Insurer Reporting Requirements; List of Insurers Required To File Reports, 52291-52294 [E6-14633]

Agencies

• National Highway Traffic Safety Administration
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 71, Number 171 (Tuesday, September 5, 2006)]
[Rules and Regulations]
[Pages 52291-52294]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-14633]



[[Page 52291]]

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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 544

[Docket No.: NHTSA-2006-24175]
RIN 2127-AJ88


 Insurer Reporting Requirements; List of Insurers Required To 
File Reports

AGENCY: National Highway Traffic Safety Administration (NHTSA), 
Department of Transportation (DOT).

ACTION: Final rule.

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SUMMARY: This final rule amends regulations on insurer reporting 
requirements. The appendices list those passenger motor vehicle 
insurers that are required to file reports on their motor vehicle theft 
loss experiences. An insurer included in any of these appendices must 
file three copies of its report for the 2003 calendar year before 
October 25, 2006. If the passenger motor vehicle insurers remain 
listed, they must submit reports by each subsequent October 25.

DATES: This final rule becomes effective on November 6, 2006. Insurers 
listed in the appendices are required to submit reports before October 
25, 2006.

FOR FURTHER INFORMATION CONTACT: Rosalind Proctor, Office of 
International Vehicle, Fuel Economy and Consumer Standards, NHTSA, 400 
Seventh Street, SW., Washington, DC 20590, by electronic mail to 
rosalind.proctor@dot.gov. Ms. Proctor's telephone number is (202) 366-
0846. Her fax number is (202) 493-2290.

SUPPLEMENTARY INFORMATION:

I. Background

    Pursuant to 49 U.S.C. 33112, Insurer reports and information, NHTSA 
requires certain passenger motor vehicle insurers to file an annual 
report with the agency. Each insurer's report includes information 
about thefts and recoveries of motor vehicles, the rating rules used by 
the insurer to establish premiums for comprehensive coverage, the 
actions taken by the insurer to reduce such premiums, and the actions 
taken by the insurer to reduce or deter theft. Pursuant to 49 U.S.C. 
Section 33112(f), the following insurers are subject to the reporting 
requirements:
    (1) Issuers of motor vehicle insurance policies whose total 
premiums account for 1 percent or more of the total premiums of motor 
vehicle insurance issued within the United States;
    (2) Issuers of motor vehicle insurance policies whose premiums 
account for 10 percent or more of total premiums written within any one 
state; and
    (3) Rental and leasing companies with a fleet of 20 or more 
vehicles not covered by theft insurance policies issued by insurers of 
motor vehicles, other than any governmental entity.
    Pursuant to its statutory exemption authority, the agency exempted 
certain passenger motor vehicle insurers from the reporting 
requirements.

A. Small Insurers of Passenger Motor Vehicles

    Section 33112(f)(2) provides that the agency shall exempt small 
insurers of passenger motor vehicles if NHTSA finds that such 
exemptions will not significantly affect the validity or usefulness of 
the information in the reports, either nationally or on a state-by-
state basis. The term ``small insurer'' is defined, in Section 
33112(f)(1)(A) and (B), as an insurer whose premiums for motor vehicle 
insurance issued directly or through an affiliate, including pooling 
arrangements established under state law or regulation for the issuance 
of motor vehicle insurance, account for less than 1 percent of the 
total premiums for all forms of motor vehicle insurance issued by 
insurers within the United States. However, that section also 
stipulates that if an insurance company satisfies this definition of a 
``small insurer,'' but accounts for 10 percent or more of the total 
premiums for all motor vehicle insurance issued in a particular state, 
the insurer must report about its operations in that state.
    In the final rule establishing the insurer reports requirement (52 
FR 59; January 2, 1987), 49 CFR part 544, NHTSA exercised its exemption 
authority by listing in Appendix A each insurer that must report 
because it had at least 1 percent of the motor vehicle insurance 
premiums nationally. Listing the insurers subject to reporting, instead 
of each insurer exempted from reporting because it had less than 1 
percent of the premiums nationally, is administratively simpler since 
the former group is much smaller than the latter. In Appendix B, NHTSA 
lists those insurers required to report for particular states because 
each insurer had a 10 percent or greater market share of motor vehicle 
premiums in those states. In the January 1987 final rule, the agency 
stated that it would update Appendices A and B annually. NHTSA updates 
the appendices based on data voluntarily provided by insurance 
companies to A.M. Best, which A.M. Best \1\ publishes in its State/Line 
Report each spring. The agency uses the data to determine the insurers' 
market shares nationally and in each state.
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    \1\ A.M. Best Company is a well-recognized source of insurance 
company ratings and information. 49 U.S.C. 33112(i) authorizes NHTSA 
to consult with public and private organizations as necessary.
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B. Self-Insured Rental and Leasing Companies

