November 18, 2025 • 53 mins
Rising insurance costs have been a major headwind facing the trucking markets and things might not improve anytime soon. Insurance premiums could grow by double digits for another year in 2026 due to increased litigation and fraud, along with fewer companies writing trucking policies. In this Talking Transports podcast, Reliance Partners’ co-founder and CEO Andrew Ladebauche and Thom Albrecht, the company’s chief revenue officer, join Lee Klaskow, Bloomberg Intelligence senior transportation and logistics analyst, to discuss the state and outlook of the trucking-insurance market. The conversation also delves into strategies for mitigating costs, the need for reform and better regulatory practices to ensure safety and sustainability in transportation, as well as why many fraudsters are apparent fans of Tommy Tutone.
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Episode Transcript
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Speaker 1 (00:07):
Hi everyone, this is Lee Klaska when We're Talking Transports.
Welcome to Bloomberg Intelligence Talking Transports podcast. I'm your host,
Lee Klaskow, senior freight, transportation and logistics analysts at Bloomberg Intelligence,
Bloomberg's in house research arm of almost five hundred analysts
and strategists around the globe. Quick public service announcement before
we dive in. Your support is instrumental to keep bringing
(00:28):
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need your support. So please, if you enjoy this podcast,
share it, like it and leave a comment. Also, if
you've got ideas, feedback, or just want to talk transports,
I'm always happy to connect. You can find me on
the Bloomberg terminal, on LinkedIn, or on x at Logistics.
Speaker 2 (00:46):
Lee.
Speaker 1 (00:47):
Today, we're going to be doing something a little different.
We have two guests for the price of one. I'm
very excited to have with us today Andrew Ladibache, the
co founder and CEO of Reliance Partners, the nation's largest
independent insurance agency focus exclusively on transportation and logistics. Also
joining us are the company's chief revenue officer, Tom Albrighter.
(01:11):
Welcome to Talking Transports, Tom and Andrew. Thanks you so
much for coming on today.
Speaker 3 (01:16):
Great to be here, Lee.
Speaker 2 (01:17):
Yeah, thanks for having.
Speaker 1 (01:18):
Us and SO Reliance Partners. You know, it's maybe not
a household name for everyone listening. Can you just give
a little background about the company.
Speaker 2 (01:29):
Yes, sir, So Reliance Partners. As you said, as we
are a retail insurance broker that specializes in the transportation,
logistics and supply chain industries. The company was found in
two thousand and nine by myself and a couple other
serial entrepreneurs that actually have a background in the freight
brokers industry, ted Alling Very Large, Brent Large, Allen Davis.
(01:52):
They had founded Access to America Transport, which eventually was
acquired by Cody Logistics. Great guys, I'd met them. I
grew up in the transportation industry and started within the
insurance realm in late two thousand and two. Really probably
got everything started in the beginning of two thousand and three.
So all I've done for my whole professional career is
(02:16):
risk management and insurance and specializing transportation and logistics companies.
Have seen the industry drastically change over those twenty years,
for good and bad. Some of the things that we
face today that I know we're going to really target
rising insurance costs, inflationary pressures, how to recombat that from
the transportation and freight broker's side, and those are things
(02:40):
that we do every single day at Reliance. Obviously, we're
fortunate to have Tom Albrick come on in. Tom's a
vital piece of our business. And I think what makes
us a little unique in this industry is not only
our specialty, but if you look at our executive team.
My business partner, Chad Eichelberger comes from the freight broker's
background as president of Access to America, President Brokerage at Cody.
(03:04):
Ronald Ramsey our chief commercial officer, as a background and
asset based trucking and freight brokerage. Tom obviously from the
analyst side and consulting in M and A platforms. So
I think what makes us really unique is really the
diversity amongst our team Laura and Howard Coo, who comes
from a family of entrepreneurs and started a trucking and
(03:24):
brokerage business within our family business is we truly sit
on the same side of the table as our clients.
We have faced the pressures that a lot of our
clients have over the years, so it helps us address
any insurance needs they may have or come up across.
And it's really what's helped our company drive to become,
as we see it, the largest masure of the number
(03:46):
of trucking companies that are out there in the country today.
Speaker 1 (03:49):
Right, So insurance has been top of mind for a
lot of companies. Part of my day job as an
analyst is I get to listen to earnings calls, and
boy is that exciting. A lot of trucking companies have
been calling out insurance, higher insurance costs.
Speaker 2 (04:04):
So could you just.
Speaker 1 (04:05):
Dive in a little bit like why is the industry
facing these higher premiums? What's going on?
Speaker 2 (04:13):
I think a lot of I mean typical what you
hear inflationary pressures within the insurance industry and insurance realm.
I think what's unique about our industry is a lot
of the reports and earning reports that you just brought
up are kind of the largest publicly traded trucking companies
and operators in the country, right and some in the world.
The way they purchase insurance is drastically different than if
(04:35):
you look at the number of motor carriers that are
four higher ninety percent of the marketplace is under twenty units.
That's a vastly different approach to purchasing your insurance than
the large publicly traded companies. But in that same note,
a lot of the primary insurance companies that ensure transportation
and supply chain risk are all the same. So you
(04:57):
have certain carriers out there that we're right, individual owner
operators that are also in part of the towers and
the umbrellas and the primary markets for the largest transportation
companies in the country. And I think what you always
hear about is nuclear verdicts. We always hear about those things.
That's always kind of a topic of discussion. But I
think Tom andized one thing we always discuss internally, and
(05:20):
what I've seen over the years is really the pressure
from PLAINUS attorneys and people don't realize that some or
even private equity funded to fight these claims is it's
the number of claims that are being settled much higher
than what they were in the past. So you take
and think about the number of claims every day that
are settled that could be kind of your day to day.
(05:43):
We're in collisions that in the past might be five
or ten thousand dollars. All of a sudden, you get
pressure and you serve papers and those claims are settled
at fifty sixty seventy eighty thousand dollars. Well, that's happening
every single day, And I think that's one thing that
people don't realize is equipments more expensive. So when you
have your compeclusion, your physical damage premiums, those are going up.
(06:04):
It's much more expensive for insurance companies to replace a
full loss on a tractor and trailer you have the liability.
That's obviously what we just discussed. The third party claims
that you know, large nuclear verdicts have contributed to it,
but I think that's contributed to kind of this the
(06:25):
fear amongst insurance companies to really dip their toes in
the transportation marketplace, and I think that's one thing. So
all of a sudden, you have the capacity and number
of carriers willing to participate in the risk of trucking companies,
it's getting smaller. So what's that mean is the careers
that have been in it and it's trading dollars, So
if they've lost some money, they're naturally going to increase
(06:46):
their premiums. You're in, you're out. Sometimes it's five percent,
sometimes it's twenty five percent, sometimes it's fifty percent. And
I think what you're seeing is a smaller number of
companies willing to really jump into this marketplace, which is
something we buy every day as an agency, as we
are constantly working beyond the scenes to say like, hey,
not all risk are bad. You can make money in
(07:08):
this marketplace, but it is difficult, and it's going to
continue to be difficult, and I think we'll touch on
that later in this podcast.
Speaker 3 (07:16):
Yeah, and lead just for the sake of your audience
and you know, even yourself. You know, those public carriers
typically have a deductible anywhere from two million dollars to
ten million dollars per incident. The vast majority of our customers,
which number merely ten thousand moment carriers only carrier carry
(07:38):
the one million dollars minimum auto liability. Technically the regulation
is seven hundred and fifty thousand dollars, but underwriters don't
ensure that. And then another difference is that almost are
the vast majority of our customers do not have any deductible,
so it's first dollar coverage on that autoliability premium so
(08:01):
there's some big, big differences. Now some of our larger
customers three hundred, five hundred and eight hundred trucks, Andrew
handles them, and many of them do have deductibles, but
they're not going to be a million, two million, ten million, Andrew,
I don't know what you maybe want to give the
audience a little sense of when they start to have
(08:21):
a deductible what it might be.
Speaker 2 (08:23):
Yes, for sure, John, So that's a great point to
bring up. And you know, what's what people don't see
and what we're seeing right now is kind of any
carrier that's really approaching, honestly, fifty trucks and up. The
only way they're able to somewhat predict costs for next
year when they were new and try to stabilize the
insurance premiums is they are starting to take on deductibles
(08:44):
or retentions, which means they are accepting the risk on
the first it could be ten thousand dollars. Lely, it
could be twenty five thousand, could be fifty thousand, some
of that varries. If it's a true asset based company
or if they're more ic based, they may not take
on as much because they don't have the physical damage
with the equipment, but those are factors that are definitely
(09:05):
driving kind of decision making and saying, okay, this is
already one of our four largest expenses, you know. And
I think what it's important is the general audience is
transportation is difficult. Running a trucking company is very, very difficult.
Margins are thin, become even thinner over the last few years.
You know, how to re somehow predict what our expenses
(09:27):
are going to be for the following twelve months. And
some of the larger companies and when we say large
for our world and really in the general marketplace, let's
say twenty five fifty seventy five trucks, one hundred trucks
that are everywhere all over this country, they are facing
pressure to take on some of the insurance. And think
more like some of the publicly traded companies that for years,
(09:49):
if you walk into some of these lea they have
full safety risk management teams, they have in house adjusters.
When they face a loss, they are out there trying
to settle and try to keep that claim as low
as possible. As Tom alluded to the marketplace for one
to ten units, I mean if you really get down
to the numbers, it's ninety seven percent of the industry
(10:09):
and the number of MC numbers four higher are in
that one to ten space. They can't afford to take
on a deductible, so they are really getting squeezed on
the insurance and facing these astronomical increases at times, you know,
and I think the industry has think what do we
do to you know, to combat that, how do we
(10:31):
make you know, the the industry really think that, Okay,
these one to tens are thinking wanted to be as
safe as a thousand unit trucking company. Those are very
difficult decisions.
Speaker 1 (10:41):
Right roughly speaking, because I know it depends on so
many different inputs, but like what is the average one
million dollar policy? What does it cost an owner operator
that's not taking a deductible? And they know, like just
like a broad you can give me like a range
you can drive through if you want, but like, just
broadly speaking, we're talking thousands of dollars, tens of thousand dollars,
(11:02):
like fifty thousand dollars, one hundred thousand dollars.
Speaker 2 (11:05):
It's not fifty, but really it goes by you know,
we can actually get pretty with the number carriers. As
Tom alluded to, we have about ten thousand customers and
they're all across the board, and what we try to
do as an agency is break that down. It's pretty
interesting because I will give you a range because if
you were here in Chattanooga, Tennessee, and it's Tom and
Andrew Trucking, our premiums might be for just liability seven
(11:29):
to nine thousand dollars we're a good operator. Then you
have the physical damage in cargoes. So let's say we're
paying twelve to thirteen thousand dollars per truck per year.
If we were based in New York, that may be
twenty three to twenty five thousand. If we're based in
you know, the Midwest and rural Midwest, it might be
(11:49):
six to eight total. You know, it varies by region.
That's been a big thing with the insurance industry and
kind of what we've seen with the companies is where
you're based and where your routes and where you run
greatly depicts the premium that you are paying based off
verdicts and what they're seeing. So it's more on the
(12:10):
verdicts right.
