Commuter Rail Coalition – The Liability Insurance Crisis: RAIL GROUP ON AIR PODCAST

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

Commuter Rail Coalition Vice Chair Mike Noland (South Shore Line) and Director of Government Affairs John Cline (Cline Strategic Consulting) discuss how the decidedly unsexy issue of excess liability insurance has become an existential threat to commuter railroads with Railway Age Editor-in-Chief William C. Vantuono. They also share the innovative solution in need of bi-partisan support as it’s being shopped on Capitol Hill.

“The CRC is advocating for a change to the current provision in law,” notes John Cline. “The federal liability cap under Section 28103(a)(2) of title 49, US Code, is adjusted every five years to reflect changes in the Consumer Price Index.  Under current law, the Secretary of Transportation provides public notice of such adjustment. However, the law provides that the adjustment shall be effective 30 days after such notice. This is not a sufficient amount of time for commuter railroads to secure newly required levels of insurance coverage, and it should be increased to at least 180 days in order to allow commuter agencies to seek bids and secure coverage. In addition, current law that requires the application of the Consumer Price Index ensures that the cap will always increase. An alternative approach must be employed whereby an analysis of market conditions can be evaluated to determine if the cap should be increased or even decreased based on loss experience and other market conditions. And a five-year window is insufficient to properly measure market conditions; it should be no less than every ten years.”

A CRC white paper, Overview: Excess Insurance Markets, addresses the current state of the excess insurance markets vis-à-vis the commuter rail industry:

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