WASHINGTON — Canadian truckers could for the first time buy Canadian insurance to haul into the U.S., according to a recent proposal of rulemaking issued by the Federal Motor Carrier Safety Administration.

Presently, Canada-domiciled trucking carriers must maintain insurance policies issued by U.S. insurance companies either directly (and thereby maintain two separate polices) or through a "fronting agreement" where the risk is "reinsured" back to the Canadian provider by the American issuer.

The latter option is the most common, but adds expense and administration costs to the 9,000 or so Canadian carriers that haul down south. American carriers operating in Canada, incidentally, don’t face the same burdens.

Now, thanks to lobbying by the Canadian Trucking Alliance and provincial associations, FMCSA has accepted a petition from the Canadian government and proposed an amendment to 49 CFR Part 387 ("Minimum Levels of Financial Responsibility for Motor Carriers"), which would eliminate the need for Canadian insurance companies to link with a U.S. insurance company.

"FMCSA believes the proposed rulemaking is needed to provide reciprocity between the U.S. and Canada and that it is inappropriate to impose on Canada-based carriers and insurance companies requirements that Canada does not impose on U.S.-based motor carriers and insurance companies," the DOT agency stated in its proposal.

The new rule would not affect the required minimum levels of financial responsibility that carriers must now maintain, notes FMCSA, which estimates that the change would result in savings of about $30,000 per carrier over the next 10 years.

Except for one group, stakeholder commentators generally agree with the amendments requested by Canada.

And although the National Association of Professional Surplus Lines Offices (NAPSLO) expressed concern that changes may expose U.S. carriers and motorists to ‘a potential increase in risk in connection with foreign carriers," FMCSA does not believe "maintaining the status quo" is appropriate. 

Besides, "all the evidence points to claims involving Canada-domiciled carriers would be honored by Canadian insurers." The on-going practice of fronting arrangements alone is a "strong indicator that Canadian insurance companies are fully capable of providing the required levels of financial responsibility," counters FMCSA.

The public can comment on this proposed rule until Aug. 10 2009, online at www.regulations.gov In the Comment or Submission section, type Docket ID Number ‘FMCSA–2006–26262’, select ‘Go’.