Fleet Insurance Rates Up 17%: The REAL Reasons Operators Are Paying More...

Episode Transcript
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Joseph Madiedo (00:00):
This year we heard, at the state of the
industry at the NLA CD show thatI think it was Mr.
Lucci that said, you expect a14% increase in insurance in
2026.
And where is he getting thatnumber?
Because this past year I did anaverage, or at least on all of
the carriers and what

James Blain (00:17):
Yeah,

and the ones I represent, oh, about a 17%
increase across the board in2025.
And that's on everybody that,that's like the clean guy, the
guy that has never had a claim.

Hello everybody and welcome back to another episode
of the Ground Train Stationpodcast.
I'm a little sad today'cause Idon't have my partner in crime,
Ken Lucci.
He is probably off doing somekind of incredible financial
deal that we'll find out aboutlater.
But I am super stoked because Ihave a good friend of mine,
Joseph Maddo, from theProfessional Insurance Center
on, and we're going to dive intoinsurance.

(01:17):
Uh, you know, we've talked aboutit a lot, but today I think
we're gonna try and get someanswers to the more hard
quitting questions.
The questions that I find a lotof a lot of guys try to kind of
dance around.
Um, and, and I know, I knowwe've heard a lot about the
crisis and what's going on, butI think today we're gonna try
and really dig into some of thethings that people have thought

(01:40):
about, but maybe not have theability to ask outright.
But before we do that, you know,Joe, you have an incredible
background in this industry.
Can you tell us a little bitabout your family history?
How did your family get into it?
How'd you get into the business?

Okay.
So yeah, back in 1981.
My father went to law school andpivoted into insurance, worked
for Washington Mutual, and aftera friend in Tampa, who owned a
taxi company here, had struggledfinding insurance, commercial
insurance for livery.
And Florida was very difficultto find at the time in the
eighties.
And so he decided open an agencyand try to specialize in

(02:18):
commercial auto he opened up aniche agency and with my mother
as his partner in 1981.
it was just them in this verybuilding I'm sitting in.
Yellow Cab of Tampa, was hisfirst commercial auto account.
And from there he created a,agency that specialized in
livery insurance.
And for myself, I grew up,surrounded by transportation.

(02:40):
My godfather, his best friend,owns a major transportation
company here.
And I worked for that company,briefly.
And then my father, when I wasin college, I was, studying
biochemistry and he sat me downand asked me, to consider taking
over the family business,

a biochemistry degree.
you're studying biochemistry andit's like, no, no, no.
We need an insurance company.

yeah, At the time, Uber and Lyft and TNCs
didn't exist, so we had a lot oftaxi business and we had a lot
of limo business.
and we were able to put togethera lot of programs.
And when I decided to make themove, I was still in college.
I transferred from Florida Statefor University of Tampa and
finished up there and switcheddegrees to marketing and

(03:24):
business.
I went into this agency, got mytwo 20 in 2005, my insurance
license, and wrote my firstpiece of business,

are you doing black car?
Are you doing limo?
Are you doing a little bit ofeverything?

All black car.
Just, I had an SUVI had a,Escalade in 2008 Escalade.
I did overflow work for some ofour clients.
Armando Shapiro's company, JerryChavez's company.
I drove Martha Stewart for anentire day.
I worked the Super Bowl 2008here, so I got to learn a lot as
a driver, as a chauffeur.
for two years,

wow.

the time to do it anymore because the
insurance, I started gettingmore clients and I got to learn
a lot about, I think thestruggles that's involved with
being a single unit operator,

it's funny because we should clarify, right?
if you are with professionalinsurance center, that is not a
service you offer anymore,right?
We will not do your overflowwork.
I,

no, I, I actually got asked by one of my
local

yeah,

clients

They tried to pull you back in, right?

last year they had a busy weekend I have four
kids now.
I didn't have any kids when Idid that.

Ah,

I told the guy, I'm sorry, I just cannot do that
any longer.

we no longer do your overflow.

I got requested by a couple of the people I
drove after I had

no way.

Martha Stewart asked Armando if I could be her
driver again, and I told him,I'm sorry, I'm not doing that
anymore.
And there was a couple otherpeople out there that requested
me.
And, and so I just, I no longerwas doing it it wasn't'cause I
didn't want to, I had no time.
I was

Yeah.

I got married.
so I, I stayed in the insurancegame and specialized in that.
and over the years I've sat onthe CFLA Gola greater Orlando
Limousine Association Board ofDirectors, the West Florida
Limousine Association, now theboard of Directors for the FLA,
the Florida LimousineAssociation.
I sit on the board of directorsand I do their safety program

(05:14):
and, and safety and insuranceand, couple other committees I
do as well, airport and,sometimes I chime in on the, the
legislative committee as well.

