Insurers Urge DOT to Add the ‘Nuts and Bolts’ to Operational Plan

January 16, 2002

The National Association of Independent Insurers (NAII) has reiterated its support for the U.S. General Accounting Office’s (GAO) call for the Department of Transportation (DOT) to develop a detailed, operational plan to ensure that Mexican carriers comply with U.S. safety standards under the North American Free Trade Agreement (NAFTA).

“In the spring of 2001 NAII testified that the ‘nuts and bolts’ of an effective, operational plan for implementing safety inspections at Mexican border crossings was still lacking,” said NAII’s Director of Commercial Lines David Golden. “The GAO now says that an operational plan is still not in place. Time is running out. With a limited number of border crossings expected to be open for commercial truck traffic by May, 2002 and with funding from the 2002 Transportation bill available, NAII again urges DOT to move forward by specifying a ‘point by point’ plan for truck safety inspections and quickly implementing it for the safety of all Americans who travel our nation’s highways.”

NAII’s major concern over the last five years has been that an adequate number of safety inspectors be hired and trained to provide effective inspections of Mexican trucks entering the United States to prevent the creation of hazardous driving situations for American motorists. The 2002 Transportation bill also requires DOT to determine the actual number of inspectors needed for quality safety checks.

“NAII believes this mandate for a standard on the necessary number of inspectors at each border is a major win-win for all concerned parties because it guarantees that safety inspections will remain a real priority as NAFTA moves forward,” Golden added.

In its report, the GAO also addressed the cost and availability of insurance for Mexican carriers citing the NAII as an expert source.

“Industry sources estimate that approximately six to ten U.S. insurance firms are now providing insurance coverage to Mexican fleets whose trucks cross into the United States. We believe that initially Mexican trucking companies will pay somewhat higher premiums for coverage with American firms than the norm because they will be considered new ventures from an underwriting perspective. In many respects, writing Mexican trucks will be just like writing brand new businesses,” Golden explained. “However, as the underwriters gain more knowledge and greater access to information on the financial and safety records of Mexican trucking firms, and as the Mexican truckers gain experience in the U.S., their rates should decline because their claim activity should become more predictable.”

Golden added that more surplus lines companies and larger U.S.-based, multinational insurers probably will enter the market as it matures and the demand for insurance for Mexican trucking companies increases.

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