Speaker 3 (12:11):
Well, and also too, if a carrier does hasmat that's
going to factor into the cost as well. We have
different dashboards and our system average excluding our intra state
customers is about eleven trucks. If you throw in the interstate,
(12:33):
it drops in size just a little bit. But a
lot of that smallness is because we have all of
our new agents generally the first year focus on one
to nine trucks, and then as they get established they
may move up and focus on twenty to fifty or
whatever their niche becomes longer term. But the highest I've
(12:55):
heard on the floor, just as a fun story, is
about thirty seven thousand dollars. I remember an agent quoting,
and I don't know if we got that business or not,
but we look at it in terms of the cost
per truck, which is the way the operators look at
it as well.
Speaker 1 (13:14):
And you know, because of the trucking market's been I
guess we could say in the toilet for the last
three years and the higher cost of insurance. Are our
owner operators or small fleets. Are they able to trade
down or the only trading down would be taking a
deductible But you said that the smaller guys aren't doing
that at all. So like our carriers able to trade
(13:37):
down on their insurance.
Speaker 2 (13:39):
Do you mean get decreases at renewal typically or are
we seeing any.
Speaker 1 (13:43):
No, like, are they taking less coverage because I know
you mentioned that. Yeah, we're structuring it where it costs
them less money.
Speaker 2 (13:51):
I will say one area that we have seen is
you know, and it's kind of interesting to watch, right,
so there's nothing out of more than a fan owned
trucking business. Like to me, that's a backbone of America.
Everything we have, the headsets, we're wearing. Everything arrives on
wheels right end of the day in America. That's the
way it works. Even if it gets somewhere by rail,
it's probably going to move on wheels to the store
(14:14):
and to get to its final place. And I have
seen and it's kind of a it's interesting. I want
to be careful saying it, but we have seen kind
of those companies and to trend down, I would say
limiting maybe the excess umbrella coverage. They have the excess
umbrella market. So let's say companies that are over ten
(14:35):
trucks and rediscuss the highlighted nuclear verdicts and that's what
everyone sees in the news, which I'm sure we'll get
in topic later with some of the two that happened
recently with some driver issues, and but we have seen
that market is tightened drastically. So if I come to
you Lee with you were paying ten thousand dollars per
(14:55):
truck last year, Let's say you get a renewal at
twelve five, that's not out of the world to see
a twenty five percent increase. And let's say you had
a one million dollar umbrella or access policy that was
to two thousand dollars a truck as well. And you're going, wow,
my last three years, my rate per mile is either
flat or it's actually down ten or fifteen cents. We
(15:17):
can't afford to operate with a twenty five percent primary
insurance renewal. And you're telling me my excess, my one
ex of one so I have two million total, is
also going to increase another ten or fifteen percent. You
know what, I'll just buy the one million because my
one million primary is now the same cost as what
(15:37):
it was to purchase two last year. We are seeing
companies basically reduce the amount of umbrella they have to
try to keep the insurance spend in line. And I
think that's That's something that we try to highlight because
people you know, as kind of producers in this world
and retail insurance brokers. I think what helped is bringing
(16:00):
Tom in. We have to look at the total spend
of all insurance. I don't care if you're one truck,
fifteen hundred trucks, I don't care. Like you have to
look at the revenue you're generating per mile, the cost
of equipment that if you're getting new equipment, it's much higher.
I mean I used to ensure sleepers for ninety five
thousand dollars, you know, and now they're one hundred and
(16:22):
seventy five thousand dollars. Well, guess what some of those
companies the revenue is about the same. So these operators
have these huge inflationary pressures and every piece of their business,
but yet they're still generating almost the same rate per mile,
which is a whole other issue. And then we're having
to deliver these insurance increases for people that you know
(16:45):
some I mean they're business relationships, but they're friends, right,
We've grown together, We've seen businesses grow together, and it's like, hey, Andrew,
how do I protect myself and our family? But all
of a sudden, I'm paying the same thing for one
million dollars in insure and said I was paying for
five ten years ago, and I'm still generating the same
rate per mile. I'm paying more for my equipment, more
(17:07):
for my drivers, more for my staff, you know, and
I put in everything that this industry wants me to
do with cameras and you know, any type of you know,
additional cameras. Now you have the trailer cameras that you know,
the kind of the side view cameras on the mirrors.
They're investing all these dollars, but yet the insurance premiums
(17:27):
continue to go up and up and up. So how
do they face it? And it's either what you said,
maybe they reduce the excess umbrella limits, maybe they take
on more deductible That's really the only thing they're able
to do to try to really address kind of the
insurance premiums that we're seeing go up your end in
your out well.
Speaker 3 (17:46):
And sometimes I will hear too that, like on the
cargo coverage, they might be willing to tolerate a few
more exceptions to non coverage.
Speaker 1 (17:54):
What does that mean? Let's lets for those that aren't
in tune with insurance. What does that mean?
Speaker 3 (17:59):
So let's say you know your business, you're hauling copper,
but then the increase that comes through on cargo, you're like, well.
Speaker 2 (18:07):
We won't have that covered.
Speaker 3 (18:08):
We'll either assume that risk, or we'll try to find
some other customers that don't do copper or other commodities.
That's probably an oversimplified example. Or they might on their
physical damage put a cap on their towing cost whereas
before they had broader coverage. Again, as long as you
don't have a problem, it doesn't come to bite you.
(18:30):
But you've essentially bought down in coverage a little bit,
and so I think there's a lot of scrambling that
does go on.
Speaker 1 (18:38):
Does this sort of coverage the coverage you guys sell
doesn't include theft?
Speaker 2 (18:42):
So that's important right now, and it's it's obviously becoming
increasingly more and more of a problem, and that's there's
different ways to interpret it. And also the cyber that
we're seeing on fictitious carriers and phishing attempts that we
see out there. So that's kind of a growing pressure
which people kind of I think when you read articles
(19:03):
generally speaking, that's all kind of a theft, right, everybody
thinks of it theft, but it could be through phishing
and more of a cyber attack and paring to be
a carrier that you're not. And then also probably on
the insurance side, what I look at is true motor
truck cargo theft. So it's becoming even more and more
difficult or even more important for all the operators that
(19:25):
are listening to make sure that there's a lot of
great insurance brokers out there in transportation, but make sure
that they are specialists and understand kind of what you're doing,
because those are areas that there are forms out there
that specifically exclude theft. And sometimes we see that with insurance,
(19:46):
especially in motor truck cargo, that people aren't aware of
and they just purchase the least expensive option, right because
people are trying to save money. Well, all of a sudden,
I always tell a lot of our producers in the
house the biggest problems I've ever had as I've learned
throughout this industry, and we all still can miss things
at times, but as always, the cargo and when you're
(20:07):
purchasing insurance, so Lee, when I come to you for
your renewal, your cargo and gl are going to be
the least amount of your premium. If you own the equipment,
your liability is majority of the costs physical damage, second cargo,
then general liability. Those are kind of the four main items,
and then work comp if you have w two employees,
but if not, those are the big four. Especially for
(20:29):
the general marketplace and transportation, you have to pay attention
to the cargo forms because there are a lot of
theft exclusions. There's a lot of different wardings out there,
and the buyers just need to be sure that they're
with the right people that are explaining it, getting a
list of what's excluded, what's included to combat some of
(20:49):
these and also how the forms are interpreted, especially if
your freight comes from load boards. Are you direct with shippers?
Just little things that can be asked and safe possibly
your business, because there's nothing worse than meeting someone or
reworked an account, maybe we didn't get it, and then
all of a sudden they have a claim because they
(21:09):
bought coverage that they thought they had and they didn't.
And guess what when a shipper or someone comes after
you leave for fifty or one hundred or one hundred
and fifty thousand dollars, which I mean cargo now almost
two fifty is becoming standard over the old one hundred.
Just due to the cost of goods. You're out of
business and that's sad to see. So I think theft
(21:30):
is it can be addressed, but you will pay more.
But in the grand scheme of things, it's it's not
as much as what you think for the potential repercussions
if it's not providing the policy that you purchase.
Speaker 1 (21:42):
You mentioned that like these sort of things can put
a small business or owner operator out of business. You know,
given the court verdicts that we've seen, is a million
dollars of coverage? Really enough? Are you seeing a lot more?
Trucking company is kind of closing their doors because of
a lawsuit that comes their way. I guess more so
(22:06):
recently than you haven't during your career.
Speaker 2 (22:10):
I mean, I think so. I think it's more. It's
kind of by I mean, you're seeing it because the
amount of the claims and where the claims are settling
is a direct relation to the renewal premiums that you're seeing.
So as these costs go up, it's not unheard up
to see some of these, or get accounts that are
getting fifty hundred percent insurance increases on the back end,
(22:32):
especially if it's very important. Everyone's looking at CABS, CSA
scores like protecting and your resume is everything now in
this insurance marketplace, whereas in the past some of the
large fleets has tom alluded to that are being self insured,
they're being truly loss rated. So I would take your
five year historical losses trading dollars. You know, if you
(22:54):
pay a million in your average three hundred thousand a
year in claims the last five years, you're a good
rich It's hard to do on a small fleet if
you're paying ten or twelve five as the example are provided. Earlier,
you were in me at a red light. All right,
there's gonna be damage to my car. Well, guess what,
maybe I go and play basketball that afternoon and then
someone's I see a billboard and you're like, you know what,
(23:16):
I tweaked my back? Did that happen in basketball or
did it happen in the accident. I'll say the accident.
The insurance company pays twenty five thousand just to avoid
going to court. Well, then all of a sudden, how
are they going to recoup that money? They just lost
one hundred percent on your wrist. So I think that
that passed down in the insurance premiums is causing a
(23:37):
lot of carriers to shut the door. The other example
was kind of this traditional mid market as we'll call it.
Let's just say twenty five to two hundred trucks that
are decreasing their premium. You know, to tell the truth,
sometimes you hear, well, if I have a million, that's
what they'll go after. If they increase the limits of
two million, that's what they'll go after. And I think
that's you know, there's this big We do a seminar
(24:00):
every year and we try to bring in operators and
insurance executives to really get down because it's always interesting
to me to see where kind of what you hear
from the everyday trucker is I want to fight this
fifty thousand dollars loss because I think it should be
twenty And then there's this battle right between who we're
(24:22):
purchasing insurance from and the operator. And then all of
a sudden, if it settles for seventy five, if reincrease
the limits to two million, which would be difficult because,
as we said, a lot of the marketplace for four
higher carriers is under twenty units. And those insurance companies
that quote that may or may they probably don't want
the two million fully at risks all of a sudden
(24:42):
they're having to purchase an excess umbrella. What is the
right premium for that? But is how do we know
if reincrease those limits that the fifty thousand dollars claim
are the twenty five thousand dollars claim lead from you
hitting me, well, if there's two million, now, maybe I
can get fifty from you or seven because you're like,
you know what, did these a lot better in paying
(25:03):
a million too? You know? And I think those are
things that our industry has continue to face and fight.
