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TTD Supports Increasing the Motorcoach Insurance Requirement

By Admin

Mr. Sean P. Gallagher
Office of Policy
Federal Motor Carrier Safety Administration
Department of Transportation
1200 New Jersey Avenue SE
Washington, DC 20590

 RE:   Financial Responsibility for Motor Carriers, Freight Forwarders, and Brokers
Advanced Notice of Proposed Rulemaking
Docket No. FMCSA-2014-0211
RIN 2126-AB74
Federal Motor Carrier Safety Administration

Dear Mr. Gallagher:

On behalf of the Transportation Trades Department, AFL-CIO (TTD), I write to comment on the Federal Motor Carrier Safety Administration’s (FMCSA) Advanced Notice of Proposed Rulemaking (ANPRM) on Financial Responsibility for Motor Carriers, Freight Forwarders, and Brokers. By way of background, TTD consists of 32 affiliate unions that represent workers in all modes of transportation, including those who operate commercial motor vehicles (CMVs) for passenger motor carriers. We therefore have a vested interest in this rulemaking.[1]

At the outset, we express support for FMCSA’s consideration of updating its existing standard that requires motor carriers to maintain a specified minimum level of financial responsibility to provide coverage for public liability and property damage resulting from a commercial bus accident. TTD and our affiliates have a long history of advocating for strengthening market entry standards to help ensure only upstanding motor carriers are granted operating authority. Just last week, TTD’s Executive Committee renewed the call for improving these standards, urging FMCSA to increase the current minimum level of financial responsibility.[2] We echo that statement in our comments that follow.

The deregulation of the 1980s deteriorated motorcoach entry standards, making it difficult to bar unsafe carriers from entering the market. In recent years, FMCSA has undertaken successful enforcement efforts to identify and remove unsafe carriers from the roadways. And while we believe those efforts are important to safety, more must be done to prevent bad actors from gaining market access in the first place.

When Congress imposed the financial liability requirement in 1982, it believed the standard would improve safety by encouraging motor carriers to implement strong safety programs to keep their premiums at low rates. But the current standard (49 CFR Part 387) remains unchanged from the level that FMCSA set in 1985, failing to account for inflated medical costs and other crash-related expenses. According to FMCSA’s report to Congress, adjusting the current minimum level for decades of inflation would increase the current minimum from $5 million to over $21 million for a large passenger carrier.[3] Instead, the minimum has remained flat and the ability of insurance to cover the costliest of crashes has decreased, leaving the public exposed to unnecessary risks when serious bus accidents occur.

Congress likely established the financial requirement with the expectation that the minimum would provide coverage up to a certain level, and that beyond that limit would extend only the most expensive and rarest accidents. However, decades of inflation and decreased real value of carrier insurance not only means that crashes are more expensive today than in the 1980s, but that a growing number of crashes exceed the limit for which insurance can provide coverage. As a result, passengers involved in a greater number of dangerous crashes many not receive the compensation they deserve.

We are encouraged by FMCSA’s ANPRM, and we urge the agency to issue a rulemaking that improves motorcoach safety by increasing the insurance requirement to a level capable of providing adequate coverage. Restoring the deterrent effect of the minimum by increasing it to modern levels will encourage insurance companies to diligently investigate prospective motor carriers to ensure they are safe operations. Likewise, carriers will once again be incentivized to maintain safe operations to keep their premiums low and reduce the chances of being dropped by their provider for poor safety performance. Additionally, low-cost, risky carriers that notoriously pay their workers absurdly low wages and evade safety standards could be eliminated when insurers discover their atrocious safety records and egregious business practices.

We appreciate the opportunity to comment on this important ANPRM, and we hope they will be taken into consideration.

Edward Wytkind

[1] Attached is a complete list of TTD’s 32 affiliated unions.
[2] TTD’s Executive Committee adopted the policy statement entitled, “Time to Raise the Bar on Market Entry in Motorcoach Industry” on February 22, 2015. The policy statement is attached.
[3] Federal Motor Carrier Safety Administration’s report: “Examining the Appropriateness of the Current Financial Responsibility and Security Requirements for Motor Carriers, Brokers, and Freight Forwarders – Report to Congress. A Report Pursuant to Section 32104 of the Moving Ahead for Progress in the 21st Century Act (P.L. 112-141).” April 2014, page 11.

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