[Federal Register Volume 60, Number 63 (Monday, April 3, 1995)] [Rules and Regulations] [Pages 16808-16811] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 95-8093] ======================================================================= ----------------------------------------------------------------------- INTERSTATE COMMERCE COMMISSION 49 CFR Parts 1043 and 1084 [Ex Parte No. MC-223] Electronic Filing of Surety Bonds, Trust Fund Agreements, Insurance Certificates, and Cancellations AGENCY: Interstate Commerce Commission. ACTION: Final rule. ----------------------------------------------------------------------- SUMMARY: The Commission modifies its regulations to permit the electronic [[Page 16809]] filing of surety bonds, trust fund agreements, certificates of insurance and cancellations. The availability of electronic filing constitutes an additional option; insurers desiring to continue to file the prescribed printed forms may do so. The electronic filing option should assist insurers that make large numbers of filings and permit the Commission to process these filings more efficiently. EFFECTIVE DATE: This rule is effective May 3, 1995. FOR FURTHER INFORMATION CONTACT: Patricia A. Burke, (202) 927-5520, or James W. Greene (202) 927-5612. [TDD for the hearing impaired: (202) 927-5721]. SUPPLEMENTARY INFORMATION: By notice of proposed rulemaking (NPR) served December 6, 1994, and published at 59 FR 62705 (1994), we proposed rules to provide for the electronic filing of surety bonds, trust fund agreements, certificates of insurance and cancellations. Comments were received from 10 interested parties,1 all of which generally favored the proposal. \1\ American Insurance Association (AIA); Cargo Liability Bureau, Inc. (CLBI); Central Analysis Bureau, Inc. (Central); Continental Insurance (Continental); Fireman's Fund Insurance Company (Fireman's Fund); Great West Casualty Company (Great West); International Brotherhood of Teamsters (IBT); Minnesota Department of Transportation (Minnesota); Northland Insurance Companies (Northland); and The Surety Association of America (Surety). --------------------------------------------------------------------------- While our proposal contemplated electronic filing as an additional option, we requested comments regarding whether electronic filing should be made mandatory. All of the commenters that addressed this issue stated that electronic filing should not be mandatory. They indicated that the cost to set up electronic filing procedures might be too high for low-volume filers, and that, if electronic filing were mandated, such filers might stop offering the affected coverages, which would reduce competition in the field. A voluntary system, on the other hand, would encourage competition and help hold down costs ultimately paid by the public, which commenters contend is consistent with legislative intent and sound public policy. Upon review of the comments, we have decided to make electronic filing optional, as envisioned in the proposed rule. Minnesota and AIA suggest that the Commission consider a more sophisticated system. Minnesota would like to see a system using electronic data interchange (EDI) in which insurance providers would post insurance messages to a network where they could be pulled up by any interested party, including the Commission and state regulatory bodies. AIA suggests that a more interactive system, which could notify filers immediately when there is a problem with a filing, would allow problems to be corrected more quickly and would benefit the public, the Commission, motor carriers and insurers. We agree that additional functionality would be desirable; however, as pointed out in the NPR, our insurance data base is part of a much larger system, and our limited financial resources do not permit a larger development effort at this time. The system we propose will produce a number of immediate benefits and could facilitate the subsequent development of a more comprehensive system. Certain of the enhancements for which these commenters indicate a need will be achieved, at least in part, with the system we propose. CLBI states that a report showing the number and type of transactions transmitted and received by the Commission is desirable at the time of transmission, and that the value of such information is significantly reduced if it is not available until the monthly billing cycle. The system we propose will give filers the option to request and receive a report showing all transactions received in each transmission.2 While the report will not identify those transactions which have deficiencies that might result in their subsequent rejection, the process of identifying deficient transactions to the filers will be speeded up by eliminating the requirement to manually process the printed forms and enter the information on the data base.3 \2\ Northland indicates that it interprets our proposed rule as allowing insurers to file a ``batch'' of filings (i.e., multiple transactions in a single transmission) in one transmission. Northland is correct. \3\ AIA and Central indicate a need for more rapid notification of accepted filings. Electronic filing will be helpful in this regard by reducing the manual effort required to prepare statements. --------------------------------------------------------------------------- Surety requests that the surety company's bond number be included in the Commission's data base. The proposed rule contained a field for an insurance policy number, and we are modifying it to allow a bond number to be included in that field for surety bond filings. AIA expresses concern that we are mandating the disclosure of insurance policy numbers in the electronic filing system. The