I mean, you're the one that pulled me in.
Right.
You know, for, for those ofthat, that don't know, the, the
Platinum Safety Program I don'twanna say a, a, a side effect or
byproduct, but it, it was reallykind of, I think spearheaded is
probably the right word byFlorida's kind of safety side.
And I still remember, uh, Iwanna say you and I were in
Vegas when you came up andyou're like, Hey, we're gonna do

(05:43):
this big thing.
We've got this great idea and.
And you know, I think that'sgonna be a huge thing.
But you're involved on so manydifferent levels in so many
different boards.
How many different ones are yousitting on right now?

right now I'm only on the FLA.

Okay.

we've been a member of the Transportation
Alliance, formerly the Taxi CabLimousine Paratransit
Association.
I put a team together that Ithought was ideal.
I got the safety directors frommy clients at, Destination

Yep.

got their safety guys on board with my platinum
safety team.

Great guys.

Gatis at Cable

Yep.

President there.
I got you.
There's a lot of people that, weapproached, but we got a good
team together of Sarahspearheaded that whole program
and she has taken it to anotherlevel.
And I like what everythingthat's been going on with it.
but as far as safety goes, evenwithout that program I've been
involved with promoting safetyfar before that,

Go,

trying to push the camera systems, which are
valuable to an insurance companyyou know, the clients, to the
operators

I've said it before, Joe.
cameras are table stakes.
If you are, if you don't havecameras and telematics, that's
like saying, I don't have awebsite or I don't have a
business card.
Like we are at a point, and Ithink you'll agree with this,
where claims cost, fraud, all ofit.
you're shooting yourself in thefoot more than just
figuratively, almost literallyshooting yourself in the foot.

(07:04):
If you don't have telematics

we are always looking to add programs That way
we can offer every, operatorevery option, we do every single
renewal is going out 60 days, etcetera, et

Yeah,

one of the things we tried to focus on was
the cameras, the safety, drivertraining is very important to
have year-round driver trainingI've found that now with the
analytics, they're moving intoai, so you're gonna have a
future, I think I was explainingto you earlier, I was at my
doctor's office and there was asign on the wall that said,
you're being recorded for ourinsurance by ai.

Yep.

so it's, in many different fields especially
transportation we used to havetwo-way cameras.
They could record accidents, butnow they're recording driver
behavior.
the AI is looking at trends.

Yep.

specific drivers score out.
if you have a risk managementprogram that's attached to like
a camera system, right?
And they can file with thestate.
For insurance credits and thecarriers, no matter who the
carrier is, can use thoseinsurance credits to bring rates
down, and apply them if theyhaven't already been applied.
So the guys out there, theoperators out there that aren't

(08:13):
doing certain things like that,they don't have the cameras or
the driver behavior or thosekinds of things in their fleets.
They may not be getting certaincredits Not all carriers are
gonna use the credits, but mostof the carriers will and can use
them.
and so you want to make surethat the camera system you're
using, if you want said creditsis something that is using AI

(08:34):
technology or analyticstechnology and things like that.
Because I think the future isgoing to be not just the loss
history, which gives ushistorical data to.
Create profitability matrixesand see if the premiums are
gonna be enough to cover a loss,et cetera, et cetera.
We're gonna be using thetelematics and analytics derived
from the AI devices on how anoperator's fleet is being run.

there's a talk that I give about the difference
between proactive and reactiveand essentially how winning
teams stay winning teams.
And one of the things that wetalk about in there is you start
with your training.
no team on the planet that willlike, Hey, I'm just gonna show
up and go play a game, and thenwe'll see how we do.
Right?
That's not how anybody thinks.
And so in our world, that kindof starts with your training,

(09:18):
your practice, then you go outand you do it.
That's where now you get intothe reactive, your ai, your
analytics, your telematics, allof these pieces are giving you
real world feedback on what'sgoing on.
Where I think we're seeing thereal kind of cut above the rest
is the companies that come backand they're like, don't do that
no more.

(09:38):
Stop speeding.
Stop doing this, Those companiesthat are being super reactive.
I think the ones that are reallygonna benefit are the ones that
are finding trends, that arefiguring out what's going on.
just like a sports team, right?
if you lose two games and didthe same thing in both games.
Your practice has to change,your training has to change the
way you're doing Ask Change.

