[Federal Register Volume 68, Number 198 (Tuesday, October 14, 2003)]
[Rules and Regulations]
[Pages 59132-59135]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-25659]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 544

[Docket No.: NHTSA-2003-14372]
RIN 2127-AJ01


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 updates Appendices A, B, and C of 49 CFR part 
544, 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 2000 
calendar year before October 25, 2003.

DATES: This final rule becomes effective on October 14, 2003. Insurers 
listed in the appendices are required to submit reports on or before 
October 25, 2003.

FOR FURTHER INFORMATION CONTACT: Ms. Carlita Ballard, Office of 
Planning and Consumer Standards, NHTSA, 400 Seventh Street, SW., 
Washington, DC 20590. Ms. Ballard's telephone number is (202) 366-0846. 
Her fax number is (202) 493-2290.

SUPPLEMENTARY INFORMATION:

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. Under the agency's 
regulation, 49 CFR part 544, the following insurers are subject to the 
reporting requirements: (1) Those 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) those 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

[[Page 59133]]

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 each insurer subject to the reporting requirements 
in Appendix A. Because the number of insurers subject to the reporting 
requirements is smaller than the number of insurers that fall under the 
1% exemption, the agency chooses to publish the shorter list of 
insurers subject to the reporting requirements of 49 U.S.C. 33112. 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,\1\ which A.M. Best 
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 (see 49 U.S.C. 
33112(b)(1)). 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
    (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, Appendix C contains only the self-
insurers subject to reporting, instead of the self-insurers that are 
exempted. NHTSA updates Appendix C based primarily on information from 
Automotive Fleet Magazine and Business Travel News.\2\
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    \2\ Automotive Fleet Magazine and Business Travel 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 Appendices A, B or C must file a report by October 25, 2003, and by 
each succeeding October 25, absent an amendment removing the insurer's 
name from the appendices.

Notice of Proposed Rulemaking

1. Insurers of Passenger Motor Vehicles

    On March 21, 2003, NHTSA published a notice of proposed rulemaking 
(NPRM) to update the list of insurers in Appendices A, B, and C 
required to file reports (68 FR 13887). 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 16, 2002 (67 FR 46608). Based on the 2000 calendar 
year data market shares from A.M. Best, we proposed to remove Farmers 
Insurance Group and St. Paul Companies from Appendix A and to add 
Zurich/Farmers Group to Appendix A.
    Each of the 19 insurers listed in Appendix A is required to file a 
report by October 25, 2003, setting forth the information required by 
part 544, for each State in which it did business in the 2000 calendar 
year. As long as these 19 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 2000, because each insurer had a 10 percent or 
greater market share of motor vehicle premiums in those States. Based 
on the 2000 calendar year data for market shares from A.M. Best, we 
proposed no changes to Appendix B.
    The eight insurers listed in Appendix B are required to report on 
their calendar year 2000 activities in every State where they had a 10 
percent or greater market share. These reports must be filed by October 
25, 2003, and set forth the information required by part 544. As long 
as these eight 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 Business 
Travel News for 2000, NHTSA proposed to remove Ford Rent-A-Car System 
from Appendix C and to add Thrifty Rental Car System Inc., and Ryder 
TRS to Appendix C. Each of the 18 companies (including franchisees and 
licensees) listed in Appendix C would be required to file reports for 
calendar year 2000 no later than October 25, 2003, and set forth the 
information required by part 544. As long as those 18 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.

[[Page 59134]]

Public Comments on Final Determination

Insurers of Passenger Motor Vehicles

    In the NPRM, the list of passenger motor vehicle insurers who are 
required to file theft loss reports contained the ``Zurich/Farmers 
Group,'' a newly listed insurance company. In response to the NPRM, we 
received two comments regarding the ``Zurich/Farmers Group'' listing. 
The first comment was submitted by Farmers Group, Inc. (Farmers), and 
the second comment was submitted by Zurich North America (Zurich).
    Farmers argued that the listing should contain only ``Farmers 
Insurance Group'' instead of ``Zurich/Farmers Group.'' Farmers also 
stated that the ``Zurich/Farmers Group'' designation does not reflect 
the legal or economic reality of the relationship between the two 
separate insurance companies. Specifically, Farmers note that it is 
``comprised of reciprocal insurance exchanges (which are owned by their 
policyholders), or the wholly owned subsidiaries of those exchanges.'' 
The only part of Farmers owned by Zurich is the management company for 
the exchanges, Farmer's Group, Inc. Besides owning this management 
company, Zurich also engages in providing passenger automobile 
insurance separately, and in competition with Farmers. According to 
Farmers, therefore, ``Zurich/Farmers Group'' is not an insurance 
company and does not own any of the subsidiary companies that write 
auto insurance.
    Zurich similarly argued that the listing in question should contain 
``Farmers Insurance Group'' instead of ``Zurich/Farmers Group.'' 
Specifically, Zurich described the structure of Farmers and reiterated 
that Zurich does not control the reciprocal insurance exchanges. 
Instead, Zurich owns only Farmers Group, Inc., which provides 
management services to all reciprocal exchanges. Zurich provides its 
own insurance services for passenger cars under the name of ``Zurich 
North America.'' Neither the reciprocal insurance exchanges, nor 
Farmers Group, Inc. are a part of Zurich North America. Further, Zurich 
has less than 1% market share for passenger car insurance, and 
therefore, should qualify for small insurer exception. Currently, 
Zurich estimates it's market share to be at 0.63%.
    After reviewing both comments, the agency concluded that Farmers 
and Zurich are not a single insurance company, and should not be listed 
together as ``Zurich/Farmers Group.'' The agency agrees with both 
commenters' basic descriptions of their corporate structure. The agency 
also notes that while Zurich owns Farmers Group Inc. (which manages 
reciprocal exchanges), it also engages in providing their own insurance 
services through a separate entity that is separately licensed to 
provide insurance. In arriving at our decision, the agency consulted 
with an A.M. Best Co. insurance analyst familiar with Farmers and 
Zurich corporate structure, Stephan Holtzberger.\3\ Mr. Holtzberger 
indicated support for our new position. Therefore, Appendix A will list 
``Farmers Insurance Group'' instead of ``Zurich Group/Farmers.'' Zurich 
North America Insurance will not be listed in Appendix A because it 
falls short of the requisite 1% market share.
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    \3\ Docket No. NHTSA-14372-4.
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    As a result of the new information received in response to the 
NPRM, this final rule revises the changes initially proposed to 
Appendix A. The agency received no comments in response to the NPRM for 
Appendices B and C. Accordingly, this final will reissue Appendix B 
without change and adopt the proposed changes to Appendix C.

