In November 2014, the FMCSA issued an Advanced Notice of Proposed Rule Making (ANPRM) concerning financial responsibility for motor carriers, freight forwarders, and brokers. Minimum third-party liability insurance limits for common carriers, passenger carriers and hazmat carriers have been unchanged since 1985.
The ANPRM did not actually propose any new limits and primarily sought information and comments and posed a series of questions, addressing: premium rates, current minimum levels, possible increased levels, and consequences of any increase etc. FMCSA received almost 2,200 public comments in response to the ANPRM. However, despite this level of response, few provided substantive and relevant information as to “cost or benefit data and the Agency was unable to otherwise obtain sufficient data on industry practice 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.” Perhaps not surprisingly, there was competing anecdotal and hypothetical data provided by responders. Trucking sources suggested the average financial damages in a truck accident is less than $12,000.00, where safety advocates (and those pesky plaintiffs’ attorneys again) provided examples of catastrophic losses where the current $750,000.00 minimum was nowhere close to fully compensating the victims (and suggesting a greater than ten-fold increase to $10,000,000.00 for common carriers of property was warranted).
The FMCSA found all representations to be insufficient to allow a necessary systematic cost-benefit analysis to make a final decision on increasing limits (e.g. as to (1) potential increases in insurance premiums associated with increased financial responsibility limits; (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; and/or (3) to calculate economic benefits from having more financial resources available to assist crash victims associated with increased minimum financial responsibility limits.) As such, the FMCSA did not have sufficient data or information to support further rulemaking and the ANPRM was accordingly withdrawn.
Given limits have not increased in 32 years, even to account for inflation, there seems little doubt that an increase is going to happen at some point in the future. When that might be is anyone’s guess, watch this space . . . .