I think there's some states with some good tort reform
that's come out that will help, but that's going to
take time, So there's not This is just something that
I think, unfortunately the trucking companies in America and that
to face for the next number of years is how
(25:23):
to recombat these rising insurance premiums.
Speaker 1 (25:27):
Yeah, it's pretty interesting how many billboards and commercials you
see for lawyers trying to go after trucking companies. I
was in Dallas earlier this week and there was a
guy standing on top of a truck yelling with a
hedge with a sledgehammer and a cowboy hat about how
he's going to fight for people. So it was it's
pretty pretty crazy, and tell them, what were you going
(25:47):
to say?
Speaker 2 (25:47):
Sorry about that?
Speaker 3 (25:48):
Well, I was going to say the nuclear verdicts. They
get the headlines a lot, but really and that will
continue for the reasons that Andrew described, but the nature
nuclear verdicts, which I would define as between two million
and up to ten million, that there's been a lot
of growth there. And then, as Andrew alluded to things
(26:11):
that might have cost forty thousand dollars maybe a broken
leg and time off plus some other bills, you know,
now it might go for one hundred and fifty thousand
dollars just six or seven years later. So the attorneys
have gotten really good and securing awards that and we
(26:32):
had an attorney at our seminar that Andrew alluded to
last year, and I've spent a lot of time talking
to her on what the plane off's attorney's strategies are
and how they build empathy with juries and part of
it is. They will throw out these big numbers associated
with like the cost of a Boeing airplane or some
(26:54):
famous lawsuit or the building of a building, and then
that association they'll make that request for two hundred and
fifty thousand dollars it seems like pennies compared to what
they've just planted in the jury's mines. Or they'll talk
about some new product from Apple and the cost that
(27:15):
it took to how much research and development went in
that has nothing to do with trucking, and it starts
to create a very sympathetic jury, like, well, heck, this guy,
you know, not only broke his leg, but you know,
his shoulders injured and his back's bothering him. And what
(27:36):
would have been a completely different verdict, a different a
decade ago now is worth four or five hundred percent more.
It's it's the craziest thing.
Speaker 1 (27:46):
When we're comparing apples to apples for insurance. Roughly, how
much did insurance costs go up for the average owner
operator this year and maybe last year, and kind of
are you expecting more of the same next year?
Speaker 2 (28:02):
I would say this last year was ten to fifteen
percent kind of across the board. I will say I
think next year twenty twenty six, there's been some unfortunately
some carriers that are getting out of the transportation market,
and I think you will see I think carriers could
see a minimum of probably closer fifteen to twenty five
(28:26):
across the board if they were just going to stay.
That's a guaranteed cost type thought processingly, So I think
it's going to be very important for everyone out there
to make sure that you know you're ahead of your renewals,
you're with the right people, with the right market approach.
And you know the problem with that is when they
when they hear this is all of a sudden, you
(28:48):
know a problem with our industry is last minute. You
know it would frustrate you, Lee, I mean if you
the only thing I know to equate it to, if
you're not buying trucking the churance. Imagine if your homeowners
and personal auto came the last day, right before your
renewal and you're getting twenty thirty percent increases your home
owners goes two to four, You're going to be pretty
pissed off. I mean, that's so all of a sudden.
(29:10):
You relate that to these trucking companies and as we said,
if it's let's just say thirteen thousand, I bet if
you took a blended rate of our one to four units,
I bet the average liability premium is probably third. I
think it's like thirteen seven. But that's probably something I'm
just pulling out of one of the gazillion power points
I've seen. But let's just say that just for a
primary one million, liability is a general average. All of
(29:33):
a sudden, you come back with sixteen seventeen thousand. That
is huge for you because you are an entrepreneur driving
one to five trucks. So then you just multiply it, right,
I mean generally speaking, for the first one hundred units,
this is how you buy insurance. So that is a
drastic increase for these operators. So I think you know,
the natural reaction is I'm going to shop last minute
(29:55):
and get a less expensive quote, which ends up happening.
All right, what is the coverage form when it's a
policy form? I bought it. It was emotional purchase because
I'm trying to save dollars, trying to operate. Oh no,
I accidentally bought a cargo form that specifically excludes theft, right,
and then you're dealing with all these other issues by
(30:16):
the way the company operates, you know, and it's it
goes back to your billboards. It makes me sick. I
have to drive to Atlanta a few times a week
occasionally billboards everywhere, you know, and I sit there and go,
you know, as an entrepreneur, like, this must cost a fortune,
right if we're all in business, And I'm like, is
my money well spent on thousands and thousands of dollars
(30:37):
monthly to have seventy five billboards in state of Georgia
or Texas. You know, you have litigation funding out there
that's backing some of this. I think there has to
be a crackdown on it. And I think the perception
of trucking I think, you know, waking up every day
we're here, I mean news is news, I mean take
it as what it is. People kind of put out
(30:58):
their own narrative at times. But the cost of good
you do here at the American family struggling. But as
we said earlier in this podcast, everything comes in on wills.
And I think the general perception is I don't think
if you walk into any of these trucking companies and
if they are ever at fault in an accident. They
want to take care of whatever happened in that claim
(31:20):
that they're at fault. The only thing that's upsetting about
this industry is and I've had two or three this
year in thank goodness, and I think the single greatest
thing that I've seen in our industry is the forward
facing cameras, because all of a sudden, I've had multiple
claims where a driver is not paying attention and no
one takes responsibility for their own actions anymore. How are
(31:42):
you going to sue my client if you just switch
three lanes without even paying attention and hit our tractor,
you know, and without that that could have been that's
easily a six figure loss. You know. Unfortunately you get
out of it. But I think the general perception is like, hey,
they want to take care of the general public. That's
why it's there, you know. But it's going to take
(32:04):
a lot of people enforcing some of the latest you know,
the administration has been on a number of things and
really trying to push certain things to make the industry
safer after the two really losses that unfortunately, it took
those to really catch national news in Florida and California
with the drivers legal drivers. But you know, it's those
(32:24):
factors where it's like, I think the general public has
come into perception that these are people they want to
run a good business. If one of the three of
us had five hundred pieces of equipment out there running
even general cars, we're gonna have a lot of accidents.
It might not cause as big of a loss. But
if we're it falled every single time, and we're having
to pay thousands and thousands, sometimes millions of dollars for
(32:45):
things that maybe our employee was doing right, but just
because we drove, you know, a Tahoe against a Volkswagen Jetta.
I think Volkswagen Jetta still exists, but if it was,
like you know, I mean, that's it's difficult to want
to keep operating because we're trying to do the right
thing and make a living and deliver it everyday goods
that we use and we sit here in the industry
(33:07):
just constantly. I mean, I think that's what we see
the most from the ownership of these truck lines. It's
like it's just one thing after another, and the insurance
unfortunately that I mean, we love what we do. We're
passionate about it, but we also realize this is a
huge expense and it needs to be you know, four
(33:29):
or five. But for some of these companies, insurance is
the largest expense and it's a second you know, and
what can we do? And I think there's really good
there's great operators, and there's bad operators in every business.
And some of the things and legislation and kind of
the agendas of the current administration that they're passing, I
think hopefully we'll clean that up some.
Speaker 3 (33:49):
I wanted to just share an example of how that
hits inflation. So one of the shippers that was at
our symposium I haven't told Andrew this story yet, called
me at the be this week. They're a private company,
but they got hit with a nuclear verdict of over
twenty million dollars and so their general counsel now is
(34:11):
saying that every motor carrier needs to have twenty five
million dollars coverage. And I was like, well, good luck
with that. You're not going to have hardly any carriers.
You know, They've got hundreds of carriers. So we kind
of talked through different things and how to get excess.
I think they're going to primarily push their partners to
(34:31):
buy an extra one or two million dollars of GL coverage.
But the more important part of that story is the
shipper and it's not hit the press because they are private,
just lost almost twenty three million dollars.
Speaker 2 (34:44):
Yeah, it's gonna be tough, fine, yea, even for the EXCESSGL,
it's gonna be tough.
Speaker 1 (34:49):
So I'm just because gonna ask really probably the really
stupid basic question, So why is the shipper on the
hook for the money if somebody else was driving a truck?
Speaker 3 (34:59):
Well, that's happened more than once.
Speaker 2 (35:02):
Or do they is it?
Speaker 1 (35:02):
Is it a private fleet?
Speaker 3 (35:04):
No, it was there was a freight broker involved and
there wasn't enough coverage. So the ambulance chasing attorneys and
that's probably not fair to all Plaineffs attorneys, but you know,
they figured out where the money was going to be,
and I think they figured out that some of the
vetting wasn't maybe as thorough in hindsight as it should
(35:25):
have been.
Speaker 2 (35:25):
Gotcha.
Speaker 3 (35:26):
Plus they played the sympathy card. Again, that's so important.
It doesn't get enough attention on how good the Plainiffs
attorneys have been on portraying stories. Even you know, if
as Andrews said, most of the companies we deal with
when they know they're at fault, they do want to pay.
But then you've got such a gap between what the
(35:47):
injured wants, in particular his or her attorney versus maybe
what's a realistic settlement, and then time becomes the enemy
of a favorable settlement the longer it goes on.
Speaker 1 (35:59):
Right, So I started talking about none or Andrewy, you
mentioned non domicile CDL holders. Obviously, the fate of you know,
renewing those uh, you know those CDLs are in the
courts right now. I think that in the courts of
DC Court of Appeals right now, whether or not limiting
(36:19):
that is legal. Do non domicile CDL holders, if they're
an owner operator, do they pay a higher premium on
average for any reason?
Speaker 2 (36:30):
They don't? And I, you know, typically the way insurance
is still rated a lot of times is I will
say it limits kind of the amount of companies that
are willing to take on that risk. But I do
think a lot of times the insurance industry is still
based off you know, driver performance, historical losses, and honestly,
(36:52):
for some of the smaller fleets kind of your CSA
safety scores. I will say a growing kind of issue
within our end history and that we've seen on the
insurance side and the insurance companies have seen is not
only the what we call scheduled drivers. Right when you
buy a business auto and if you have children or
anything else, you need to list your drivers. Same thing
(37:14):
applies to commercial insurance, commercial trucking. They want to know
who's driving for you, the amount of equipment on the road.
I think we are seeing our industry there's a there's
an issue with non scheduled drivers and non scheduled units,
which means that you know, Tom is may have fifty trucks,
he buys insurance for thirty. The MCS ninety requires insurance
(37:37):
companies to protect the public, so they're on the hook
and they will pay for a loss. But Tom doesn't
report the other trucks or tell anyone he's bought them.
Grabs the name on the side. Yeah, and so you're
facing it's like we said, right, it's any industry, it's
you know, it's banking, investments, I mean, whatever you want
to do, any type of sales. There's in any service
(37:58):
industry good providers, bad providers, medical, you know, they work
comp face that for many years. They're even seeing it
on speaking of this, the liability pressures for trucking companies
as we talk about it, they've seen networks of medical
providers kind of all colluding together to try to create
you know, higher settlements. You know, there was that famous
(38:20):
Louisiana case of like this whole network. So you know,
I think the non CDLs it's going to face growing
pressure because even with let's just say the two latest
kind of to hit the headlines in Florida and California,
which which is a whole nother issue when you have
states issuing CDLs to people who do not meet requirements.