prescribed printed certificates currently contain a field for the insurance policy number, and we accept printed filings only if this field is completed. We will follow the same procedure for electronic filings. Fireman's Fund requests that we allow filings on computer tapes or diskettes where telephone connections may not be feasible. We will not provide for such filings at this time. The dial-up connection contemplated in our proposed rule does not impose extensive equipment requirements, and we do not anticipate that it will impose a significant burden on insurers desiring to file electronically. Should experience indicate otherwise, we will consider additional options at a later date.4 \4\ Fireman's Fund also suggests a transition period of not less than two years; however, since electronic filing will be voluntary, we see no need to impose a lengthy transition period. --------------------------------------------------------------------------- We indicated in the NPR that we were considering the option of allowing insurers to establish prepaid accounts from which filing fees would automatically be deducted, as a way to reduce costs to both insurers and the Commission. Only two commenters addressed this issue: Fireman's Fund stated that if such accounts are established they should be voluntary, and that it was uncertain whether it would use them; and Northland stated that it would not favor such an arrangement because it raised serious concerns relating to the reconciliation of accounts. We will not take any action to establish such accounts at this time.5 \5\ We would point out, however, that any insurer desiring to establish a prepaid account can do so, in any event, simply by prepaying its account. Where a credit balance exists, our billing system will apply the credit (or portion thereof) against current charges. --------------------------------------------------------------------------- We also indicated in the NPR that electronic filing would be done through the transmission of American Standard Code Information Interchange (ASCII) delimited files. After further analysis, however, we have determined that fixed field records will be preferable. We have determined that we will be able to accept transmissions up to 14400 baud, rather than the 2400 baud rate indicated in the NPR, and, given the relatively small volume of data to be transmitted in each session, we do not believe fixed field records will add appreciably to transmission time. We have added start field and end field columns to the description table contained in subsection 1043.12(c) to further explain the format. AIA raises several questions regarding how the system will operate. We anticipate that electronic filings received before the close of a business day will be processed overnight.6 During processing, error-free transactions will be accepted, transactions containing certain [[Page 16810]] designated errors will be rejected, and questionable transactions will be queued for review by staff the next business day. During the review process, the questionable transactions will either be reviewed and accepted, modified and accepted, or rejected. Where a rejection is generated by the system, we anticipate that a rejection letter will be computer-generated the business day after the filing is received. Where a rejection is generated as a result of the staff review, we anticipate that it will generally be mailed to the filer by the third business day after the filing is received.7 A listing of accepted filings will be transmitted to the filer with the monthly statement. Where changes are made to the filings, including cancellation notices, to make them acceptable, those changes will be indicated on the listing. \6\Dial-up access to the system will allow filings to be made 24 hours a day, 7 days a week (except for scheduled maintenance). \7\Filings reinstating insurance coverage will be handled in the same manner as new filings. --------------------------------------------------------------------------- AIA indicates that at least one insurer desires billing to its branch offices when filings originate from those offices. This can be accomplished by establishing a separate account for each branch. In other instances, insurers apparently wish to be billed at their home offices regardless of which branch makes the filing. The system will support this procedure also, by providing for a two-position branch suffix in connection with the insurer's account number. AIA and Central also are concerned that the relationship of the electronic filing program to the Single State Registration System (SSRS) is not clear. Central comments that its reading of the Commission's SSRS regulations finds no provision for the electronic receipt of insurance filings, in lieu of hard-copy filings, by the registration states, and that, therefore, it would appear that insurers would have to prepare a hard copy of the ICC filing or cancellation form, a process that would nullify many of the advantages to the insurance industry of the electronic filing system. Under 49 CFR 1023.4, a motor carrier is required to file or cause to be filed a copy of its proof of public liability security ``submitted to and accepted by the Commission under 49 CFR part 1043 * * *'' At the time the regulation was adopted, the Commission accepted only paper filings. While there may prove to be a need specifically to modify the SSRS regulations in the future, we believe that carriers can comply with the SSRS requirements by having their insurance company file either electronically with the registration state or file a ``hard copy'' of the electronic transaction, rather than completing a prescribed paper form. We remind insurance companies that, in any