WASHINGTON — The motorcoach industry’s three-year battle with the Federal Motor Carrier Safety Administration over a proposal to at least double liability insurance minimums appears to be over, at least for now.
FMCSA said it was withdrawing its November 28, 2014, proposal concerning increasing insurance minimums for commercial motor carriers, freight forwarders and brokers.
Insurance minimums for motorcoaches were expected to at least double to $10 million, and possibly rise to as much as $20 million to $30 million per incident or claim, which industry officials said would force smaller operators out of business.
“The decision by FMCSA, under Secretary of Transportation Elaine
Chao’s leadership, to withdraw the advanced notice of rulemaking was welcomed news for the bus and motorcoach industry,” said Ken Presley, vice president of industry relations and COO for the United Motorcoach Association.
“We’ve been fighting this insurance battle since 2014 when others in the industry were advocating for an increase in minimum insurance limits,” Presley said. “Everyone knew even then this would create a hardship and shrink the number of small fleet operators and create an economic barrier to entry.”
FMCSA announced last month that after reviewing all public comments on the proposed rule, it determined there is insufficient cost or benefit data to support moving forward with a rulemaking proposal.
The agency said it 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, the cost of such premiums, and the frequency of and the amount by which bodily injury and property damage claims exceed policy liability limits.
FMCSA said it received 2,181 public comments in response to the proposed rule. “Various stakeholders commented, including representatives of motor carriers, insurance companies, broker/freight forwarders, safety advocates, attorneys, drivers and many others,” the agency said in a statement.
“Approximately 120 submissions, including one submission reflecting a petition signed by 11,366 individuals, expressed general support for increasing the minimum levels of financial responsibility for motor carriers without providing a substantive rationale for their opinion.”
About 145 commenters expressed general opposition to increasing the minimum without providing a substantive rationale for their opinions, FMCSA said.
“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 said.
“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.”
The current minimum liability level of $5 million per incident or claim for motocoaches and $750,000 for commercial trucks has been in place since the 1980s.
The push to raise the level began in early 2014, when FMCSA reported to Congress that the 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 to raise the level.
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.
UMA and other industry stakeholders countered with statistics showing that the increase is unnecessary because few insurance claims have reached the current minimum. They took the fight to Congress, arguing that it isn’t necessary and that the higher premiums could force small operators out of business and block new ones from entering the industry.
UMA made the issue the focus of its Capitol Hill Days “Fly-In” events, during which association members lobbied their congressional representatives to block FMCSA from implementing any increases.
With the help of House Transportation and Infrastructure Committee Chairman Bill Shuster and Rep. Scott Perry, both Republicans from Pennsylvania, a provision was added to the FAST Act of 2015 to ensure that minimum insurance limits for commercial motor carriers could not be raised absent a complete analysis that supported any increase. That measure helped fend off what would have been an expensive, burdensome and unwarranted mandate on the nation’s bus and motorcoach companies, Presley said.
“When the minimum limits were raised back in the early 1980s at the dawn of deregulating the industry, the new limits created an economic barrier for many new ventures and simply put some carriers out of business,” he said. “UMA was not about to see that happen again.”