(38:41):
I mean, the fact that there's CDLs out there with
no name given written on them is to me something
that has to be addressed at a at a major
federal level and some type of penalties, because I mean,
anyone with a family or even yourself, the fact that
I could be on the road, I mean I was
driven back late last night and I saw someone I'm like,
do they know I to drive? It was eighteen wheeler.
(39:01):
Usually I'll take a video or try to find the
company not to but on blast just say hey, this
is why our industry gets bad name, like they're all
over the place. I don't know what was going on
or what was happening, but I'm sitting there and I have,
you know, my daughter in the car, and I'm going, wow,
she's gonna be driving soon. And this large vehicle can
even stay in three lanes hardly. They're all over. I
(39:23):
don't know what was going on, but straighten it out eventually,
But I do have a picture and we'll probably say something.
But I do think that's we're gonna have to combat
that now. The insurance industry. The problem with that is
it puts this pressure and it puts this publicity on
this could happen even though Lee seems to run a
(39:44):
great company, so does Tom. And then carriers that think
they could come in and actually write trucking companies for
a profit, because let's face it, their business insurance companies
are they need to make a profit. They won't ensure it.
It just puts kind of this this mark in earmark
on commercial transportation. It's like, we don't want to touch this.
It's a mess. In the United States, people can sue.
(40:06):
You don't have any federal regulation on people being issued
CDLs that are unfortunately causing terrible catastrophic accidents, loss of life,
permanent disability. Why would we want to ensure this marketplace?
And that's really what's the biggest issue that we're seeing
is carriers are just pulling out. They don't even want
(40:27):
to take a chance on really good risk because of
everyone everything else that's happening that's almost outside their control.
Speaker 1 (40:35):
Who are the major writers of trucking insurance right now?
Speaker 2 (40:41):
Great West is one of the premier providers. All they do,
they've been around forever, great West, Old Republic. You have Progressive,
you have Berkshire, AIG Berkeley Companies, which includes a number
of different companies that have done it for a very
long time. Can Now Insurance. So those are kind of
(41:02):
the national interstate century trying to that's a tough question
to ask. I don't want to leave anyone else, so
they don't get mad at me if they listen to this.
But there's some really good companies. But there's also a
lot of just programs, so you know, things that you say,
and so there are carriers that specialize, let's say, in
cross border companies. Obviously, we we've done very few acquisitions
(41:26):
in the history of reliance. But across cross border was
one with Mark Vickers, who really understands the industry and
B one drivers, and that's like a whole marketplace in
itself that we've educated. You know, a lot of insurance
companies on to learn that marketplace so they can ensure
them and write them properly. But it's you know, those
(41:47):
are kind of the most of the premier providers. Tom,
if I left one off, please say so. I don't
make anyone upset, Lee. We have.
Speaker 3 (41:54):
The way it works as an agency is you get
appointments with underwriters, and so when Andrew and even after
Chad joined, five or six years after Andrew founded the company,
they were still going around, beaten on doors trying to
get underwriters to a point reliance. And then they reached
a point where underwriters now reach out to us. But
(42:16):
we have about two hundred underwriter appointments, some of which
we may only do one to five policies a year.
They're specialized, or they deal with very high risk motor carriers.
There could be any number of things, but I think
Andrew got the essence of a lot of the leaders.
(42:37):
But I wanted to kind of go into this issue
just a little bit more. You know, Andrew gave an
example of a carrier that may have thirty trucks on
their insurance policy, but they're really operating fifty or more.
We had one of our agents told me this summer
one of their insureds got hit by another trucking company
and it looked to be they were hit by a
(42:58):
one truck operator. It turns out that there's one thousand
trucks operating there and they were paying insurance on one truck.
And so my underwrider missed that there had been three
hundred and seventy inspections in the previous one hundred days.
And that's not an exception. That's how big this fraud
(43:20):
has become. And there was another situation where it looked
like a one truck company hit someone and it turns
out they had four hundred and fifty trucks, And I think,
what's the non domiciled ELP. This is just the tip
of the iceberg in exposing things. There's a large fleet
(43:42):
in the Midwest that I'm not going to name the
name of. They advertise having between seven hundred and fifty
to eight hundred trucks, yet they've boasted to their Romanian
investors that they have ten thousand trucks, and I have
looked up whenever I see their trucks, it's always listed
is one. Now they have several dot numbers, but the
(44:04):
amount of non compliant fraudulent carriers is maybe fifteen percent
of the industry. That's the biggest reason why this freight
recession recently began its fourth year.
Speaker 1 (44:19):
And so you know we're coming up on the time.
But I want to hear from you guys. So what
should the industry do and what should the government do
to Obviously you're not going to cure the disease, but
you can make it a lot less worse.
Speaker 2 (44:38):
I guess for I need another hour, I mean I could.
I'll highlight real quick and then I'll let you kind
of go. Tom. But you know, because Tom and I
discussed this and Leah, I think you had some good
points to bring up. And I think a lot of
things the current administration has brought forth is very important.
Can do a lot of good for our industry. You know,
(45:00):
to me, there's different sides. You have kind of the
fmcsa dot and then you have kind of the world
that you brought us on. For myself, for insurance risk management.
I think there's things we can do on the insurance
side as well, But I think everything looks good on
paper if we put in but there has to be action, right,
So I think if we have the right numbers of people,
(45:21):
they're able to do the inspections. When I first got
in this industry in the early two thousands, I felt
like every trucking company I wrote, I felt like every
month one of my clients was getting a DOT audit
to know if they were satisfactory or not. I mean
it just was like routine. Now, I rarely hear any
of my people getting dot audits. And there's a lot
(45:43):
more motor carriers now than what there was then, but
there was still a lot back then. So I think,
you know, a lot of these things with the ALPS
and some of the other things are trying to pass
the legislation. I think we just have to make sure
reinforce that. And then I think from the end insurance side,
what we're going to see for anyone that's worried about
next year twenty twenty six, I mean most carriers are
(46:06):
filing rate increases, So I think be smart about who
you approach, make sure you choose a partner that is
that understands the transportation industry, that has great market representation,
so they can look at a number of different factors
and make sure you become as educated as you can
about how to relimit this cost to our company to
(46:27):
help our bottom line. So is that take on a deductible?
Is it smart for us? Look at the number of
claims you've had the last five years. Sometimes a deductible
may make sense and it's a way to offset the
premium increases. But you know, I think from our side,
it's continuing to just and I think there's a lot
going on because of eleds, telematics and cameras that are
(46:48):
allowing us slowly to deny claims that in the past
we're probably paid. But that takes time. It takes three
to five years, honestly to make that up. So hopefully
in the next couple of years, we'll see insurance premiums
kind of flatten out a little bit instead of these
drastic increases every year. But I think, you know, for
the buyers and anyone that's having to purchase insurance in
(47:10):
the commercial trucking industry or even the freight brokerage industry,
we see those premiums go up. Just make sure you're
doing the right things and always think of your safety scores,
your carrier vetting systems. Everything's a resume to almost build
your resume to where you know someone will want to
take a chance to ensure you. And I think it's
just like applying for a job. I think it's very
(47:30):
important for the buyers to understand that because that's what
the underwriters within the kind of the supply chain, logistics
and trucking industry is looking at daily to make sure like,
are we going to make money on this risk, is
this a risk we want to take on, or even
if are we going to get aggressive on pricing? Because
they've learned from things that have happened in the past,
(47:52):
that is very very important. So I appreciate you having
us on today, and I'll let Tom kind of close
it out.
Speaker 3 (47:58):
Well, let me rattle off just a handful of practical
examples or suggestions. First of all, I want to emphasize
how fragmented the industry has become. The ATA puts out
their Trucking Trends Report every I think it's late summer,
early fall. Ten years ago, they said that the number
of carriers that had twenty or fewer truck trucks was
(48:22):
about ninety one percent of the industry. Their most recent
addition says ninety six percent have ten or fewer. So
ninety one went to ninety six and twenty went to ten.
But there's so many things, like, for example, they've got
to focus on standardizing what's called the CDL mills. You know,
(48:42):
there's got to be a standard around truck driver training
schools to get your CDL.
Speaker 2 (48:47):
Maybe we need to.
Speaker 3 (48:48):
Have the same process as the twig cards, which is
what's required in and around ports and airports. You don't
hear of any of these fraudulent issues there. The FMCSA
needs to upgrade its own software. So for example, that
when a motor carrier lists their principal place of business
(49:08):
as a PO box, which is against the law, you
can investigate that. They need to take a look at
the top twenty five to fifty cities every month that
are getting DOT numbers. That way, places like Sheridan, Wyoming,
Union City, California, Signal Hill, California, where there's thousands of
(49:29):
motor carriers sometimes bigger than the population of the cities
right there, that should be just an indication on what
they need to do in the buying and selling of
MC numbers or motor carrier numbers. There needs to be
a verification of the seller and the buyer right now,
that's essentially done in a private marketplace. I'll just give
(49:53):
you an oddball example that the most common phone number
for motor carriers in the FMCSA data is one one
one one one one one one one one. Thousands of
carriers are using that. That's why they don't have good
enough software that ought to be an automatic alert. And
I'm just old enough to remember the song eight six
(50:15):
seven five three oh nine. There's over fifty carriers use
that phone number. Jenny is in trucking. Yeah. It really
is a place, though, where practical ideas should be able
to flourish because there's so many people that care and
that are beginning to think through these issues. Somehow the
(50:39):
s in FMCSA. Safety has not been front and center
over the last eight to ten years, probably for political
reasons or other reasons, who knows, But we need to
get back to safety, the public safety. That should not
be a Republican versus democratic issue, blue versus red. It's
(51:01):
public safety and we've gotten away from that, and there's
too many good operators that care and they're being hurt
by these non compliant, fraudulent operators when and I differentiate
that fraudulent generally means they're committed to stealing cargo. Non
compliant means maybe they're they've got one of these phony
(51:24):
elds that can be doctored and they're driving three to
four thousand miles a week instead of two thousand, or
they're they're just they're going without inspections. There's fifty three
thousand motor carriers that have not had an inspection in
the last three years, and over one hundred thousand that
(51:44):
haven't had one in the last year. I mean, that's crazy.
So the list could go on and on. We can
have a lot of fun with that, but it is
serious business and it's hurting the healthy operators, and it's
putting undue pressure sure on the industry and the underwriters.
These underwriters are in this because you know, they believe
(52:06):
in trucking as well, but you know they've got to
get a return on the risk dollars that they put
to work every single day.
Speaker 1 (52:15):
Sure, absolutely, Well, you know, before this conversation began, I
didn't think we'd be talking so much and so long
about insurance. I really enjoyed the conversation. Actually only got
two a handful of my questions. So I'd like to
have you guys back on the podcast maybe next year.
So Tom and Andrew just really want to thank you
for your time and your insights today.
Speaker 2 (52:33):
I really appreciate it. Thank you so much, Ley, and.