(09:58):
You can't just tell your team,don't do that anymore.
And I think that's one of thehuge things we're seeing.
Interestingly enough, we're alsoseeing a lot of people taking
our defensive drivingcertificates.
And this is something that wedidn't push this.
It's something that was kind ofbrought to us later.
They're taking those defensivedriving certificates and they're
taking their certifications forwhat they've done in our

(10:18):
platform, and they're sendingthat in to their personal
insurance in addition to thecompany sending it in to their
regular carriers.
And some of these guys arestarting to see discounts in the
regular insurance.
And the fact of the matter is,when we started this business 10
years ago, a lot of it was thecompanies that wanted to be
better.
The companies that want to dobetter, the companies that want

(10:39):
to be at the top of the game.
But now we're at a place withthe insurance crisis.
telematics are table stakes.
If you're not gonna usesomething like Pax, that's fine.
But having a solid trainingprogram is becoming table
stakes.
And I'm hearing more and moreabout carriers wanting to
actually see, show me yourtraining program, tell us what

(11:00):
they're going through.
Give us everything.
How does that landscape shift?
And most importantly, thequestion that everybody wants to
know, how the heck did we getwhere we are today?
Like how did it go from beforeCOVID, five, 10 years ago not
being a big deal to nowinsurance is all anybody talks
about'cause people are goingoutta business because of it.

Sure.
in 2010, I'll just start there.
there were a lot of markets andI called it a soft market,
right?

Okay.

means you have, a lot more carriers to go to.
I'm putting this in layman'sterms.

You've got options

Basically the soft market means you got a lot
of carriers that are probablygonna all try to bid on
different risks,

Okay.

they're more open.
To taking more risk in those Ithink sometimes.
And, but they don't have to,right?
So, because there's a lot ofother options.
So if there's a good risk theymight get a price from everybody
and then compete for it, etcetera, et cetera.
Whereas a hard market, you havea lot less markets available for

Okay.

risks.
and it creates, an environmentfor insurance where instead of
you have the carriers are gonnabe a lot more picky and choosy
in what they want to insurebecause of, pressure that's
coming down from reinsurance.
And when you have insuranceprograms, right, that paper that
you have with your carrier'sname on it, is gonna be backed

(12:59):
up usually by a lot of otherinsurance carriers,

but it's almost like banking and investing,
right?
I think of them almost likepicking stocks because they've
gotta go in and they've gottadecide, you know, what's a good
investment?
What's not a bad investment, isthat the right way to think
about this?

I think that's a good example or a good way to
think about it is, basicallyinvesting into a product.
So like, let's say a reinsurancecompany has the option to invest
into a workers' comp program, aproperty program, or a
commercial auto program,

I.

one is going to yield them some profit?
they're businesses they're in itto make money for a long time,
the commercial auto, whetherit's pricing or improper
underwriting or tort, we saw theadvent of the Morgan and Morgan
type of law firms, the big lawfirms that are basically other
types of ambulance chasers,things like that, where they see

(13:51):
a company name, right?
You're gonna see a company nameon the other side of a claim,
like somebody brings this lawyera claim and they see, oh, well,
we should go after the maxlimits.
And I'm not necessarily gonnasay one, you know, they're not
doing their due diligence, orthey're not doing the proper
investigation on the claim tomake sure that they're.
prospective client isn't lying,but a lot of the stuff we talked

(14:12):
about technology is findingtoday that a lot of people out
there are lying about theirclaim,

Oh, absolutely.

And we've found specifically where in a lot of
claims, I had one instance inSouth Florida where there was
almost a policy limits hit untilthe video footage showed that
the driver, nothing hadhappened.
She said her arm got slammed andshe got dragged and all these
things happened,

Geez.

she went after policy limits, and in a lot of
cases in the past probablywould've.
Got it.
what happened to the industry inthat time period where cameras
weren't involved, where, youknow, underwriting was a little
bit more, antiquated where theydidn't have the technology they
have today to do a lot of thebackground, data search, et
cetera, et cetera.
So you see a lot of nuclearclaims, a lot of this, stuff

(15:00):
that the lawyers were able toget away with, in my opinion.
so I think tort reform, like inFlorida and in

yeah.

where carriers don't want to come into the
state.
I think in 2017 area, I visitedseveral carriers that were not
doing business in Florida, we'rein

Right.

but I was trying to get Florida to bring in more
carriers and the first thingthey mentioned is the PI term,
the tort, a lot of the legal,environment we have down in
Florida.
And we had a lot more of that,than some of the other states.
I know other states have gottenworse.
There's a list out there likeCalifornia and Georgia top

It, it's all the major markets, right?
So what, what I think we'reseeing, and I think where a lot
of this might've intersected isit seems to be New York, Miami,
la, any market large market forour industry becomes a large
market for those predatoryattorneys.
predatory towards us.
so I guess my question becomes,knowing that, and seeing that

(15:56):
you've got a lot of guys, and Ithink this is probably the
number one complaint.
You've got a lot of guys thatare like, well, we've never, you
know, I have no claims.
I've got an awesome loss run.
I've got everything solid, I'vegot everything buttoned up, and
I'm still getting slaughtered bymy insurance rates.
how does it work in terms of.
Those types of companies, is it,you know, a bad apple ruining it

(16:19):
for everyone or what?
What's the issue?

in a way it's multiple apples, right?
So you're always, I think thatthe carrier side, they have a
very difficult job in trying toalways keep, you know, I I, I
always respect what the carrierunderwriters are doing, All the
major limo carriers out therehave.
Probably tweaked theirunderwriting, tweaked what
they've been doing as far as,collecting data

Right?

to do historical underwriting, what's happening
is you're in a pool.
I mean, insurance is typically apool, a program, right?
they're trying to get a pool ofoperators that are all if they,
in their minds, right?
Like

Right?

gotta, we want to have driver training year
round.

