February 27, 2026 admin

Fraud is eating Illinois’ trucking insurance pool


Illinois’ insurer of last resort is bleeding cash. Trump revives the IC rule

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THE DAILY

Friday, February 27, 2026

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The Daily

Illinois’ insurer of last resort is bleeding cash: fraud is the culprit

The insurance backstop for carriers that can’t get coverage anywhere else in Illinois is losing money, and the fraud baked into the system is doing most of the damage.

The Illinois assigned risk pool was built to function as a narrow pressure valve — a managed mechanism for carriers with legitimate high-risk profiles who couldn’t qualify for voluntary market coverage. It was never designed to absorb an industrial-scale fraud operation. That’s what it’s doing now. As standard market insurers tightened underwriting criteria in response to chameleon carrier schemes and fabricated safety records, legitimate high-risk operators and fraudulent ones started landing in the same place. The math doesn’t work, and the losses reflect it.

FreightWaves has documented exactly how this cycle operates at the carrier level. Entities like KG Line Group, claiming 310 trucks from a residential home in Streamwood, Illinois, burned through four insurers in rapid succession before landing on Universal Casualty Risk Retention Group, effective January 2026. Universal Casualty is an Oklahoma-chartered RRG that markets itself as an insurer for auto dealers. Every time a carrier drops coverage or an insurer exits the relationship, that carrier needs coverage from somewhere. Assigned risk pools are frequently the terminal destination.

Illinois has 893 motor carriers currently insured by Risk Retention Groups in FMCSA data, with 208 classified at high risk. When RRGs collapse under the weight of their losses, as Global Hawk Risk Retention Group did, leaving 1,008 trucks effectively uninsured after its president pleaded guilty to $19 million in federal fraud charges, crash victims have no state guaranty fund to access. The pool then absorbs pressure that should never have reached it. The fraud allegations now surfacing within the Illinois pool suggest the exposure goes beyond concentration risk into deliberate exploitation of a system with no adequate guardrails.

So What? For shippers, carrier insurance vetting just got more complicated. Multiple recent insurer changes, unusual operational addresses, or authority ages under two years deserve harder scrutiny. The pool doesn’t screen for fraud; it provides coverage. For the broader market, assigned risk pool losses are a cost that gets redistributed across everyone in the system. When pools bleed money, assessment rates rise for every carrier, including those who’ve done nothing wrong.

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Top Stories

Trump’s independent contractor rule is back but industry says it barely changed

The Department of Labor’s Wage and Hour Division published a revived independent contractor rule that the American Trucking Associations described as "a significant step forward" for the hundreds of thousands of truckers who work as ICs. The new proposal centers on the same two core factors as the original Trump-era rule — control and opportunity for profit or loss — as primary indicators of worker classification. Critics note the near-identical language to its predecessor, which the Biden administration spent two years dismantling. The rule is now in a public comment period, and litigation is widely expected once a final rule is issued.

So What? An IC-friendly classification rule clears the path for carriers and brokers relying on owner-operator models. The misclassification litigation risk from the Biden rule was already reshaping some operational structures. Comment period outcomes and court challenges will determine the timeline — but the direction of travel is clear.

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Sponsored

FMCSA renews Wilson Logistics’ CDL waiver but opens inquiry into its training program

FMCSA approved a five-year renewal of Wilson Logistics’ CDL exemption, effective Feb. 24, 2026, and running through Feb. 24, 2031. The waiver permits CLP holders who have passed a CDL skills test to operate commercial vehicles without a licensed CDL holder present for up to 30 days. In the same notice, the agency confirmed it will follow up on allegations that Wilson lowered its driver qualification standards and shortened its training program in December 2025. FMCSA said it found no evidence of a safety degradation attributable to the current exemption but signaled the inquiry is active and ongoing.

So What? The waiver renewal signals continued regulatory flexibility on CDL training timelines. The simultaneous inquiry is a harder signal to read — if FMCSA finds that shortened training produced measurable safety degradation, it will have the data to tighten waiver criteria across the industry, not just for Wilson.

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Maersk retreats from the Red Sea again, just weeks after declaring a return

Maersk announced Friday it will reroute several sailings — including U.S.-bound services — around the Cape of Good Hope after encountering unforeseen constraints in the Red Sea corridor. The reversal comes roughly six weeks after Maersk committed to a structural return to trans-Suez routing for its MECL service, linking the Middle East and India with the U.S. East Coast. The U.S.-flagged Maersk Denver had successfully transited the Red Sea in January, and the carrier had expanded Suez transits through its Gemini cooperation with Hapag-Lloyd in February. The current disruption suspends some of those voyages indefinitely.

So What? Shippers who rebuilt lane pricing and transit timelines around the Suez reopening need to update their models again. The Cape route adds 10 to 14 days to Asia-to-U.S. East Coast transit times and drives up carrier operating costs. Each reversal makes durable rate agreements harder to structure and keeps U.S. importers exposed to supply chain unpredictability.

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New York’s toughened driving penalties are adding compliance pressure on CDL holders

New York is already under federal order after FMCSA found the state issued more than 32,000 nondomiciled CDLs in violation of federal immigration status requirements — a 53% failure rate on sampled records. New state-level driving penalties are layering additional compliance risk on CDL holders operating in and through the state. Federal English Language Proficiency enforcement is tightening simultaneously: drivers who fail a roadside language evaluation face immediate out-of-service orders. FMCSA has given New York 30 days to audit and void non-compliant licenses or risk losing tens of millions in federal highway funding.

So What? Carriers routing freight through New York with non-domiciled drivers need to audit CDL records now. The federal compliance deadline lands on the state DMV, but carriers holding non-compliant credentials will feel the operational consequences first — out-of-service orders at the roadside don’t wait for state bureaucracies to catch up.

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Q1 2026 Shipper Rate Report

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From the Research Desk

In partnership with Trimble

2026 Outlook: Spot Market Strategies for Shippers, Carriers, and Brokers

Trimble surveyed participants across the freight ecosystem on how they’re positioning in the spot market for 2026. With rejection rates rising and the spot-contract spread widening, 2024 procurement benchmarks are already stale. This report maps where the market is moving and what the data says to do about it.

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Courtesy of Descartes

2026 TMS Buyer’s Guide

Selecting the wrong TMS is one of the most expensive decisions a mid-market shipper or 3PL can make. Descartes’ 2026 guide breaks down the key capabilities, integration requirements, and evaluation criteria that separate platforms built to scale from those that won’t keep pace. Required reading before your next procurement decision.

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Upcoming Event

FreightWaves Roadshow

March 3, 2026  |  Charlotte, NC

From AI integration to fraud prevention and a full array of pressing industry topics, you’ll gain the exclusive intelligence needed to protect your margins and scale in 2026.

Register Here →


What We’re Watching

FMCSA’s training inquiry at Wilson Logistics. The waiver renewed, but the allegation that qualification standards were lowered in December 2025 is now on the record. A follow-up finding could set precedent for how regulators treat driver training waivers across the industry — not just at one carrier.

Maersk’s Red Sea calculus in the coming weeks. Every reversal makes durable capacity planning harder for shippers with Asia-to-U.S. East Coast exposure. Watch whether this is a one-sailing adjustment or the start of a broader retreat from the Suez return strategy.

The public comment clock on Trump’s IC rule. The ATA is publicly supportive. Labor groups and plaintiff attorneys will file comments arguing the rule makes misclassification easier and worker protections weaker. The comment period is the last structured opportunity to shape the final rule before litigation begins.


That’s your Daily for today. See you tomorrow.

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