Speaker 1 (52:36):
I want to thank you for tuning in. If you
liked the episode, please subscribe and leave a review. We've
lined up a number of great guests for the podcast,
so please check back to hear conversations with C suite executives, shippers, regulators,
and decision makers within the freight markets. Also, if you
want to learn more about the freight transportation markets, check
out our work on the Bloomberg Terminal at BIGO and
(52:57):
on social media. This is Lee Clascow signing up. Thanks
for talking transports with me. Talk to you soon. Bye,
Hi everyone, this is Lee Klaska when We're Talking Transports.
Welcome to Bloomberg Intelligence Talking Transports podcast. I'm your host,
Lee Klaskow, senior freight, transportation and logistics analysts at Bloomberg Intelligence,
Bloomberg's in house research arm of almost five hundred analysts
and strategists around the globe. Quick public service announcement before
we dive in. Your support is instrumental to keep bringing
(00:28):
great guests and conversations to you, our listeners, and we
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share it, like it and leave a comment. Also, if
you've got ideas, feedback, or just want to talk transports,
I'm always happy to connect. You can find me on
the Bloomberg terminal, on LinkedIn, or on x at Logistics.
Speaker 2 (00:46):
Lee.
Speaker 1 (00:47):
Today, we're going to be doing something a little different.
We have two guests for the price of one. I'm
very excited to have with us today Andrew Ladibache, the
co founder and CEO of Reliance Partners, the nation's largest
independent insurance agency focus exclusively on transportation and logistics. Also
joining us are the company's chief revenue officer, Tom Albrighter.
(01:11):
Welcome to Talking Transports, Tom and Andrew. Thanks you so
much for coming on today.
Speaker 3 (01:16):
Great to be here, Lee.
Speaker 2 (01:17):
Yeah, thanks for having.
Speaker 1 (01:18):
Us and SO Reliance Partners. You know, it's maybe not
a household name for everyone listening. Can you just give
a little background about the company.
Speaker 2 (01:29):
Yes, sir, So Reliance Partners. As you said, as we
are a retail insurance broker that specializes in the transportation,
logistics and supply chain industries. The company was found in
two thousand and nine by myself and a couple other
serial entrepreneurs that actually have a background in the freight
brokers industry, ted Alling Very Large, Brent Large, Allen Davis.
(01:52):
They had founded Access to America Transport, which eventually was
acquired by Cody Logistics. Great guys, I'd met them. I
grew up in the transportation industry and started within the
insurance realm in late two thousand and two. Really probably
got everything started in the beginning of two thousand and three.
So all I've done for my whole professional career is
(02:16):
risk management and insurance and specializing transportation and logistics companies.
Have seen the industry drastically change over those twenty years,
for good and bad. Some of the things that we
face today that I know we're going to really target
rising insurance costs, inflationary pressures, how to recombat that from
the transportation and freight broker's side, and those are things
(02:40):
that we do every single day at Reliance. Obviously, we're
fortunate to have Tom Albrick come on in. Tom's a
vital piece of our business. And I think what makes
us a little unique in this industry is not only
our specialty, but if you look at our executive team.
My business partner, Chad Eichelberger comes from the freight broker's
background as president of Access to America, President Brokerage at Cody.
(03:04):
Ronald Ramsey our chief commercial officer, as a background and
asset based trucking and freight brokerage. Tom obviously from the
analyst side and consulting in M and A platforms. So
I think what makes us really unique is really the
diversity amongst our team Laura and Howard Coo, who comes
from a family of entrepreneurs and started a trucking and
(03:24):
brokerage business within our family business is we truly sit
on the same side of the table as our clients.
We have faced the pressures that a lot of our
clients have over the years, so it helps us address
any insurance needs they may have or come up across.
And it's really what's helped our company drive to become,
as we see it, the largest masure of the number
(03:46):
of trucking companies that are out there in the country today.
Speaker 1 (03:49):
Right, So insurance has been top of mind for a
lot of companies. Part of my day job as an
analyst is I get to listen to earnings calls, and
boy is that exciting. A lot of trucking companies have
been calling out insurance, higher insurance costs.
Speaker 2 (04:04):
So could you just.
Speaker 1 (04:05):
Dive in a little bit like why is the industry
facing these higher premiums? What's going on?
Speaker 2 (04:13):
I think a lot of I mean typical what you
hear inflationary pressures within the insurance industry and insurance realm.
I think what's unique about our industry is a lot
of the reports and earning reports that you just brought
up are kind of the largest publicly traded trucking companies
and operators in the country, right and some in the world.
The way they purchase insurance is drastically different than if
(04:35):
you look at the number of motor carriers that are
four higher ninety percent of the marketplace is under twenty units.
That's a vastly different approach to purchasing your insurance than
the large publicly traded companies. But in that same note,
a lot of the primary insurance companies that ensure transportation
and supply chain risk are all the same. So you
(04:57):
have certain carriers out there that we're right, individual owner
operators that are also in part of the towers and
the umbrellas and the primary markets for the largest transportation
companies in the country. And I think what you always
hear about is nuclear verdicts. We always hear about those things.
That's always kind of a topic of discussion. But I
think Tom andized one thing we always discuss internally, and
(05:20):
what I've seen over the years is really the pressure
from PLAINUS attorneys and people don't realize that some or
even private equity funded to fight these claims is it's
the number of claims that are being settled much higher
than what they were in the past. So you take
and think about the number of claims every day that
are settled that could be kind of your day to day.
(05:43):
We're in collisions that in the past might be five
or ten thousand dollars. All of a sudden, you get
pressure and you serve papers and those claims are settled
at fifty sixty seventy eighty thousand dollars. Well, that's happening
every single day, And I think that's one thing that
people don't realize is equipments more expensive. So when you
have your compeclusion, your physical damage premiums, those are going up.
(06:04):
It's much more expensive for insurance companies to replace a
full loss on a tractor and trailer you have the liability.
That's obviously what we just discussed. The third party claims
that you know, large nuclear verdicts have contributed to it,
but I think that's contributed to kind of this the
(06:25):
fear amongst insurance companies to really dip their toes in
the transportation marketplace, and I think that's one thing. So
all of a sudden, you have the capacity and number
of carriers willing to participate in the risk of trucking companies,
it's getting smaller. So what's that mean is the careers
that have been in it and it's trading dollars, So
if they've lost some money, they're naturally going to increase
(06:46):
their premiums. You're in, you're out. Sometimes it's five percent,
sometimes it's twenty five percent, sometimes it's fifty percent. And
I think what you're seeing is a smaller number of
companies willing to really jump into this marketplace, which is
something we buy every day as an agency, as we
are constantly working beyond the scenes to say like, hey,
not all risk are bad. You can make money in
(07:08):
this marketplace, but it is difficult, and it's going to
continue to be difficult, and I think we'll touch on
that later in this podcast.
Speaker 3 (07:16):
Yeah, and lead just for the sake of your audience
and you know, even yourself. You know, those public carriers
typically have a deductible anywhere from two million dollars to
ten million dollars per incident. The vast majority of our customers,
which number merely ten thousand moment carriers only carrier carry
(07:38):
the one million dollars minimum auto liability. Technically the regulation
is seven hundred and fifty thousand dollars, but underwriters don't
ensure that. And then another difference is that almost are
the vast majority of our customers do not have any deductible,
so it's first dollar coverage on that autoliability premium so
(08:01):
there's some big, big differences. Now some of our larger
customers three hundred, five hundred and eight hundred trucks, Andrew
handles them, and many of them do have deductibles, but
they're not going to be a million, two million, ten million, Andrew,
I don't know what you maybe want to give the
audience a little sense of when they start to have
(08:21):
a deductible what it might be.
Speaker 2 (08:23):
Yes, for sure, John, So that's a great point to
bring up. And you know, what's what people don't see
and what we're seeing right now is kind of any
carrier that's really approaching, honestly, fifty trucks and up. The
only way they're able to somewhat predict costs for next
year when they were new and try to stabilize the
insurance premiums is they are starting to take on deductibles
(08:44):
or retentions, which means they are accepting the risk on
the first it could be ten thousand dollars. Lely, it
could be twenty five thousand, could be fifty thousand, some
of that varries. If it's a true asset based company
or if they're more ic based, they may not take
on as much because they don't have the physical damage
with the equipment, but those are factors that are definitely
(09:05):
driving kind of decision making and saying, okay, this is
already one of our four largest expenses, you know. And
I think what it's important is the general audience is
transportation is difficult. Running a trucking company is very, very difficult.
Margins are thin, become even thinner over the last few years.
You know, how to re somehow predict what our expenses
(09:27):
are going to be for the following twelve months. And
some of the larger companies and when we say large
for our world and really in the general marketplace, let's
say twenty five fifty seventy five trucks, one hundred trucks
that are everywhere all over this country, they are facing
pressure to take on some of the insurance. And think
more like some of the publicly traded companies that for years,
(09:49):
if you walk into some of these lea they have
full safety risk management teams, they have in house adjusters.
When they face a loss, they are out there trying
to settle and try to keep that claim as low
as possible. As Tom alluded to the marketplace for one
to ten units, I mean if you really get down
to the numbers, it's ninety seven percent of the industry
(10:09):
and the number of MC numbers four higher are in
that one to ten space. They can't afford to take
on a deductible, so they are really getting squeezed on
the insurance and facing these astronomical increases at times, you know,
and I think the industry has think what do we
do to you know, to combat that, how do we
(10:31):
make you know, the the industry really think that, Okay,
these one to tens are thinking wanted to be as
safe as a thousand unit trucking company. Those are very
difficult decisions.
Speaker 1 (10:41):
Right roughly speaking, because I know it depends on so
many different inputs, but like what is the average one
million dollar policy? What does it cost an owner operator
that's not taking a deductible? And they know, like just
like a broad you can give me like a range
you can drive through if you want, but like, just
broadly speaking, we're talking thousands of dollars, tens of thousand dollars,
(11:02):
like fifty thousand dollars, one hundred thousand dollars.
Speaker 2 (11:05):
It's not fifty, but really it goes by you know,
we can actually get pretty with the number carriers. As
Tom alluded to, we have about ten thousand customers and
they're all across the board, and what we try to
do as an agency is break that down. It's pretty
interesting because I will give you a range because if
you were here in Chattanooga, Tennessee, and it's Tom and
Andrew Trucking, our premiums might be for just liability seven
(11:29):
to nine thousand dollars we're a good operator. Then you
have the physical damage in cargoes. So let's say we're
paying twelve to thirteen thousand dollars per truck per year.
If we were based in New York, that may be
twenty three to twenty five thousand. If we're based in
you know, the Midwest and rural Midwest, it might be
(11:49):
six to eight total. You know, it varies by region.
That's been a big thing with the insurance industry and
kind of what we've seen with the companies is where
you're based and where your routes and where you run
greatly depicts the premium that you are paying based off
verdicts and what they're seeing. So it's more on the
(12:10):
verdicts right.
