FHWA To Review Self-Insurance

The review was prompted by recent bankruptcies of three self-insured motor carriers. The agency did not identify the carriers.

"The FHWA considers any self-insured carrier's financial failure to be a breach of the integrity of the program, as well as imposing an unanticipated and unjustifiable risk on the public," the agency said it a May 5 Federal Register notice.

To alleviate these concerns, FHWA said it will seek comment on a "minimum financial fitness standard." Under the proposed standard:

lI>Carriers must generate from operations sufficient cash flow to pay twice the amount of self-insured claims.

li>Carriers that fail to meet this standard would be required to provide adequate collateral to cover their outstanding claims liability.

li>Unfunded letters of credit no longer would be accepted.

li>Carriers would have to submit an independent annual certified claims report.

According to FHWA, virtually none of the carriers authorized to self-insure maintain sufficient collateral to cover outstanding claims. That is why it is critical that carriers have sufficient cash flow, the agency said.

For the full story, see the May 17 print edition of Transport Topics. Subscribe today.