    In addition, upon making certain determinations, NHTSA grants 
exemptions to self-insurers, i.e., any person who has a fleet of 20 or 
more motor vehicles (other than any governmental entity) used for 
rental or lease whose vehicles are not covered by theft insurance 
policies issued by insurers of passenger motor vehicles, 49 U.S.C. 
33112(b)(1) and (f). Under 49 U.S.C. 33112(e)(1) and (2), NHTSA may 
exempt a self-insurer from reporting, if the agency determines:
    (1) The cost of preparing and furnishing such reports is excessive 
in relation to the size of the business of the insurer; and 33112(e)(1) 
and (2),
    (2) The insurer's report will not significantly contribute to 
carrying out the purposes of Chapter 331.
    In a final rule published June 22, 1990 (55 FR 25606), the agency 
granted a class exemption to all companies that rent or lease fewer 
than 50,000 vehicles, because it believed that the largest companies' 
reports sufficiently represent the theft experience of rental and 
leasing companies. NHTSA concluded that smaller rental and leasing 
companies' reports do not significantly contribute to carrying out 
NHTSA's statutory obligations and that exempting such companies will 
relieve an unnecessary burden on them. As a result of the June 1990 
final rule, the agency added Appendix C, consisting of an annually 
updated list of the self-insurers subject to part 544. Following the 
same approach as in Appendix A, NHTSA included, in Appendix C, each of 
the self-insurers subject to reporting instead of the self-insurers 
which are exempted. NHTSA updates Appendix C based primarily on 
information from Automotive Fleet Magazine and Auto Rental News.\2\
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    \2\ Automotive Fleet Magazine and Auto Rental News are 
publications that provide information on the size of fleets and 
market share of rental and leasing companies.
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C. When a Listed Insurer Must File a Report

    Under part 544, as long as an insurer is listed, it must file 
reports on or before October 25 of each year. Thus, any insurer listed 
in the appendices must file a report before October 25, and by each 
succeeding October 25, absent an amendment removing the insurer's name 
from the appendices.

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II. Notice of Proposed Rulemaking

1. Insurers of Passenger Motor Vehicles

    On April 3, 2006, NHTSA published a notice of proposed rulemaking 
(NPRM) to update the list of insurers in Appendices A, B, and, C 
required to file reports (71 FR 16541). Appendix A lists insurers that 
must report because each had 1 percent of the motor vehicle insurance 
premiums on a national basis. The list was last amended in a final rule 
published on July 25, 2005 (70 FR 42505). Based on the 2003 calendar 
year market share data from A.M. Best, NHTSA proposed to remove 
California State Auto Association from Appendix A.
    Each of the 18 insurers listed in Appendix A are required to file a 
report before October 25, 2006, setting forth the information required 
by Part 544 for each State in which it did business in the 2003 
calendar year. As long as these 18 insurers remain listed, they are 
required to submit a report by each subsequent October 25 for the 
calendar year ending slightly less than 3 years before.
    Appendix B lists insurers required to report for particular States 
for calendar year 2003, because each insurer had a 10 percent or 
greater market share of motor vehicle premiums in those States. Based 
on the 2003 calendar year data for market shares from A.M. Best, we 
proposed to remove Nodak Mutual Group (North Dakota) and add Safety 
Group (Massachusetts) to Appendix B.
    The nine insurers listed in Appendix B are required to report on 
their calendar year 2003 activities in every State where they had a 10 
percent or greater market share. These reports must be filed by October 
25, 2006, and set forth the information required by part 544. As long 
as these nine insurers remain listed, they would be required to submit 
reports on or before each subsequent October 25 for the calendar year 
ending slightly less than 3 years before.