Speaker 3 (12:11):
Well, and also too, if a carrier does hasmat that's
going to factor into the cost as well. We have
different dashboards and our system average excluding our intra state
customers is about eleven trucks. If you throw in the interstate,
(12:33):
it drops in size just a little bit. But a
lot of that smallness is because we have all of
our new agents generally the first year focus on one
to nine trucks, and then as they get established they
may move up and focus on twenty to fifty or
whatever their niche becomes longer term. But the highest I've
(12:55):
heard on the floor, just as a fun story, is
about thirty seven thousand dollars. I remember an agent quoting,
and I don't know if we got that business or not,
but we look at it in terms of the cost
per truck, which is the way the operators look at
it as well.
Speaker 1 (13:14):
And you know, because of the trucking market's been I
guess we could say in the toilet for the last
three years and the higher cost of insurance. Are our
owner operators or small fleets. Are they able to trade
down or the only trading down would be taking a
deductible But you said that the smaller guys aren't doing
that at all. So like our carriers able to trade
(13:37):
down on their insurance.
Speaker 2 (13:39):
Do you mean get decreases at renewal typically or are
we seeing any.
Speaker 1 (13:43):
No, like, are they taking less coverage because I know
you mentioned that. Yeah, we're structuring it where it costs
them less money.
Speaker 2 (13:51):
I will say one area that we have seen is
you know, and it's kind of interesting to watch, right,
so there's nothing out of more than a fan owned
trucking business. Like to me, that's a backbone of America.
Everything we have, the headsets, we're wearing. Everything arrives on
wheels right end of the day in America. That's the
way it works. Even if it gets somewhere by rail,
it's probably going to move on wheels to the store
(14:14):
and to get to its final place. And I have
seen and it's kind of a it's interesting. I want
to be careful saying it, but we have seen kind
of those companies and to trend down, I would say
limiting maybe the excess umbrella coverage. They have the excess
umbrella market. So let's say companies that are over ten
(14:35):
trucks and rediscuss the highlighted nuclear verdicts and that's what
everyone sees in the news, which I'm sure we'll get
in topic later with some of the two that happened
recently with some driver issues, and but we have seen
that market is tightened drastically. So if I come to
you Lee with you were paying ten thousand dollars per
(14:55):
truck last year, Let's say you get a renewal at
twelve five, that's not out of the world to see
a twenty five percent increase. And let's say you had
a one million dollar umbrella or access policy that was
to two thousand dollars a truck as well. And you're going, wow,
my last three years, my rate per mile is either
flat or it's actually down ten or fifteen cents. We
(15:17):
can't afford to operate with a twenty five percent primary
insurance renewal. And you're telling me my excess, my one
ex of one so I have two million total, is
also going to increase another ten or fifteen percent. You
know what, I'll just buy the one million because my
one million primary is now the same cost as what
(15:37):
it was to purchase two last year. We are seeing
companies basically reduce the amount of umbrella they have to
try to keep the insurance spend in line. And I
think that's That's something that we try to highlight because
people you know, as kind of producers in this world
and retail insurance brokers. I think what helped is bringing
(16:00):
Tom in. We have to look at the total spend
of all insurance. I don't care if you're one truck,
fifteen hundred trucks, I don't care. Like you have to
look at the revenue you're generating per mile, the cost
of equipment that if you're getting new equipment, it's much higher.
I mean I used to ensure sleepers for ninety five
thousand dollars, you know, and now they're one hundred and
(16:22):
seventy five thousand dollars. Well, guess what some of those
companies the revenue is about the same. So these operators
have these huge inflationary pressures and every piece of their business,
but yet they're still generating almost the same rate per mile,
which is a whole other issue. And then we're having
to deliver these insurance increases for people that you know
(16:45):
some I mean they're business relationships, but they're friends, right,
We've grown together, We've seen businesses grow together, and it's like, hey, Andrew,
how do I protect myself and our family? But all
of a sudden, I'm paying the same thing for one
million dollars in insure and said I was paying for
five ten years ago, and I'm still generating the same
rate per mile. I'm paying more for my equipment, more
(17:07):
for my drivers, more for my staff, you know, and
I put in everything that this industry wants me to
do with cameras and you know, any type of you know,
additional cameras. Now you have the trailer cameras that you know,
the kind of the side view cameras on the mirrors.
They're investing all these dollars, but yet the insurance premiums
(17:27):
continue to go up and up and up. So how
do they face it? And it's either what you said,
maybe they reduce the excess umbrella limits, maybe they take
on more deductible That's really the only thing they're able
to do to try to really address kind of the
insurance premiums that we're seeing go up your end in
your out well.
Speaker 3 (17:46):
And sometimes I will hear too that, like on the
cargo coverage, they might be willing to tolerate a few
more exceptions to non coverage.
Speaker 1 (17:54):
What does that mean? Let's lets for those that aren't
in tune with insurance. What does that mean?
Speaker 3 (17:59):
So let's say you know your business, you're hauling copper,
but then the increase that comes through on cargo, you're like, well.
Speaker 2 (18:07):
We won't have that covered.
Speaker 3 (18:08):
We'll either assume that risk, or we'll try to find
some other customers that don't do copper or other commodities.
That's probably an oversimplified example. Or they might on their
physical damage put a cap on their towing cost whereas
before they had broader coverage. Again, as long as you
don't have a problem, it doesn't come to bite you.
(18:30):
But you've essentially bought down in coverage a little bit,
and so I think there's a lot of scrambling that
does go on.
Speaker 1 (18:38):
Does this sort of coverage the coverage you guys sell
doesn't include theft?
Speaker 2 (18:42):
So that's important right now, and it's it's obviously becoming
increasingly more and more of a problem, and that's there's
different ways to interpret it. And also the cyber that
we're seeing on fictitious carriers and phishing attempts that we
see out there. So that's kind of a growing pressure
which people kind of I think when you read articles
(19:03):
generally speaking, that's all kind of a theft, right, everybody
thinks of it theft, but it could be through phishing
and more of a cyber attack and paring to be
a carrier that you're not. And then also probably on
the insurance side, what I look at is true motor
truck cargo theft. So it's becoming even more and more
difficult or even more important for all the operators that
(19:25):
are listening to make sure that there's a lot of
great insurance brokers out there in transportation, but make sure
that they are specialists and understand kind of what you're doing,
because those are areas that there are forms out there
that specifically exclude theft. And sometimes we see that with insurance,
(19:46):
especially in motor truck cargo, that people aren't aware of
and they just purchase the least expensive option, right because
people are trying to save money. Well, all of a sudden,
I always tell a lot of our producers in the
house the biggest problems I've ever had as I've learned
throughout this industry, and we all still can miss things
at times, but as always, the cargo and when you're
(20:07):
purchasing insurance, so Lee, when I come to you for
your renewal, your cargo and gl are going to be
the least amount of your premium. If you own the equipment,
your liability is majority of the costs physical damage, second cargo,
then general liability. Those are kind of the four main items,
and then work comp if you have w two employees,
but if not, those are the big four. Especially for
(20:29):
the general marketplace and transportation, you have to pay attention
to the cargo forms because there are a lot of
theft exclusions. There's a lot of different wardings out there,
and the buyers just need to be sure that they're
with the right people that are explaining it, getting a
list of what's excluded, what's included to combat some of
(20:49):
these and also how the forms are interpreted, especially if
your freight comes from load boards. Are you direct with shippers?
Just little things that can be asked and safe possibly
your business, because there's nothing worse than meeting someone or
reworked an account, maybe we didn't get it, and then
all of a sudden they have a claim because they
(21:09):
bought coverage that they thought they had and they didn't.
And guess what when a shipper or someone comes after
you leave for fifty or one hundred or one hundred
and fifty thousand dollars, which I mean cargo now almost
two fifty is becoming standard over the old one hundred.
Just due to the cost of goods. You're out of
business and that's sad to see. So I think theft
(21:30):
is it can be addressed, but you will pay more.
But in the grand scheme of things, it's it's not
as much as what you think for the potential repercussions
if it's not providing the policy that you purchase.
Speaker 1 (21:42):
You mentioned that like these sort of things can put
a small business or owner operator out of business. You know,
given the court verdicts that we've seen, is a million
dollars of coverage? Really enough? Are you seeing a lot more?
Trucking company is kind of closing their doors because of
a lawsuit that comes their way. I guess more so
(22:06):
recently than you haven't during your career.
Speaker 2 (22:10):
I mean, I think so. I think it's more. It's
kind of by I mean, you're seeing it because the
amount of the claims and where the claims are settling
is a direct relation to the renewal premiums that you're seeing.
So as these costs go up, it's not unheard up
to see some of these, or get accounts that are
getting fifty hundred percent insurance increases on the back end,
(22:32):
especially if it's very important. Everyone's looking at CABS, CSA
scores like protecting and your resume is everything now in
this insurance marketplace, whereas in the past some of the
large fleets has tom alluded to that are being self insured,
they're being truly loss rated. So I would take your
five year historical losses trading dollars. You know, if you
(22:54):
pay a million in your average three hundred thousand a
year in claims the last five years, you're a good
rich It's hard to do on a small fleet if
you're paying ten or twelve five as the example are provided. Earlier,
you were in me at a red light. All right,
there's gonna be damage to my car. Well, guess what,
maybe I go and play basketball that afternoon and then
someone's I see a billboard and you're like, you know what,
(23:16):
I tweaked my back? Did that happen in basketball or
did it happen in the accident. I'll say the accident.
The insurance company pays twenty five thousand just to avoid
going to court. Well, then all of a sudden, how
are they going to recoup that money? They just lost
one hundred percent on your wrist. So I think that
that passed down in the insurance premiums is causing a
(23:37):
lot of carriers to shut the door. The other example
was kind of this traditional mid market as we'll call it.
Let's just say twenty five to two hundred trucks that
are decreasing their premium. You know, to tell the truth,
sometimes you hear, well, if I have a million, that's
what they'll go after. If they increase the limits of
two million, that's what they'll go after. And I think
that's you know, there's this big We do a seminar
(24:00):
every year and we try to bring in operators and
insurance executives to really get down because it's always interesting
to me to see where kind of what you hear
from the everyday trucker is I want to fight this
fifty thousand dollars loss because I think it should be
twenty And then there's this battle right between who we're
(24:22):
purchasing insurance from and the operator. And then all of
a sudden, if it settles for seventy five, if reincrease
the limits to two million, which would be difficult because,
as we said, a lot of the marketplace for four
higher carriers is under twenty units. And those insurance companies
that quote that may or may they probably don't want
the two million fully at risks all of a sudden
(24:42):
they're having to purchase an excess umbrella. What is the
right premium for that? But is how do we know
if reincrease those limits that the fifty thousand dollars claim
are the twenty five thousand dollars claim lead from you
hitting me, well, if there's two million, now, maybe I
can get fifty from you or seven because you're like,
you know what, did these a lot better in paying
(25:03):
a million too? You know? And I think those are
things that our industry has continue to face and fight.
I think there's some states with some good tort reform
that's come out that will help, but that's going to
take time, So there's not This is just something that
I think, unfortunately the trucking companies in America and that
to face for the next number of years is how
(25:23):
to recombat these rising insurance premiums.
Speaker 1 (25:27):
Yeah, it's pretty interesting how many billboards and commercials you
see for lawyers trying to go after trucking companies. I
was in Dallas earlier this week and there was a
guy standing on top of a truck yelling with a
hedge with a sledgehammer and a cowboy hat about how
he's going to fight for people. So it was it's
pretty pretty crazy, and tell them, what were you going
(25:47):
to say?