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: Carlita Ballard, Office of Planning and Consumer 
Standards, NHTSA, NVS-131, 400 Seventh Street, SW., Washington, DC 
20590;
    b. E-mail: [email protected]; 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 http://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 
proposed rule and has determined that the action is not ``significant'' 
within the meaning of the Department of Transportation's regulatory 
policies and procedures. This 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 2003 (see http://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 $86,100 for any insurer added to Appendix A, $34,440 for 
any insurer added to Appendix B, and $9,936 for any insurer added to 
Appendix C. In this final rule, for Appendix A, the agency will remove 
one company and add none; for Appendix B, the agency proposed no 
change; and for Appendix C, the agency removed one company and added 
two companies. The agency estimates that the net effect of this final 
rule would be a decrease of $76,164 to insurers as a group.
    Interested persons may 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, 2003, 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 proposed for Appendices A, 
B, or C is 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

[[Page 59135]]

insurer whose premiums for all forms of motor vehicle insurance account 
for less than one 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 would exempt 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 proposes to exempt 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 13132, 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:
    [sbull] Have we organized the material to suit the public's needs?
    [sbull] Are the requirements in the proposal clearly stated?
    [sbull] Does the rule contain technical language or jargon that is 
not clear?
    [sbull] Would a different format (grouping and order of sections, 
use of headings, paragraphing) make the rule easier to understand?
    [sbull] Would more (but shorter) sections be better?
    [sbull] Could we improve clarity by adding tables, lists, or 
diagrams?
    [sbull] 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: Carlita Ballard, Office of Planning and Consumer 
Standards, NVS-131, NHTSA, 400 Seventh Street, SW., Washington, DC 
20590;
    b. E-mail: [email protected]; 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. Paragraph (a) of Sec.  544.5 is revised to read as follows:


Sec.  544.5  General requirements for reports.

    (a) Each insurer to which this part applies shall submit a report 
annually before October 25, beginning on October 25, 1986. 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, 2003 will contain the 
required information for the 2000 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
American International Group
California State Auto Association
CGU Group
CNA Insurance Companies
Erie Insurance Group
Berkshire Hathaway/GEICO Corporation Group
Great American P & C Group
Hartford Insurance Group
Liberty Mutual Insurance Companies
Metropolitan Life Auto & Home Group
Nationwide Group
Progressive Group
SAFECO Insurance Companies
State Farm Group
Travelers/Citigroup Company
USAA Group
Farmers Insurance Group


0
4. Appendix B to part 544 will continue 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 of Michigan Group (Michigan)
Commerce Group, Inc. (Massachusetts)
Kentucky Farm Bureau Group (Kentucky)
New Jersey Manufacturers Group (New Jersey)
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

Alamo Rent-A-Car, Inc.
ARI (Automotive Resources International)
Associates Leasing Inc.
Avis, Rent-A-Car, Inc.
Budget Rent-A-Car Corporation
Consolidated Service Corporation
Dollar Rent-A-Car Systems, Inc.
Donlen Corporation
Enterprise Rent-A-Car
GE Capital Fleet Services
Hertz Rent-A-Car Division (subsidiary of the Hertz Corporation)
Lease Plan USA, Inc.
National Car Rental System, Inc.
PHH Vehicle Management Services
Ryder TRS \1\
Thrifty Rental Car System Inc.\1\
U-Haul International, Inc. (Subsidiary of AMERCO)
Wheels Inc.

    \1\ Indicates a newly listed company, which must file a report 
beginning with the report due October 25, 2003.

    Issued on: October 6, 2003.
Stephen R. Kratzke,
Associate Administrator for Rulemaking.
[FR Doc. 03-25659 Filed 10-10-03; 8:45 am]
BILLING CODE 4910-59-P