© 2008 Property Casualty Insurers Association of America A Truck is a Truck is a Truck? Not Necessarily Why Insurance Filings Should Not Extend to Private

© 2008 Property Casualty Insurers Association of America

A Truck is a Truck is a Truck?Not Necessarily

Why Insurance Filings Should Not Extend to Private Motor Carriers

Dave Golden

NCSTS Annual Meeting

June 9, 2008


A Solution Looking for a Problem?

Different exposures Private has less vehicle miles per year than

for-hire Private has less time pressure Private routes usually do not vary Private fleet is not a profit center Private large trucks tend to be part of a larger

fleet of small trucks and cars Can magnify impact of MCS-90

No pattern of inadequately insured private fleets


Interstate Financial Responsibility

Incentive for safe operation (49 CFR 387.1) Appropriate level of financial responsibility

DOT Secy. may require F/RNot must – (H.R. 3 of 2005)

Any evidence of more accidents involving inadequately insured private motor carriers than for-hire?


Insurance vs. Reg. Fin. Resp.

Coverage by contract Market based

Insurer + Insured Actuarial premium

Based on losses Language adjusted for

evolving court interpretations

Coverage imposed Regulatory fiat Surety, not insurance Insurer + government

No premium Additional losses

No real change since 1982 16 needed changes

denied in 2005


Black’s Law Dictionary - Insurance

A contract by which one party (the insurer) undertakes to indemnify another party (the insured) against risk of loss, damage, or liability arising from the occurrence of some specified contingency, and usu. to defend the insured or to pay for a defense regardless of whether the insured is ultimately found liable. • An insured party usu. pays a premium to the insurer in exchange for the insurer's assumption of the insured's risk.


Private vs. For-Hire Safety – FMCSA 2004

Percentage of privates w/zero crashes better than for-higher in each of three years studied (2000-2002)

Fatality crash rates similar 0.015 privates vs. 0.013 for-hire

Per power unit crash rates similar 0.275 privates vs. 0.285 for-hire

Truck tractors (largest regulator-expressed concern) >200 mi. are 30% of all trucks >26,000 lbs (U-Mich.) 3 for-hire to every 1 private in this category

NO SAFETY IMPERITIVE TO EXPAND FILINGS NO SAFETY INCENTIVE SHOWN FROM FILINGS


Be Careful What You Wish For

Some private motor carrier insurers do not currently insure for-hire risks

OPERATIONS & EXPOSURES ARE DIFFERENT Private carriage incidental to larger operation For-hire exposures require expertise

MCS-90 coverage expansion artificially raises loss exposure Current – seen with for-hire fleets Courts may hold that MCS-90 applies to ALL vehicles in

fleet Cancellation rules + other regulatory constraints Insurer may have no experience with federal filings Insurer may have no infrastructure for filings


Be Careful What You Wish For

Who will pay the cost associated with filings? Ultimately paid by consumers Filing/cancellation/refiling fees Automation MCS-90 claims outside the policy contract May force private owners to give up trucks

Where is the safety imperative to justify the cost?

Triple the current number of filings (ILCC) States would be responsible


A Solution In Search of a Problem

NO demonstrated pattern of inadequately insured private motor carriers

Different exposures Government transformation of private insurance

contracts into surety bonds Additional cost ultimately borne by consumers No apparent safety imperative or incentive to

justify the additional costs and exposures


Insurance Filings and Private Motor Carriers

Insurance Filings Should Not Extend to Private Motor Carriers

Dave GoldenNCSTS Annual Meeting

June 9, 2008

Documents

© 2008 Property Casualty Insurers Association of America A Truck is a Truck is a Truck? Not Necessarily Why Insurance Filings Should Not Extend to Private