insurance carriers out there that offer the $750,000 amount.

“You could see it a lot more several years ago, but really, the standard offering in the marketplace is $1 million,” he said.

FMCSA said the comment period will last until Feb. 26.

Small and midsize carriers should make sure to send in comments to give FMCSA balanced information, said Michael Wilson, president of Whitewood Transport in Billings, Montana, a heavy-equipment hauler running 40 trucks.

“If only the big guys answer the questions, does it favor the big guys?” Wilson asked. “If we get a lot of small carrier participation to give some really good input, that’s critical.

Wilson is a past president of the Motor Carriers of Montana and a state vice president to American Trucking Associations.

Wilson said Whitewood carries a far higher amount of coverage than required but that he doesn’t know what a new federal requirement should be or what insurance rates will be.

“There’s no doubt it’s what you’re hauling; it’s where you’re hauling it from; it’s where you’re hauling it to,” he said of the rates. “There are so many variables that have to be considered. How many miles you’re out there, are you running in the daylight or at night . . . are you in the plains or in the mountains, in the snow, in the desert.

“The insurance companies look at all those factors and they need to,” Wilson said.

Todd Reiser, vice president in the transportation practice at insurance broker, Lockton Cos., headquartered in Kansas City, Missouri, said insurance brokers are not expecting changes soon on the minimum coverage levels.

“I think it’s going to be a long process,” Reiser said. “They’re obviously looking for a lot of feedback.”

Reiser also said that when minimum coverage requirements are raised, premiums will increase.

“People say it’s really going to be expensive and to be frank it’s going to depend on your safety record,” he said.

FMCSA did not say in its notice what coverage levels it’s considering but cited studies, one from the Volpe Transportation Systems Center in 2013, that said severe crashes typically result in more than $1 million in damages.

The agency is also seeking comments on issues besides minimum coverage. The notice asks for feedback on the requirement that took effect last year for freight brokers to have at least $75,000 bonds.

It also seeks insurance information on Mexican carriers authorized to run in the United States and on the self-insurance program FMCSA offers U.S. carriers.

The Obama administration wants to repeal the program, saying only about 40 carriers use it and that is has not greatly en-hanced safety.