Washington Utilities and Transportation Commission Issues Order Involving Deliveries Without Borders

OLYMPIA, Washington, July 9 (TNSsro) -- The Washington State Utilities and Transportation Commission issued the following order (No. TV-210397):

In the Matter of the Petition of DELIVERIES WITHOUT BORDERS LLC Petitioner, For an Exemption from WAC 480-14-250(1)(a)

ORDER 01 GRANTING PETITION FOR EXEMPTION

BACKGROUND

1 On May 20, 2021, Deliveries Without Borders LLC (Deliveries Without Borders or Company) filed with the Washington Utilities and Transportation Commission (Commission) an application for a common carrier permit that included a certificate of insurance for auto liability issued by Prime Insurance Company (Application). The Company seeks intrastate common carrier authority from the Commission.

2 Under WAC 480-14-250(1), each applicant for common carrier authority must file with the Commission evidence of currently effective liability and property damage insurance written by a company authorized to write such insurance in the state of Washington.

3 On May 27, 2021, the Company filed a Petition for an exemption from WAC 480-14- 250(1)(a), the Commission's insurance rule for vehicles with gross vehicle weight ratings of 10,000 pounds or more (Petition). The Company requests to retain insurance from a surplus lines insurer that is not authorized to write insurance in Washington. Surplus lines insurance is used when licensed insurers in the standard market will not provide coverage because the risk is too high, too unfamiliar, or does not otherwise meet the insurers' guidelines. Surplus line insurers have more flexibility to design and price their policies and generally charge higher premiums because they ensure risks that are usually more costly to cover.

4 Evolution Insurance Brokers LLC (Evolution Insurance Brokers) is a broker registered with the Office of the Insurance Commissioner (OIC) and authorized to write surplus lines insurance on behalf of Prime Insurance Company. Effective September 9, 2020, Deliveries Without Borders secured auto liability insurance from Prime Insurance Company through its broker, Evolution Insurance Brokers.

5 Deliveries Without Borders requests an exemption from WAC 480-14-250(1)(a) so that it can operate as a common carrier in Washington state with surplus lines insurance. The Company attempted to and was unable to obtain coverage from a Washington-admitted insurance provider. The Company requests coverage from Prime Insurance Company for its proposed common carrier operations in Washington state.

6 Commission staff (Staff) supports the Company's Petition. Staff submits that while the specific requirements of Commission rules can be exempted, under RCW 81.80.190, the Commission must "require the carriers to either procure and file liability and property damage insurance from a company licensed to write such insurance in the State of Washington, or deposit security, for the limits of liability and on terms and conditions that the Commission determines are necessary for the reasonable protection of the public against damage and injury for which the carrier may be liable by reason of the operation of any motor vehicle." Because this is a statutory requirement, the Commission cannot grant the Company an exemption from the obligation to purchase its insurance from a company licensed in Washington. The OIC authorizes insurance companies to write insurance in Washington. RCW 48.15.040 allows surplus lines coverage under certain conditions if insurance from authorized insurers cannot be procured. The licensing requirements for surplus line brokers are found in RCW 48.15.070.

7 Staff notes that the Federal Motor Carrier Safety Administration (FMCSA) accepts surplus lines insurance (CFR Title 49 Part 387.315). Staff is willing to recommend the use of surplus lines insurance subject to the condition that the Company buy insurance from a highly rated surplus line company (AM Best A- or above rating) that meets the surplus lines company requirements set out in RCW 48.15.070. Prime Insurance Company's financial strength rating is A for excellent.

DISCUSSION

8 We grant the Company's Petition subject to the condition that Staff recommends. Under WAC 480-07-110(1), the Commission may grant an exemption from any of its rules if doing so is consistent with the public interest, the purposes underlying regulation, and applicable statutes. We find that the Company's Petition meets this standard subject to the condition that the Company buy insurance from a highly rated surplus lines company (AM Best A- or above rating) that meets the surplus lines company requirements set out in RCW 48.15.070. The purpose of the insurance rule is to protect the public from loss or damage caused by the Company while providing service. Surplus lines insurance responds to that need and is a viable option for high-risk or unique lines of business where risk is less certain. In addition, the FMCSA accepts surplus lines insurance. Accordingly, we find that the Petition for exemption is consistent with the public interest, the purposes underlying regulation, and applicable statutes, and conclude that it should be granted.

FINDINGS AND CONCLUSIONS

9 (1) The Commission is an agency of the State of Washington vested by statute with the authority to regulate the rules, regulations, and practices of motor carrier companies relating to acquiring common carrier permit and insurance requirements.

10 (2) Deliveries Without Borders is an applicant for common carrier authority, and, once approved, will be a common carrier company and a public service company subject to Commission jurisdiction.

11 (3) On May 27, 2021, Deliveries Without Borders filed a Petition for Exemption from the Commission's insurance rule, WAC 480-14-250(1)(a), so that it may purchase surplus lines insurance with an unauthorized insurer, Prime Insurance Company, consistent with the requirements of RCW 48.15.070.

12 (4) Pursuant to WAC 480-07-110(1), the Commission may grant an exemption from any of its rules if doing so is consistent with the public interest, the purposes underlying regulation, and applicable statutes.

13 (5) This matter came before the Commission at its regularly scheduled meeting on July 8, 2021.

14 (6) After reviewing Deliveries Without Borders's Petition and giving due consideration to relevant matters and for good cause shown, the Commission finds that granting Deliveries Without Border's Petition subject to the condition that it buy insurance from a highly rated surplus lines company (AM Best A- or above rating) is consistent with the public interest, the purposes underlying regulation, and applicable statutes.

ORDER

THE COMMISSION ORDERS:

15 (1) Deliveries Without Borders LLC's Petition for exemption from WAC 480-14- 250(1)(a) is granted subject to the condition that Deliveries Without Borders LLC purchases insurance from a highly rated surplus line insurance company (AM Best A- or above rating) that meets the surplus lines company requirements set out in RCW 48.15.070.

16 (2) The Commission retains jurisdiction over the subject matter and Deliveries Without Borders LLC to effectuate the terms of this Order.

17 The Commissioners, having determined this Order to be consistent with the public interest, directed the Secretary to enter this Order.

DATED at Lacey, Washington, and effective July 8, 2021.

WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION

MARK L. JOHNSON, Executive Director and Secretary