A final surface transportation bill will be signed by President Obama this week, and will become law. Among other mandates, the bill increases the minimum bond required of freight/transport brokers. The freight broker surety bond minimum will change from the current $10,000 to $75,000. The bill also stipulates that surety providers must notify the U.S. Department of Transportation of any surety cancellation, to be posted to the DOT website, and must pay uncontested claims within thirty days. In the event of a broker or forwarder business failure, providers are required to publicly advertise for claims for sixty days following notification of business failure, and surety cancellation. The new requirements are problematic for sureties and their underwriters. First, this class of surety business has always been a pain in the ass for sureties to administrate. Even the best brokers seem to receive demand notices. Second, sureties won’t be able to get out from under these liabilities without an onerous notification requirement and then a sixty day wait. Third, the pool of applicants that will qualify for $75,000 of what is essentially a financial guarantee, will be very limited. These factors and others make the BMC-84 class unattractive to sureties. Surety One, leader in surety will continue to offer the BMC-84 bond, however new conditions and qualifications will apply. Call (787) 333-0222 or email Underwriting@SuretyOne.com for further information about how you may obtain the new $75,000 BMC-84 freight broker bond.
