Commuter Railroads Face Late March Insurance Deadline

Commuter railroads are facing a March 27 deadline to purchase new liability insurance coverage of at least $323 million.

The U.S. Department of Transportation said that is $28 million more than is currently required.

The insurance mandate is required by the Fixing America’s Surface Transportation Act of 2015.

During a March 10 hearing of the House Committee on Transportation and Infrastructure, Subcommittee on Railroads, Pipelines, and Hazardous Materials, Virginia Secretary of Transportation Sharon Valentine said some transit agencies are facing challenges getting an insurance policy before the deadline.

The Commuter Rail Coalition said commuter railroads recently have experienced dramatic premium increases, despite having no losses, and now face the prospect of fewer insurers in the market willing to write policies, thus threatening their ability to operate.

CRC said insurers that provided coverage in the past “have endured losses due to wildfires and hurricanes for other industries and have made a strategic decision to withdraw in part or in whole from the excess liability market; many are no longer writing policy coverages.”

Railroads “have struggled for the past several years to obtain sufficient coverages that are oftentimes provided through multiple layers of coverage provided by numerous insurers. As fewer insurers offered policy coverage, premiums were driven up, sometimes by more than 100 percent in annual increases.”

Valentine said a coalition of commuter railroads is working with the federal government to extend the deadline or obtain congressional authorization to allow commuter railroads to secure additional liability coverage in time to meet that deadline.

CRC has asked U.S. Transportation Secretary Pete Buttigieg to extend the March 27 deadline by a minimum of 120 days.

During another congressional hearing last November, Paul P. Skoutelas, president of the American Public Transportation Association, said his group is researching how liability costs have increased for the commuter rail industry and seeking to determine the reasons for the increases.

Skoutlelas said during that hearing that federal law provides a backstop to cover losses above liability limits where the insurance marketplace has become noncompetitive and premiums unaffordable.

APTA is developing a legislative proposal to reduce liability insurance premium costs for commuter railroads.

Unions Want FRA to Act on Coronavirus

Two railroad unions have asked the Federal Railroad Administration to take action to protect rail workers from the coronavirus.

The Brotherhood of Locomotive Engineers and Trainmen and the SMART Transportation Division have asked the FRA to issue guidelines directed at railroads, their employees and passengers.

“We and other rail labor organizations take this issue very seriously, and we have been monitoring it closely,” BLET President Dennis Pierce and SMART-TD President Jeremy Ferguson wrote in a letter to FRA Administrator Ronald Batory.

In a related development, executives at three Class 1 railroads canceled their planned presentations at the J.P. Morgan Industrials Conference in New York City due to concerns about the spread of the coronavirus.

The executives from Norfolk Southern, Canadian National and Union Pacific said they would not be speaking at the conference.

Also related to the coronavirus pandemic, the Commuter Rail Coalition has warned that the virus outbreak could disrupt efforts to complete installation of positive train control equipment.

The coalition said that was because of factory closings in China, where the virus originated. “Vendors have so far only alerted agencies to the threat, and agencies are exploring whether they have options for alternative sources for any components that might be cut off,” said KellyAnne Gallagher, executive director of the coalition.