[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,<SUP>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.<SUP>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.<SUP>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.<SUP>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.<SUP>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.<SUP>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.<SUP>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