Beefing Up the Bond
“The word among motor carriers is,” he says, “if you file a claim with a bond company with an adjuster that doesn’t understand the business, you can get paid for delivering a load of Christmas trees on New Year’s Eve.”
Pacific Financial, he says, writes sureties for roughly 5,000 brokers large and small — “a quarter of all 20,000 licensed brokers in the country,” he says.
“Claim volume has been going down,” he says, from roughly 15,000 claims inquiries in 2010 to 10,000 in 2011. “Ninety percent of these are resolved through a telephone call” to the broker saying something like “you’re 120 days out — if you don’t pay [the carrier], we’re going to have to cancel your trust.”
Extrapolating from Pacific’s numbers, a total 4,000 claims a year are actionable, whether disputed or in the case of the broker going out of business, Sanders estimates.
That’s “one claim filed in the calendar year for every 100 motor carriers,” he says. “That’s the ‘financial emergency’ that’s caused the TIA and their buddies to try to get rid of 75 percent of the brokerage industry?”
OOIDA’s Todd Spencer says surety providers are part of the overall problem. “The bonding companies are the partners of these crooked brokers,” he says. “They can sit on claims for 60 or 90 days without notifying anyone that claims are being filed on the bond.”
For claims that go the distance, after subtracting attorney’s fees and other costs, “virtually no one gets anything,” he says.