Commuter Rail Insurance Crisis Solution Gaining Momentum

Written by William C. Vantuono, Editor-in-Chief
image description

The American Public Transportation Association has added its voice to the chorus of commuter rail stakeholders in addressing the liability insurance crisis—first identified and acted upon by the Commuter Rail Coalition—facing operators.

On Aug. 20, APTA released a report, Recommendation on Commuter Rail Liability Insurance, that recommends establishing a Commuter Rail Insurance Program at the U.S. Department of Transportation to provide insurance to agencies that operate commuter rail services in the U.S.

Download APTA’s Report:

The report, APTA said, “outlines how the commuter rail insurance market has become significantly more expensive and has much less capacity in terms of insurers willing to participate. As a result, agencies have been forced to turn to foreign markets for commuter rail insurance. Moreover, the report found that the market will not correct or improve on its own without federal involvement. The cost and scarcity of insurance coverage for commuter rail operators threatens the stability of commuter rail services across the country.”

The Commuter Rail Coalition (CRC), an association consisting of 15 commuter rail agencies operating services across the U.S. and representing more than 90% of all commuter rail passengers, asserts that agencies “continue to have difficulty securing sufficient insurance coverage for their operations, despite the industry’s excellent safety record. That is why the CRC is seeking legislation to establish a new federal program that can offer commuter rail agencies excess liability insurance coverage up to the federal liability cap of approximately $323 million, per the FAST Act index.”

Many anticipate that a new infrastructure bill expected to be enacted later this year will add greater demand overall in the excess liability market, likely further impacting insurance market pricing and capacity,” CRC told Railway Age, noting that the Coalition “first alerted the USDOT/Federal Railroad and Transit Administrations (FRA/FTA) in September of 2019 of this important issue by providing industry data and market trends.”

In Fall 2020, CRC inquired after the Trump Administration’s intent with regard to the approach and timing of liability limit indexing (due in Winter 2021, per the FAST Act). FRA signaled that a recommendation had been made to the Office of the Secretary. CRC also worked with brokers/insurers to explore a market-based solution, including a stand-alone meeting and presentation to the full CRC membership.

CRC followed these efforts by communicating its policy priorities to the Biden Administration’s new USDOT leadership. In a March 1 letter to Transportation Secretary Pete Buttigieg, the Coalition pointed to an announced increase in the liability cap, insurance market capacity constraints, and the risk of non-compliance due to these constraints, and requested the Secretary’s intervention to delay implementation. CRC also worked with Sen. Tammy Duckworth’s (D-Ill.) staff to generate signatures on a “Dear Colleague” letter asking Buttigieg to delay implementation, and briefed USDOT’s Office of Intergovernmental Relations on the issue on March 16.

Shortly thereafter, CRC commissioned an Excess Insurance Markets White Paper, described as “a plain-language explanation of events leading to the excess liability insurance crisis document insurers’ retreat from the marketplace.” CRC distributed the White Paper to the press, Congress, and the Administration. The Coalition also assessed its members’ ability to acquire coverage up to the new liability limit, briefed FRA and FTA on the crisis and requested tacit support for CRC’s pursuit of a solution, and briefed House and Senate committees of jurisdiction.

Download CRC’s White Paper:

On June 11, CRC and Railway Age released a Rail Group On Air Podcast outlining the crisis for railroads, including discussion of the current market conditions and the solution advocated by CRC. The Coalition also met twice with Rep. Donald Payne Jr. (D-N.J.), Chairman of the House T&I  Railroads Subcommittee; Payne introduced a “Sense of the House” on the need for Congress to find a solution. A July 12 letter explaining the issue was sent to Senate Banking Committee leadership and all Senators with commuter rail in their districts.

“The recently released report from the American Public Transportation Association, Recommendation on Commuter Rail Liability Insurance, lays out the current market conditions that have caused the hardened market for excess liability coverages and proposes a new federal program that would help stabilize the market and ensure sufficient coverages can be obtained at a reasonable cost,” CRC told Railway Age. “The CRC believes it vitally important that Congress enact this recommended federal program to ensure uninterrupted commuter rail services nationwide. The current bipartisan infrastructure bill that passed in the U.S. Senate does not include a provision establishing this recommended program. The CRC calls on Congress to enact this program as a part of the infrastructure bill.”

Tags: , , , ,