Canada petitions U.S. to help Canadian trucking insurers compete

The Canadian government has petitioned the U.S. Federal Motor Carrier Safety Administration (FMCSA) to allow Canadian trucking insurers to underwrite Canadian carriers operating south of the border without having to link with an American counterpart, according to a report by Today’s Trucking Online.
The Property Casualty Insurers of America has joined with the Canadian government in submitting the petition to the FMCSA.
According to Today’s Trucking Online, Canadian carriers believe a U.S. requirement for Canadian insurers to legally ensure their policies places them at a competitive disadvantage with U.S. trucking insurers.
“Presently, Canadian cross-border carriers must obtain insurance through a Canada-licensed insurer, which enters into a ‘fronting agreement’ with a U.S. insurer,” Today’s Trucking Online reports. Essentially, the U.S. insurer “permits the Canadian insurer to sign ‘Form MCS-90’ as its agent, and the entire risk is contractually ‘reinsured’ back to the Canadian insurer.”
A separate option is to obtain two separate insurance policies one valid in Canada (written by a Canadian insurer) and another valid in the United States, (written by an American carrier). The two-policy option is “a much less common option,” Today’s Trucking Online reports.
About 17,000 Canadian carriers with 184,000 power units operate in the U.S., the report says.
If approved, the amended rule might include a requirement for a Canadian insurer to designate an official who can serve in any proceeding “at law or equity brought in any state in which the motor carrier operates,” the petition suggests.
“FMCSA recognizes the importance of considering these requests, and has granted the petitions by initiating this rulemaking proceeding to solicit public comment on the safety, legal, and economic ramifications of Canada’s proposal,” the agency stated, as reported by Today’s Trucking Online.