Speaker 2 (25:47):
Sorry about that?
Speaker 3 (25:48):
Well, I was going to say the nuclear verdicts. They
get the headlines a lot, but really and that will
continue for the reasons that Andrew described, but the nature
nuclear verdicts, which I would define as between two million
and up to ten million, that there's been a lot
of growth there. And then, as Andrew alluded to things
(26:11):
that might have cost forty thousand dollars maybe a broken
leg and time off plus some other bills, you know,
now it might go for one hundred and fifty thousand
dollars just six or seven years later. So the attorneys
have gotten really good and securing awards that and we
(26:32):
had an attorney at our seminar that Andrew alluded to
last year, and I've spent a lot of time talking
to her on what the plane off's attorney's strategies are
and how they build empathy with juries and part of
it is. They will throw out these big numbers associated
with like the cost of a Boeing airplane or some
(26:54):
famous lawsuit or the building of a building, and then
that association they'll make that request for two hundred and
fifty thousand dollars it seems like pennies compared to what
they've just planted in the jury's mines. Or they'll talk
about some new product from Apple and the cost that
(27:15):
it took to how much research and development went in
that has nothing to do with trucking, and it starts
to create a very sympathetic jury, like, well, heck, this guy,
you know, not only broke his leg, but you know,
his shoulders injured and his back's bothering him. And what
(27:36):
would have been a completely different verdict, a different a
decade ago now is worth four or five hundred percent more.
It's it's the craziest thing.
Speaker 1 (27:46):
When we're comparing apples to apples for insurance. Roughly, how
much did insurance costs go up for the average owner
operator this year and maybe last year, and kind of
are you expecting more of the same next year?
Speaker 2 (28:02):
I would say this last year was ten to fifteen
percent kind of across the board. I will say I
think next year twenty twenty six, there's been some unfortunately
some carriers that are getting out of the transportation market,
and I think you will see I think carriers could
see a minimum of probably closer fifteen to twenty five
(28:26):
across the board if they were just going to stay.
That's a guaranteed cost type thought processingly, So I think
it's going to be very important for everyone out there
to make sure that you know you're ahead of your renewals,
you're with the right people, with the right market approach.
And you know the problem with that is when they
when they hear this is all of a sudden, you
(28:48):
know a problem with our industry is last minute. You
know it would frustrate you, Lee, I mean if you
the only thing I know to equate it to, if
you're not buying trucking the churance. Imagine if your homeowners
and personal auto came the last day, right before your
renewal and you're getting twenty thirty percent increases your home
owners goes two to four, You're going to be pretty
pissed off. I mean, that's so all of a sudden.
(29:10):
You relate that to these trucking companies and as we said,
if it's let's just say thirteen thousand, I bet if
you took a blended rate of our one to four units,
I bet the average liability premium is probably third. I
think it's like thirteen seven. But that's probably something I'm
just pulling out of one of the gazillion power points
I've seen. But let's just say that just for a
primary one million, liability is a general average. All of
(29:33):
a sudden, you come back with sixteen seventeen thousand. That
is huge for you because you are an entrepreneur driving
one to five trucks. So then you just multiply it, right,
I mean generally speaking, for the first one hundred units,
this is how you buy insurance. So that is a
drastic increase for these operators. So I think you know,
the natural reaction is I'm going to shop last minute
(29:55):
and get a less expensive quote, which ends up happening.
All right, what is the coverage form when it's a
policy form? I bought it. It was emotional purchase because
I'm trying to save dollars, trying to operate. Oh no,
I accidentally bought a cargo form that specifically excludes theft, right,
and then you're dealing with all these other issues by
(30:16):
the way the company operates, you know, and it's it
goes back to your billboards. It makes me sick. I
have to drive to Atlanta a few times a week
occasionally billboards everywhere, you know, and I sit there and go,
you know, as an entrepreneur, like, this must cost a fortune,
right if we're all in business, And I'm like, is
my money well spent on thousands and thousands of dollars
(30:37):
monthly to have seventy five billboards in state of Georgia
or Texas. You know, you have litigation funding out there
that's backing some of this. I think there has to
be a crackdown on it. And I think the perception
of trucking I think, you know, waking up every day
we're here, I mean news is news, I mean take
it as what it is. People kind of put out
(30:58):
their own narrative at times. But the cost of good
you do here at the American family struggling. But as
we said earlier in this podcast, everything comes in on wills.
And I think the general perception is I don't think
if you walk into any of these trucking companies and
if they are ever at fault in an accident. They
want to take care of whatever happened in that claim
(31:20):
that they're at fault. The only thing that's upsetting about
this industry is and I've had two or three this
year in thank goodness, and I think the single greatest
thing that I've seen in our industry is the forward
facing cameras, because all of a sudden, I've had multiple
claims where a driver is not paying attention and no
one takes responsibility for their own actions anymore. How are
(31:42):
you going to sue my client if you just switch
three lanes without even paying attention and hit our tractor,
you know, and without that that could have been that's
easily a six figure loss. You know. Unfortunately you get
out of it. But I think the general perception is like, hey,
they want to take care of the general public. That's
why it's there, you know. But it's going to take
(32:04):
a lot of people enforcing some of the latest you know,
the administration has been on a number of things and
really trying to push certain things to make the industry
safer after the two really losses that unfortunately, it took
those to really catch national news in Florida and California
with the drivers legal drivers. But you know, it's those
(32:24):
factors where it's like, I think the general public has
come into perception that these are people they want to
run a good business. If one of the three of
us had five hundred pieces of equipment out there running
even general cars, we're gonna have a lot of accidents.
It might not cause as big of a loss. But
if we're it falled every single time, and we're having
to pay thousands and thousands, sometimes millions of dollars for
(32:45):
things that maybe our employee was doing right, but just
because we drove, you know, a Tahoe against a Volkswagen Jetta.
I think Volkswagen Jetta still exists, but if it was,
like you know, I mean, that's it's difficult to want
to keep operating because we're trying to do the right
thing and make a living and deliver it everyday goods
that we use and we sit here in the industry
(33:07):
just constantly. I mean, I think that's what we see
the most from the ownership of these truck lines. It's
like it's just one thing after another, and the insurance
unfortunately that I mean, we love what we do. We're
passionate about it, but we also realize this is a
huge expense and it needs to be you know, four
(33:29):
or five. But for some of these companies, insurance is
the largest expense and it's a second you know, and
what can we do? And I think there's really good
there's great operators, and there's bad operators in every business.
And some of the things and legislation and kind of
the agendas of the current administration that they're passing, I
think hopefully we'll clean that up some.
Speaker 3 (33:49):
I wanted to just share an example of how that
hits inflation. So one of the shippers that was at
our symposium I haven't told Andrew this story yet, called
me at the be this week. They're a private company,
but they got hit with a nuclear verdict of over
twenty million dollars and so their general counsel now is
(34:11):
saying that every motor carrier needs to have twenty five
million dollars coverage. And I was like, well, good luck
with that. You're not going to have hardly any carriers.
You know, They've got hundreds of carriers. So we kind
of talked through different things and how to get excess.
I think they're going to primarily push their partners to
(34:31):
buy an extra one or two million dollars of GL coverage.
But the more important part of that story is the
shipper and it's not hit the press because they are private,
just lost almost twenty three million dollars.
Speaker 2 (34:44):
Yeah, it's gonna be tough, fine, yea, even for the EXCESSGL,
it's gonna be tough.
Speaker 1 (34:49):
So I'm just because gonna ask really probably the really
stupid basic question, So why is the shipper on the
hook for the money if somebody else was driving a truck?
Speaker 3 (34:59):
Well, that's happened more than once.
Speaker 2 (35:02):
Or do they is it?
Speaker 1 (35:02):
Is it a private fleet?
Speaker 3 (35:04):
No, it was there was a freight broker involved and
there wasn't enough coverage. So the ambulance chasing attorneys and
that's probably not fair to all Plaineffs attorneys, but you know,
they figured out where the money was going to be,
and I think they figured out that some of the
vetting wasn't maybe as thorough in hindsight as it should
(35:25):
have been.
Speaker 2 (35:25):
Gotcha.
Speaker 3 (35:26):
Plus they played the sympathy card. Again, that's so important.
It doesn't get enough attention on how good the Plainiffs
attorneys have been on portraying stories. Even you know, if
as Andrews said, most of the companies we deal with
when they know they're at fault, they do want to pay.
But then you've got such a gap between what the
(35:47):
injured wants, in particular his or her attorney versus maybe
what's a realistic settlement, and then time becomes the enemy
of a favorable settlement the longer it goes on.
Speaker 1 (35:59):
Right, So I started talking about none or Andrewy, you
mentioned non domicile CDL holders. Obviously, the fate of you know,
renewing those uh, you know those CDLs are in the
courts right now. I think that in the courts of
DC Court of Appeals right now, whether or not limiting
(36:19):
that is legal. Do non domicile CDL holders, if they're
an owner operator, do they pay a higher premium on
average for any reason?
Speaker 2 (36:30):
They don't? And I, you know, typically the way insurance
is still rated a lot of times is I will
say it limits kind of the amount of companies that
are willing to take on that risk. But I do
think a lot of times the insurance industry is still
based off you know, driver performance, historical losses, and honestly,
(36:52):
for some of the smaller fleets kind of your CSA
safety scores. I will say a growing kind of issue
within our end history and that we've seen on the
insurance side and the insurance companies have seen is not
only the what we call scheduled drivers. Right when you
buy a business auto and if you have children or
anything else, you need to list your drivers. Same thing
(37:14):
applies to commercial insurance, commercial trucking. They want to know
who's driving for you, the amount of equipment on the road.
I think we are seeing our industry there's a there's
an issue with non scheduled drivers and non scheduled units,
which means that you know, Tom is may have fifty trucks,
he buys insurance for thirty. The MCS ninety requires insurance
(37:37):
companies to protect the public, so they're on the hook
and they will pay for a loss. But Tom doesn't
report the other trucks or tell anyone he's bought them.
Grabs the name on the side. Yeah, and so you're
facing it's like we said, right, it's any industry, it's
you know, it's banking, investments, I mean, whatever you want
to do, any type of sales. There's in any service
(37:58):
industry good providers, bad providers, medical, you know, they work
comp face that for many years. They're even seeing it
on speaking of this, the liability pressures for trucking companies
as we talk about it, they've seen networks of medical
providers kind of all colluding together to try to create
you know, higher settlements. You know, there was that famous
(38:20):
Louisiana case of like this whole network. So you know,
I think the non CDLs it's going to face growing
pressure because even with let's just say the two latest
kind of to hit the headlines in Florida and California,
which which is a whole nother issue when you have
states issuing CDLs to people who do not meet requirements.
(38:41):
I mean, the fact that there's CDLs out there with
no name given written on them is to me something
that has to be addressed at a at a major
federal level and some type of penalties, because I mean,
anyone with a family or even yourself, the fact that
I could be on the road, I mean I was
driven back late last night and I saw someone I'm like,
do they know I to drive? It was eighteen wheeler.