event, they must have the capability of producing duplicate originals of any filing made electronically. While we are making the electronic filing regulations effective in 30 days, we do not anticipate being able to accept the first electronic filings until approximately August 1, 1995. Our staff is currently developing the system, and we expect to have the necessary instructions and materials available to potential users of the system by July 1, 1995. During July, we will work with filers to test the system prior to actual usage. Persons desiring to utilize the Commission's electronic insurance filing capability should contact: Ms. Patricia A. Burke, Chief-- Insurance, Section of Operations, Insurance and Tariffs, Office of Compliance and Enforcement, Interstate Commerce Commission, Washington, DC 20423. Regulatory Flexibility This action merely provides filers with an optional way to satisfy existing regulatory requirements. It will not have a significant impact on a substantial number of small entities. Environmental Statement This action will not significantly affect either the quality of the human environment or the conservation of energy resources. List of Subjects 49 CFR Part 1043 Insurance, Motor carriers, Surety bonds. 49 CFR Part 1084 Freight forwarders, Insurance, Surety bonds. Decided: March 20, 1995. By the Commission, Chairman McDonald, Vice Chairman Morgan, Commissioners Simmons and Owen. Vernon A. Williams, Secretary. For the reasons set forth in the preamble, title 49, chapter X, parts 1043 and 1084 of the Code of Federal Regulations are amended as follows: PART 1043--SURETY BONDS AND POLICIES OF INSURANCE 1. The authority citation for part 1043 continues to read as follows: Authority: 49 U.S.C. 10101, 10321, 11701, 10927; 5 U.S.C. 553. 2. A new Sec. 1043.12 is added to read as follows: Sec. 1043.12 Electronic filing of surety bonds, trust fund agreements, certificates of insurance and cancellations. (a) Insurers may, at their option and in accordance with the requirements and procedures set forth in paragraphs (a) through (d) of this section, file forms BMC 34, BMC 35, BMC 36, BMC 82, BMC 83, BMC 84, BMC 85, BMC 91, and BMC 91X electronically, in lieu of using the prescribed printed forms. (b) Each insurer must obtain authorization to file electronically by registering with the Commission. An individual account number and password for computer access will be issued to each registered insurer. (c) All files to be transmitted must be in an ASCII fixed format, i.e., all records must have the same number of fields and same length. The record layouts for electronic filing transactions are as described in the following table: [[Page 16811]] Electronic Insurance Filing Transactions ---------------------------------------------------------------------------------------------------------------- Required F=filing Start End Field name Number of positions Description C=cancel field field B=both ---------------------------------------------------------------------------------------------------------------- Record type.............. 1 Numeric............... 1=Filing B 1 1 2=Cancellation Insurer number........... 8 Text.................. ICC Assigned Insurer B 2 9 Number (Home Office) With Suffix (Issuing Office), If Different, e.g. 12345-01. Filing type.............. 1 Numeric............... 1 = BI&PD B 10 10 2 = Cargo 3 = Bond 4 = Trust Fund ICC docket number........ 8 Text.................. ICC Assigned MC or FF B 11 18 Number, e.g., MC000045. Insured legal name....... 120 Text................ Legal Name.............. B 19 138 Insured d/b/a name....... 60 Text................. Doing Business As Name B 139 198 If Different From Legal Name. Insured address.......... 35 Text................. Either street or mailing B 199 233 address. Insured city............. 30 Text................. ........................ B 234 263 Insured state............ 2 Text.................. ........................ B 264 265 Insured zip code......... 9 Numeric (Do not include dash if B 266 274 using 9 digit code). Insured country.......... 2 Text.................. (Will default to US).... B 275 276 Form code................ 10 Text................. BMC-91, BMC-91X, BMC-34, B 277 286 BMC-35, etc. Full, primary or excess 1 Text.................. If BMC-91X, P or E = F 287 287 coverage. indicator of primary or excess policy; 1 = Full under Sec. 1043.2(b)(1); 2 = Full under Sec. 1043.2(b)(2). Limit of liability....... 5 Numeric............... $ in Thousands.......... F 288 292 Underlying limit of 5 Numeric............... $ in Thousands (will F 293 297 liability. default to $000 if Primary). Effective date........... 8 Text.................. MM/DD/YY Format for both B 298 305 Filing or Cancellation. Policy number............ 25 Text................. Surety companies may B 306 330 enter bond number. ---------------------------------------------------------------------------------------------------------------- (d) All registered insurers agree to furnish upon request to the Commission a duplicate original of any policy (or policies) and all endorsements, surety bond, trust fund agreement, or other filing. PART 1084--SURETY BONDS AND POLICIES OF INSURANCE 3. The authority citation for part 1084 continues to read as follows: Authority: 49 U.S.C. 10102, 10321 and 10927; 5 U.S.C. 553. 4. A new Sec. 1084.10 is added to read as follows: Sec. 1084.10 Electronic filing of surety bonds, certificates of insurance and cancellations. Insurers may, at their option and in accordance with the requirements and procedures set forth at 49 CFR 1043.12, file certificates of insurance, surety bonds, and other securities and agreements electronically. [FR Doc. 95-8093 Filed 3-31-95; 8:45 am] BILLING CODE 7035-01-P