1. © 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

2. © 2008 Property Casualty Insurers Association of America 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

3. © 2008 Property Casualty Insurers Association of America Interstate Financial Responsibility  Incentive for safe operation (49 CFR 387.1)  Appropriate level of financial responsibility  DOT Secy. may require F/R Not must – (H.R. 3 of 2005)  Any evidence of more accidents involving inadequately insured private motor carriers than for-hire?

4. © 2008 Property Casualty Insurers Association of America 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

5. © 2008 Property Casualty Insurers Association of America 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.

6. © 2008 Property Casualty Insurers Association of America 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

7. © 2008 Property Casualty Insurers Association of America 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

8. © 2008 Property Casualty Insurers Association of America 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

9. © 2008 Property Casualty Insurers Association of America 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

10. © 2008 Property Casualty Insurers Association of America Insurance Filings and Private Motor Carriers Insurance Filings Should Not Extend to Private Motor Carriers Dave Golden NCSTS Annual Meeting June 9, 2008