WASHINGTON — Canadian trucking insurers soon may not have to link with an American counterpart to underwrite Canadian carriers operating south of the border.

The Federal Motor Carrier Safety Administration (FMCSA) is considering a petition from the Canadian government and the Property Casualty Insurers of America to eliminate the requirement for Canadian insurers to legally ensure their policies, and thereby reduce the additional costs for their trucking clients.

Canadian carriers say American insurance rules
place them at a competitive disadvantage

Presently, Canadian cross-border carriers must obtain insurance through a Canada-licensed insurer, which enters into a “fronting agreement” with a U.S. insurer, whereby the latter permits the Canadian insurer to sign “Form MCS-90” as its agent, and the entire risk is contractually “reinsured” back to the Canadian insurer.

Carriers can also obtain two separate insurance policies, one valid in Canada written by a Canadian insurer and one valid in the United States written by an American one — although it’s a much less common option.

“Canada believes the FMCSA’s current regulations place Canada-domiciled motor carriers operating in the United States at a competitive disadvantage with (American) carriers,” says the FMCSA in an advance notice of proposed rulemaking.

“…The result of these requirements is an additional administrative burden, inconvenience, and cost not faced by U.S. carriers operating into Canada.”

About 17,000 Canadian carriers with 184,000 power units operate in the U.S.

If approved, the amendment could 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.