2. Rental and Leasing Companies

    Appendix C lists rental and leasing companies required to file 
reports. Based on information in Automotive Fleet Magazine and Auto 
Rental News for 2003, NHTSA proposed to remove Avis Rent-A-Car, Budget 
Rent-A-Car Corporation, Dollar Rent-A-Car Systems, Inc. and ANC Rental 
Corporation and add the Cendant Car Rental Group,\3\ Dollar Thrifty 
Automotive Group \4\ and Vanguard Car Rental USA.\5\ Each of the 13 
companies (including franchisees and licensees) listed in Appendix C 
are required to file reports for calendar year 2003 no later than 
October 25, 2006, and set forth the information required by part 544. 
As long as those 13 companies remain listed, they would be required to 
submit reports before each subsequent October 25 for the calendar year 
ending slightly less than 3 years before.
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    \3\ Cendant Car Rental acquired ownership of Avis and Budget 
Rent-a-Car in 2002.
    \4\ Dollar Thrifty Automotive Group acquired ownership of Dollar 
Rent-a-Car Systems, Inc. and Thrifty, Inc., in 2001.
    \5\ Vanguard Car Rental USA acquired ownership of ANC Rental 
Corporation in 2003.
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Public Comments on Final Determination

Insurers of Passenger Motor Vehicles

    In response to the NPRM, the agency received one formal comment. In 
a letter dated April 27, 2006, Automotive Resources International/
Automotive Rentals, Inc. (ARI), requested the agency to remove its name 
from the list of insurers required to meet the insurer reporting 
requirements. ARI informed the agency that it is not an insurer and 
does not allow self-insurance. ARI explained that it is a national 
long-term corporate fleet lessor/fleet management company, not 
affiliated in any way with an insurance company or carrier, and that 
its lessees are responsible for all insurance coverages on their leased 
vehicles. ARI further explained that while it is named as an additional 
insured/interest on its lessee's insurance policies, it does not keep 
records of these policies or become involved in theft claims because 
they are handled through the lessee's insurance company. Subsequent to 
the comment closing period, the agency was informed by five additional 
companies, the Donlen Corporation, GE Capital Fleet Services/GE Fleet 
Services, Lease Plan USA, Inc., PHH Vehicle Management Services/PHH 
Arval, and Wheels, Inc. that when they offer vehicles for lease, they 
also include as a condition of the lease agreement that the lessor 
provide its own motor vehicle insurance. Specifically, four of the five 
companies (Donlen Corporation, GE Capital Fleet Services/GE Fleet 
Services, Lease Plan USA, Inc., and Wheels, Inc.,) reported that they 
do not self-insure any of their vehicles. At NHTSA's request these 
companies submitted copies of their lease agreements showing that 
insurance was required as a condition of the lease. One company, PHH 
Vehicle Management Services/PHH Arval, reported that it does allow 
self-insurance but self-insures fewer than 50,000 vehicles in its 
fleet.
    Section 33112(b)(1) of Title 49 of the United States Code (U.S.C.) 
defines an insurer to include ``a person (except a governmental 
authority) having a fleet of at least 20 motor vehicles that are used 
primarily for rental or lease and that are not covered by a theft 
insurance policy issued by an insurer of passenger motor vehicles''.\6\
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    \6\ As previously noted, NHTSA has by regulation increased the 
exemption to 50,000 vehicles.
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    Since all of these companies either require its lessees to provide 
the insurance for its vehicles, or do not self-insure 50,000 or more 
vehicles in its leasing fleet, none of them meet the criteria the 
agency uses to determine that an insurer should be included in Appendix 
C. Therefore, the agency determines that each of these six companies 
should be removed from Appendix C in the final rule.
    The agency received no comments in response to the NPRM for 
Appendices A and B. Accordingly, this final rule adopts the proposed 
changes to Appendix A and B.
    After reviewing the public comments and making the appropriate 
adjustment to Appendix C, NHTSA has determined that each of the 18 
insurers listed in Appendix A, each of the nine insurers listed in 
Appendix B and each of 7 companies listed in Appendix C are required to 
submit an insurer report on its experience for calendar year 2003 as 
required by 49 CFR part 544.

Submission of Theft Loss Report

    Passenger motor vehicle insurers listed in the appendices can 
forward their theft loss reports to the agency in several ways:
    a. Mail: Rosalind Proctor, Office of International Policy, Fuel 
Economy and Consumer Standards, NHTSA, NVS-131, 400 Seventh Street, 
SW., Washington, DC 20590;
    b. E-Mail: rosalind.proctor@dot.gov; or
    c. Fax: (202) 493-2290.
    Theft loss reports may also be submitted to the docket 
electronically by:
    d. Logging onto the Dockets Management System Web site at https://
dms.dot.gov. Click on ``ES Submit'' or ``Help'' to obtain instructions 
for filing the document electronically.

