This started out as a very quiet month in the industry.  Most of us are focusing on summer and allowing things to quiet down. Then we got to the end of the month and there were a few very significant events which should not slip quietly by.  So before you head to the beach we report the following:

DEMISE OF THE BMC-32 ENDORSEMENT – To the surprise of many in the insurance and transportation industry the FMCSA has decided to do away with mandatory financial responsibility for cargo insurance for many carriers – the BMC-32 endorsement is going away.  The FMCSA has issued its final rule, effective March, 2011, that certain motor carriers operating in interstate commerce will no longer be required to have an endorsement in place in order to operate.  The shipping industry was directed by the FMCSA to protect itself by insuring that the carriers with whom they did business are adequately insured.  Household goods carriers and household good freight forwarders will continue to be subject to the filing requirement.  It is currently unknown what effect the existing filings will have, and whether insurers will be required to cancel all filings and remove the endorsement from existing policies.  We will certainly keep you posted as we learn more about this significant development. A copy of the final rulemaking can be viewed here.

SUPREME COURT CARGO DECISION – The issue of whether an inland carrier can reap the benefits of an international through bills of lading has been the subject of tremendous litigation over the years.  In a rare case, the Supreme Court of the United States has issued an opinion on the issue, putting to rest many of the questions.  In the particular case decided by the high court, the shipment moved under a through bill of lading which required that suit against the parties be commenced in a foreign jurisdiction.  The court rejected the plaintiff’s position that the Carmack Amendment applied to the inland transportation and that the foreign selection clause was a violation of the rights and remedies afforded under Carmack.  This decision has serious consequences for shippers and carriers as it would appear that forum selection clauses, and clauses extending limitations of liability to inland carriers will not be subject to attack any longer. It is interesting that the dissent to this opinion was led by the newest Justice, Sonya Sotomayor.  As you may recall Justice Sotomayor hails from the 2nd Circuit here in New York. The Second Circuit was the court which led the attack on these clauses under the Carmack Amendment. You can read the whole decision here (Kawaski Kisen Kaisha v. Regal Beloit).
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It was great seeing so many of you in Williamsburg, VA last week at the IMUA annual meeting.  As always the meeting was a great success.  Our congratulations and warm wishes go out to Ron Thorton, who announced his retirement as President of the IMUA.  He will be a tough act to follow and we wish him much success in his post retirement career as Grandfather Extraordinaire.

Since I am heading off for a long awaited family trip to Ireland this report will be short this month.  Too much to do and too little time to get it done before I head out. So I report:

INSURANCE SURVEY – NIP Group, Inc. released the results of the Transportation Insurance Pricing Survey (TIPS™) for the first quarter of 2010. Over 95% of the respondents reported that during the 1st quarter, the transportation insurance market was flat or softer when compared to the fourth quarter of 2009. More than half of respondents believe that underwriting capacity has increased as more insurers have entered the transportation market. You can read the report at here.

PRE-EMPLOYMENT SCREENING – The FMCSA is now allowing access to the safety data base for screening driver applicants. This information is available only to prospective employers. The internet based program allows access to 5 years of an applicant’s crash history and 3 years of inspection history.  The driver must give approval before the information is released.  Underwriters can begin to inquire whether their insureds are utilizing this system to vet drivers.

HOURS OF SERVICE – The FMCSA extended the hours of service for carriers transporting equipment, materials and supplies to help clean up the oil spill.  The exemption applies to transportation within Louisiana, Mississippi, Alabama and Florida, along with any portion of the trip outside those areas.  Carriers or drivers who are placed out of service can not claim the benefit of this extension. In other news the American Transportation Research Institute released its report on its crash survey and found that the majority of commercial vehicle crashes occur during the first eight hours of driving. The analysis, based on hours-of-service surveys from about 260 motor carriers, found that 87% of crashes were in the first eight hours, while 12% occurred in the 9th to 11th hours.  A copy of the report can be viewed here.

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