BMC-84 and BMC-85 Broker Bonds going up soon are you ready?
October 1, 2013 will be a day many load brokers in the US will dread, as this is the day the bond requirement goes up, not just a little bit, but a lot a bit! While legal action against the bill has been filed most agree there is no stopping the implementation date of the BMC-84 and BMC-85 broker bond increase.
It’s going to cost a pile of this if the new bond requirement becomes reality
Last year Congress passed the MAP-21 highway bill which included provision to increase the current BMC-84 and BMC-85 $10,000 broker bond or trust account to a huge $75,000. Proponents of the bill including Transportation Intermediaries Associations (TIA), the American Trucking Associations (ATA) and the Owner Operator – Independent Drivers Association (OOIDA) all claim the increase will help prevent fly by night load brokers from going into business one day and going out the next as a means to avoid paying carriers.
Many load brokers are already feeling the pinch as they scramble to find the cash to cover the increased premiums or trust fund accounts, that is if their current surety provider will cover them. Additionally some current surety companies are choosing not to cover the higher bonds effectively going out of the load broker bond business.
We have spoken with several surety companies who all expect more in-depth credit checks and fewer approvals for bonds. As well, most are also warning brokers not to wait to apply for the increased bond because they expect a mad rush closer to October therefore longer delays in getting processed due to increased work loads.
Canadian load brokers who already have problems obtaining bonds are even more strongly encouraged not to delay in getting ready for compliance. Since their pool of surety companies is already very small it may take more time in arranging compliance.
Some surety companies are already arranging to roll current BMC-84 and BMC-85 Broker Bond holders into the higher bonds when and if the requirement comes into effect, thereby avoiding possible delays on October 1.
One Group Sues the FMCSA over the increase
The Association of Independent Property Brokers & Agents (AIPBA) an organization of small property brokers recently filed a law suit against the FMCSA challenging the broker bond requirement. AIPBA President James Lamb said “AIPBA believes the $75,000 bond was designed by its proponents to remove small and mid-sized non asset based intermediaries from the market… under the guise of ‘fighting fraud.”
The AIPBA is also pushing to have federal legislation in place to repeal Section 32918 of the MAP-21 bill regarding BMC-84 and BMC-85 Broker Bonds. No such bill has been introduced yet.
For more information on the suit filed against the FMCSA click here
Contact us today if you are thinking of opening up a new broker business or are having trouble obtaining a bond.