Regulatory Impacts

1. Costs and Other Impacts

    This notice has not been reviewed under Executive Order 12866, 
Regulatory Planning and Review. NHTSA has considered the impact of this 
final rule and determined that the action is not ``significant'' within 
the meaning of the Department of Transportation's regulatory policies 
and

[[Page 52293]]

procedures. This final rule implements the agency's policy of ensuring 
that all insurance companies that are statutorily eligible for 
exemption from the insurer reporting requirements are in fact exempted 
from those requirements. Only those companies that are not statutorily 
eligible for an exemption are required to file reports.
    NHTSA does not believe that this rule, reflecting current data, 
affects the impacts described in the final regulatory evaluation 
prepared for the final rule establishing part 544 (52 FR 59; January 2, 
1987). Accordingly, a separate regulatory evaluation has not been 
prepared for this rulemaking action. Using the Bureau of Labor 
Statistics Consumer Price Index for 2005 (see https://www.bls.gov/cpi), 
the cost estimates in the 1987 final regulatory evaluation were 
adjusted for inflation. The agency estimates that the cost of 
compliance is $97,650 for any insurer added to Appendix A, $39,060 for 
any insurer added to Appendix B, and $11,269 for any insurer added to 
Appendix C. In this final rule, the agency made no additional changes 
to Appendices A and B, and includes six fewer companies in Appendix C, 
as compared to the last list of insurers published in the April 3, 2006 
NPRM. The agency estimates that the net effect of this final rule would 
be a cost savings of approximately $67,614 to insurers as a group.
    Interested persons may wish to examine the 1987 final regulatory 
evaluation. Copies of that evaluation were placed in Docket No. T86-01; 
Notice 2. Any interested person may obtain a copy of this evaluation by 
writing to NHTSA, Docket Section, Room 5109, 400 Seventh Street, SW., 
Washington, DC 20590, or by calling (202) 366-4949.

2. Paperwork Reduction Act

    The information collection requirements in this final rule were 
submitted and approved by the Office of Management and Budget (OMB) 
pursuant to the requirements of the Paperwork Reduction Act (44 U.S.C. 
3501 et seq.). This collection of information is assigned OMB Control 
Number 2127-0547 (``Insurer Reporting Requirements'') and approved for 
use through August 31, 2009, and the agency will seek to extend the 
approval afterwards.

3. Regulatory Flexibility Act

    The agency also considered the effects of this rulemaking under the 
Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.). I certify that 
this final rule will not have a significant economic impact on a 
substantial number of small entities. The rationale for the 
certification is that none of the companies listed on Appendices A, B, 
or C are construed to be a small entity within the definition of the 
RFA. ``Small insurer'' is defined, in part under 49 U.S.C. 33112, as 
any insurer whose premiums for all forms of motor vehicle insurance 
account for less than 1 percent of the total premiums for all forms of 
motor vehicle insurance issued by insurers within the United States, or 
any insurer whose premiums within any State, account for less than 10 
percent of the total premiums for all forms of motor vehicle insurance 
issued by insurers within the State. This notice exempts all insurers 
meeting those criteria. Any insurer too large to meet those criteria is 
not a small entity. In addition, in this rulemaking, the agency exempts 
all ``self insured rental and leasing companies'' that have fleets of 
fewer than 50,000 vehicles. Any self-insured rental and leasing company 
too large to meet that criterion is not a small entity.

4. Federalism

    This action has been analyzed according to the principles and 
criteria contained in Executive Order 12612, and it has been determined 
that the final rule does not have sufficient federalism implications to 
warrant the preparation of a Federalism Assessment.

5. Environmental Impacts

    In accordance with the National Environmental Policy Act, NHTSA has 
considered the environmental impacts of this final rule and determined 
that it would not have a significant impact on the quality of the human 
environment.

6. Civil Justice Reform

    This final rule does not have any retroactive effect, and it does 
not preempt any State law, 49 U.S.C. 33117 provides that judicial 
review of this rule may be obtained pursuant to 49 U.S.C. 32909, and 
section 32909 does not require submission of a petition for 
reconsideration or other administrative proceedings before parties may 
file suit in court.