(39:01):
Usually I'll take a video or try to find the
company not to but on blast just say hey, this
is why our industry gets bad name, like they're all
over the place. I don't know what was going on
or what was happening, but I'm sitting there and I have,
you know, my daughter in the car, and I'm going, wow,
she's gonna be driving soon. And this large vehicle can
even stay in three lanes hardly. They're all over. I
(39:23):
don't know what was going on, but straighten it out eventually,
But I do have a picture and we'll probably say something.
But I do think that's we're gonna have to combat
that now. The insurance industry. The problem with that is
it puts this pressure and it puts this publicity on
this could happen even though Lee seems to run a
(39:44):
great company, so does Tom. And then carriers that think
they could come in and actually write trucking companies for
a profit, because let's face it, their business insurance companies
are they need to make a profit. They won't ensure it.
It just puts kind of this this mark in earmark
on commercial transportation. It's like, we don't want to touch this.
It's a mess. In the United States, people can sue.
(40:06):
You don't have any federal regulation on people being issued
CDLs that are unfortunately causing terrible catastrophic accidents, loss of life,
permanent disability. Why would we want to ensure this marketplace?
And that's really what's the biggest issue that we're seeing
is carriers are just pulling out. They don't even want
(40:27):
to take a chance on really good risk because of
everyone everything else that's happening that's almost outside their control.
Speaker 1 (40:35):
Who are the major writers of trucking insurance right now?
Speaker 2 (40:41):
Great West is one of the premier providers. All they do,
they've been around forever, great West, Old Republic. You have Progressive,
you have Berkshire, AIG Berkeley Companies, which includes a number
of different companies that have done it for a very
long time. Can Now Insurance. So those are kind of
(41:02):
the national interstate century trying to that's a tough question
to ask. I don't want to leave anyone else, so
they don't get mad at me if they listen to this.
But there's some really good companies. But there's also a
lot of just programs, so you know, things that you say,
and so there are carriers that specialize, let's say, in
cross border companies. Obviously, we we've done very few acquisitions
(41:26):
in the history of reliance. But across cross border was
one with Mark Vickers, who really understands the industry and
B one drivers, and that's like a whole marketplace in
itself that we've educated. You know, a lot of insurance
companies on to learn that marketplace so they can ensure
them and write them properly. But it's you know, those
(41:47):
are kind of the most of the premier providers. Tom,
if I left one off, please say so. I don't
make anyone upset, Lee. We have.
Speaker 3 (41:54):
The way it works as an agency is you get
appointments with underwriters, and so when Andrew and even after
Chad joined, five or six years after Andrew founded the company,
they were still going around, beaten on doors trying to
get underwriters to a point reliance. And then they reached
a point where underwriters now reach out to us. But
(42:16):
we have about two hundred underwriter appointments, some of which
we may only do one to five policies a year.
They're specialized, or they deal with very high risk motor carriers.
There could be any number of things, but I think
Andrew got the essence of a lot of the leaders.
(42:37):
But I wanted to kind of go into this issue
just a little bit more. You know, Andrew gave an
example of a carrier that may have thirty trucks on
their insurance policy, but they're really operating fifty or more.
We had one of our agents told me this summer
one of their insureds got hit by another trucking company
and it looked to be they were hit by a
(42:58):
one truck operator. It turns out that there's one thousand
trucks operating there and they were paying insurance on one truck.
And so my underwrider missed that there had been three
hundred and seventy inspections in the previous one hundred days.
And that's not an exception. That's how big this fraud
(43:20):
has become. And there was another situation where it looked
like a one truck company hit someone and it turns
out they had four hundred and fifty trucks, And I think,
what's the non domiciled ELP. This is just the tip
of the iceberg in exposing things. There's a large fleet
(43:42):
in the Midwest that I'm not going to name the
name of. They advertise having between seven hundred and fifty
to eight hundred trucks, yet they've boasted to their Romanian
investors that they have ten thousand trucks, and I have
looked up whenever I see their trucks, it's always listed
is one. Now they have several dot numbers, but the
(44:04):
amount of non compliant fraudulent carriers is maybe fifteen percent
of the industry. That's the biggest reason why this freight
recession recently began its fourth year.
Speaker 1 (44:19):
And so you know we're coming up on the time.
But I want to hear from you guys. So what
should the industry do and what should the government do
to Obviously you're not going to cure the disease, but
you can make it a lot less worse.
Speaker 2 (44:38):
I guess for I need another hour, I mean I could.
I'll highlight real quick and then I'll let you kind
of go. Tom. But you know, because Tom and I
discussed this and Leah, I think you had some good
points to bring up. And I think a lot of
things the current administration has brought forth is very important.
Can do a lot of good for our industry. You know,
(45:00):
to me, there's different sides. You have kind of the
fmcsa dot and then you have kind of the world
that you brought us on. For myself, for insurance risk management.
I think there's things we can do on the insurance
side as well, But I think everything looks good on
paper if we put in but there has to be action, right,
So I think if we have the right numbers of people,
(45:21):
they're able to do the inspections. When I first got
in this industry in the early two thousands, I felt
like every trucking company I wrote, I felt like every
month one of my clients was getting a DOT audit
to know if they were satisfactory or not. I mean
it just was like routine. Now, I rarely hear any
of my people getting dot audits. And there's a lot
(45:43):
more motor carriers now than what there was then, but
there was still a lot back then. So I think,
you know, a lot of these things with the ALPS
and some of the other things are trying to pass
the legislation. I think we just have to make sure
reinforce that. And then I think from the end insurance side,
what we're going to see for anyone that's worried about
next year twenty twenty six, I mean most carriers are
(46:06):
filing rate increases, So I think be smart about who
you approach, make sure you choose a partner that is
that understands the transportation industry, that has great market representation,
so they can look at a number of different factors
and make sure you become as educated as you can
about how to relimit this cost to our company to
(46:27):
help our bottom line. So is that take on a deductible?
Is it smart for us? Look at the number of
claims you've had the last five years. Sometimes a deductible
may make sense and it's a way to offset the
premium increases. But you know, I think from our side,
it's continuing to just and I think there's a lot
going on because of eleds, telematics and cameras that are
(46:48):
allowing us slowly to deny claims that in the past
we're probably paid. But that takes time. It takes three
to five years, honestly to make that up. So hopefully
in the next couple of years, we'll see insurance premiums
kind of flatten out a little bit instead of these
drastic increases every year. But I think, you know, for
the buyers and anyone that's having to purchase insurance in
(47:10):
the commercial trucking industry or even the freight brokerage industry,
we see those premiums go up. Just make sure you're
doing the right things and always think of your safety scores,
your carrier vetting systems. Everything's a resume to almost build
your resume to where you know someone will want to
take a chance to ensure you. And I think it's
just like applying for a job. I think it's very
(47:30):
important for the buyers to understand that because that's what
the underwriters within the kind of the supply chain, logistics
and trucking industry is looking at daily to make sure like,
are we going to make money on this risk, is
this a risk we want to take on, or even
if are we going to get aggressive on pricing? Because
they've learned from things that have happened in the past,
(47:52):
that is very very important. So I appreciate you having
us on today, and I'll let Tom kind of close
it out.
Speaker 3 (47:58):
Well, let me rattle off just a handful of practical
examples or suggestions. First of all, I want to emphasize
how fragmented the industry has become. The ATA puts out
their Trucking Trends Report every I think it's late summer,
early fall. Ten years ago, they said that the number
of carriers that had twenty or fewer truck trucks was
(48:22):
about ninety one percent of the industry. Their most recent
addition says ninety six percent have ten or fewer. So
ninety one went to ninety six and twenty went to ten.
But there's so many things, like, for example, they've got
to focus on standardizing what's called the CDL mills. You know,
(48:42):
there's got to be a standard around truck driver training
schools to get your CDL.
Speaker 2 (48:47):
Maybe we need to.
Speaker 3 (48:48):
Have the same process as the twig cards, which is
what's required in and around ports and airports. You don't
hear of any of these fraudulent issues there. The FMCSA
needs to upgrade its own software. So for example, that
when a motor carrier lists their principal place of business
(49:08):
as a PO box, which is against the law, you
can investigate that. They need to take a look at
the top twenty five to fifty cities every month that
are getting DOT numbers. That way, places like Sheridan, Wyoming,
Union City, California, Signal Hill, California, where there's thousands of
(49:29):
motor carriers sometimes bigger than the population of the cities
right there, that should be just an indication on what
they need to do in the buying and selling of
MC numbers or motor carrier numbers. There needs to be
a verification of the seller and the buyer right now,
that's essentially done in a private marketplace. I'll just give
(49:53):
you an oddball example that the most common phone number
for motor carriers in the FMCSA data is one one
one one one one one one one one. Thousands of
carriers are using that. That's why they don't have good
enough software that ought to be an automatic alert. And
I'm just old enough to remember the song eight six
(50:15):
seven five three oh nine. There's over fifty carriers use
that phone number. Jenny is in trucking. Yeah. It really
is a place, though, where practical ideas should be able
to flourish because there's so many people that care and
that are beginning to think through these issues. Somehow the
(50:39):
s in FMCSA. Safety has not been front and center
over the last eight to ten years, probably for political
reasons or other reasons, who knows, But we need to
get back to safety, the public safety. That should not
be a Republican versus democratic issue, blue versus red. It's
(51:01):
public safety and we've gotten away from that, and there's
too many good operators that care and they're being hurt
by these non compliant, fraudulent operators when and I differentiate
that fraudulent generally means they're committed to stealing cargo. Non
compliant means maybe they're they've got one of these phony
(51:24):
elds that can be doctored and they're driving three to
four thousand miles a week instead of two thousand, or
they're they're just they're going without inspections. There's fifty three
thousand motor carriers that have not had an inspection in
the last three years, and over one hundred thousand that
(51:44):
haven't had one in the last year. I mean, that's crazy.
So the list could go on and on. We can
have a lot of fun with that, but it is
serious business and it's hurting the healthy operators, and it's
putting undue pressure sure on the industry and the underwriters.
These underwriters are in this because you know, they believe
(52:06):
in trucking as well, but you know they've got to
get a return on the risk dollars that they put
to work every single day.
Speaker 1 (52:15):
Sure, absolutely, Well, you know, before this conversation began, I
didn't think we'd be talking so much and so long
about insurance. I really enjoyed the conversation. Actually only got
two a handful of my questions. So I'd like to
have you guys back on the podcast maybe next year.
So Tom and Andrew just really want to thank you
for your time and your insights today.
Speaker 2 (52:33):
I really appreciate it. Thank you so much, Ley, and.
Speaker 1 (52:36):
I want to thank you for tuning in. If you
liked the episode, please subscribe and leave a review. We've
lined up a number of great guests for the podcast,
so please check back to hear conversations with C suite executives, shippers, regulators,
and decision makers within the freight markets. Also, if you
want to learn more about the freight transportation markets, check
out our work on the Bloomberg Terminal at BIGO and
(52:57):
on social media. This is Lee Clascow signing up. Thanks
for talking transports with me. Talk to you soon. Bye,
Host
Lee Klaskow
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