TIA Bond Program Offers Added Financial Security Around FMCSA Requirements

Reprinted with permission from TIA

WITH UPDATES TO the Federal Motor Carrier Safety Administration’s (FMCSA) financial security requirements taking effect next year, broker and freight forwarders must be ready to comply. Under the amended law, brokers and freight forwarders must maintain greater financial security in cases where claims are made by motor carriers that they were not paid for their services. While some rules were originally set to take effect this year, the FMCSA extended the compliance deadline to Jan. 16, 2026, so that all provisions were under one date.

The TIA Bond program was created in concert with Avalon Risk Management to help 3PLs and freight brokerages easily comply with these changes and ensure the validating of claims against them. Backed by TIA Bondholders, the program is well respected throughout the industry, simplifying and legitimizing the claims process for all members.

In this interview with Michael Brown, president and CEO at Avalon Risk Management, he explains the changes to the law and how the TIA Bond program can not only help you comply but also give you added security from fraudulent claims.

Can you explain the updates to FMCSA financial security requirements on brokers and freight forwarders?
MB: In November 2023, the FMCSA issued a final rule pertaining to BMC-84 Bonds and BMC-85 Trusts, which initiates financial security requirements on brokers and freight forwarders. For about 10 years, the Moving Ahead for Progress in the 21st Century Act (MAP-21) has required that brokers and forwarders maintain financial security of $75,000 at all times in the form of a bond or trust fund. In its final rule, the agency has attempted to provide clarity to bond and trust providers in cases where claims received but not yet paid by the surety or trust provider may, if paid, reduce the amount of security available to less than $75,000.

The agency has determined that, starting in January 2026, when a claim is received and the surety or trust provider contacts the broker or forwarder, a response must be received within seven days. If the broker or forwarder fails to respond within this time frame, sureties and trust fund providers will be required to report this to the FMCSA, resulting in suspension of authority.

If the broker or forwarder responds to the claim inquiry, and the surety or trust provider believes, after evaluating the reply, that the claim may need to be paid by the surety or trust provider, the agency will also need to be notified so that it can begin the authority revocation process.

The FMCSA final rule will also require all trusts to be backed by an acceptable “assets readily available.” This includes cash, irrevocable letters of credit and Treasury bonds. Trusts that rely on promises, guarantees or letters of credit issued by a bank that is not insured [by the Federal Deposit Insurance Corp.] will no longer be accepted.

How can brokers and freight forwarders comply?
MB: Brokers and forwarders should work to minimize the instance of claims fi led against their bond or trust by carefully managing their payables. When a broker or forwarder does receive notification that a claim was fi led, they must be sure to respond immediately to the surety or trust provider. It will be critical that responses are received within seven days.

They may also want to consider obtaining a bond or trust in excess of the minimum $75,000. This will ensure their amount of financial security does not immediately fall below the $75,000minimum because of one or two claims.

For brokers and forwarders who currently have a trust rather than a bond, they will want to make sure their trust provider is adhering to the asset requirements that will become effective in 2026.

How does the TIA Bond program help brokers meet these requirements?
MB: The TIA Bond program is administered by Avalon Risk Management. Avalon’s claims department is skilled and robust. Our claims team works closely with brokers and forwarders when claims are fi led to validate their legitimacy. The TIA Bond program also offers bonds with increased limits for TIA members.

THE TIA BOND AND TRUST PROGRAMS ARE WELL RESPECTED,
LIKE THE TIA ITSELF, AND PARTICIPATION DEMONSTRATES
A BROKER’S PROFESSIONALISM.

How is the TIA Bond program different from other bonds available?
MB: The TIA Bond and trust programs are well respected, like the TIA itself, and participation demonstrates a broker’s professionalism. Carriers understand this. Additionally, we provide higher bond limits in the amount of $100,000 and $250,000 for qualified TIA members. All the bonds under the program are fully underwritten.

What services are available through this program?
MB: Once a TIA member obtains a TIA bond, the record of this will be uploaded to all major load boards along with the TIA logo. The broker can also work with TransCredit to increase its credit score.

How can the program help lower risk and reduce fraudulent claims?
MB: Unfortunately, in recent years, fraud has increased at an alarming rate. Many brokers have experienced illegal rebrokering and carriers utilizing fraudulent credentials to obtain loads. In the last year, we have seen an increase of stolen broker credentials as well. When this happens, legitimate brokers often receive claims from carriers who were never paid. We work with brokers to identify and substantiate claims where they were never involved with the shipments. Working with surety and trust providers that are less experienced with your industry can lead to illegitimate claims being inadvertently paid.

What are the member-exclusive benefits?
MB: All TIA members are given a premium discount on the bond. Qualified members also have access to our $100,000 and $250,000 bond options.

How can you apply for the TIA Bond program?
MB: Our easy online application can be completed at www.tiabond.com. We do require financial statements, which can be uploaded directly to the portal. The application will be sent directly to our underwriting team, and a customer service representative will contact you to provide you with a quotation.

For more information on the TIA Bond program, visit www.tianet.org/tiabond.