7. Regulation Identifier Number (RIN)

    The Department of Transportation assigns a regulation identifier 
number (RIN) to each regulatory action listed in the Unified Agenda of 
Federal Regulations. The Regulatory Information Service Center 
publishes the Unified Agenda in April and October of each year. You may 
use the RIN contained in the heading, at the beginning, of this 
document to find this action in the Unified Agenda.

8. Plain Language

    Executive Order 12866 requires each agency to write all rules in 
plain language. Application of the principles of plain language 
includes consideration of the following questions:
     Have we organized the material to suit the public's needs?
     Are the requirements in the proposal clearly stated?
     Does the proposal contain technical language or jargon 
that is not clear?
     Would a different format (grouping and order of sections, 
use of headings, paragraphing) make the rule easier to understand?
     Would more (but shorter) sections be better?
     Could we improve clarity by adding tables, lists, or 
diagrams?
     What else could we do to make the proposal easier to 
understand?
    If you have any responses to these questions, you can forward them 
to me several ways:
    a. Mail: Rosalind Proctor, Office of International Policy, Fuel 
Economy and Consumer Standards, NHTSA, 400 Seventh Street, SW., 
Washington, DC 20590;
    b. E-mail: rosalind.proctor@dot.gov; or
    c. Fax: (202) 493-2290.

List of Subjects in 49 CFR Part 544

    Crime insurance, Insurance, Insurance companies, Motor vehicles, 
Reporting and recordkeeping requirements.


0
In consideration of the foregoing, 49 CFR part 544 is amended as 
follows:

PART 544--[AMENDED]

0
1. The authority citation for part 544 continues to read as follows:

    Authority: 49 U.S.C. 33112; delegation of authority at 49 CFR 
1.50.


0
2. In Sec.  544.5, paragraph (a), the second sentence is revised to 
read as follows:


Sec.  544.5  General requirements for reports.

    (a) * * * This report shall contain the information required by 
Sec.  544.6 of this part for the calendar year 3 years previous to the 
year in which the report is filed (e.g., the report due by October 25, 
2006 will contain the required information for the 2003 calendar year).
* * * * *

0
3. Appendix A to part 544 is revised to read as follows:

Appendix A--Insurers of Motor Vehicle Insurance Policies Subject to the 
Reporting Requirements in Each State in Which They Do Business

Allstate Insurance Group
American Family Insurance Group

[[Page 52294]]

American International Group
Auto-Owners Insurance Group
CNA Insurance Companies
Erie Insurance Group
Berkshire Hathaway/GEICO Corporation Group
Hartford Insurance Group
Liberty Mutual Insurance Companies
Metropolitan Life Auto & Home Group
Mercury General Group
Nationwide Group
Progressive Group
Safeco Insurance Companies
State Farm Group
Travelers PC Group
USAA Group
Farmers Insurance Group


0
4. Appendix B to part 544 is revised to read as follows:

Appendix B--Issuers of Motor Vehicle Insurance Policies Subject to the 
Reporting Requirements Only in Designated States

Alfa Insurance Group (Alabama)
Arbella Mutual Insurance (Massachusetts)
Auto Club (Michigan)
Commerce Group, Inc. (Massachusetts)
Kentucky Farm Bureau Group (Kentucky)
New Jersey Manufacturers Group (New Jersey)
Safety Group (Massachusetts) \1\
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    \1\ Indicates a newly listed company, which must file a report 
beginning with the report due October 25, 2006.
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Southern Farm Bureau Group (Arkansas, Mississippi)
Tennessee Farmers Companies (Tennessee)


0
5. Appendix C to part 544 is revised to read as follows:

Appendix C--Motor Vehicle Rental and Leasing Companies (Including 
Licensees and Franchisees) Subject to the Reporting Requirements of 
Part 544

Cendant Car Rental
Dollar Thrifty Automotive Group
Enterprise Rent-A-Car
Enterprise Fleet Services
Hertz Rent-A-Car Division (subsidiary of The Hertz Corporation)
U-Haul International, Inc. (Subsidiary of AMERCO)
Vanguard Car Rental USA

    Issued on: August 29, 2006.
Stephen R. Kratzke,
Associate Administrator for Rulemaking.
[FR Doc. E6-14633 Filed 9-1-06; 8:45 am]
BILLING CODE 4910-59-P