Yep.

will lower it a little bit, right?
Lower the chance of a claim,right?
there's always gonna be yourshock losses or uncontrollable
claims

Oh yeah.

that are completely outta your control.
Those are unfortunate and thosehit a lot of people and they hit
the carriers as well.
The carriers have done anexcellent job, They're switching
towards AI and analytics and

Predictive,

data can they get to try to predict?
It's a predictive model, right?

right?

what's gonna happen if we insure this risk
for X amount of money?
Are we gonna be profitable?
Are they gonna have a big claimin two years?
I mean, there's a lot ofprediction with, especially with
ai right?

Oh, yeah.

Come out.
There's a lot of new ways topredict it.
This year we heard, at the stateof the industry at the NLA CD
show that I think it was Mr.
Lucci that said, you expect a14% increase in insurance in 26
or 2026.
And where is he getting thatnumber?
Because this past year I did anaverage, or at least on all of
the carriers and what

Yeah,

and the ones I represent, oh, about a 17%
increase across the board from20, in 2025.
And that's on everybody that,that's like the clean guy, the
guy that has never had a claim.
Now they may have a

So that's a 14 to 17% expected increase, Nick,
right?
Like, and, and yeah, bad newsbears here.
So if, if I'm an operator, evenif I have a perfectly clean
year, I should be ready for a 14to 17% increase.

Maybe.
Right.

Okay.

it depends.
the average, and what I mean bymaybe.
up to your carrier, your

Right,

your, to fight for you, right?
To, to say, Hey, this guy, lookat his five years, look at what
he is done in six years.
Look at what he ins, you know,put these cameras in.
Look, he's got driver traininggoing on.
Look, he's in the safetyprogram.
He is got this.
He is got that.
So you're fighting to get thatprice reduced to a flat renewal
or 5% increase something that'smanageable in your own overhead

(18:50):
we used to call an inflationaryincrease 4% in our industry.
I, I've, I've had theterminology used by carriers
before.
Not all carriers have said thatthey do inflationary increases.
what do I mean by that?
Inflation on parts.
we had some crazy inflation,after COVID, especially

repairs are insanity.

Repairs, but not just repairs.
The cost

Oh.

a lawyer or the payouts on a claim, are the
liability side of the inflation.
A lot of people always can dothe, oh, well, car parts and the
price of a vehicle has gone upand this and that, that's on
physical damage or whatnot.
But when you look at theliability side, the cost to
fight a claim has gone up.
The cost to defend a claim hasgone up.
The cost to, I think I, I readsomething in five years, we had

(19:34):
a 60% increase in Florida in theamount of, uh, legal fees.

we had Tim Delaney on, and Tim Delaney dropped
that.
It's like, and, and hopefully,I'm not misquoting Tim here, but
I wanna say what Tim said was itwas like 14 years, 14 straight
years of not being theprofitable segment of insurance,
of not being able to make thatprofit.
And I guess my question becomes,it get to kind of the max or the

(20:05):
ceiling on that?
Or is it something where it'sgonna keep reacting and it's
gonna keep going up?
Because the other thing I hear,especially from operators is,
man, look at how much I'mpaying.

(21:21):
If I'm paying all this money andI'm not having any claims, this
guy's gotta have a new yacht.
He's gotta be buying a boat thisyear.
Right.
Something's not adding up.
And I, to a certain extent, Ithink that's, I, I'm not gonna
say it's unreasonable because Ithink that feeling of we're
we're not having claims andwe're paying in and paying in
and paying in is a really toughthing, especially if you're an

(21:44):
operator that's worried aboutgoing outta business and you're
paying in more and more onclaims.
I guess at what point do you saythis is where we think it's
gonna plateau or it's gonna peakoff?
Because I think there's a lot ofpeople that are really scared
about the next couple years.

I've heard from a carrier that tort reform
alone, which we had in Florida,and

Right?

Texas is working on tort reform.
I Georgia is working on it

I,

modeling Florida.
But our tort reform in 2023, HB8 37, which Morgan and Morgan,
by the way, tried to overturn

I can only imagine the amount of money they spent
trying to fight that.

our governor, well, they tried to overturn it
with another bill, and ourgovernor said he would not
backtrack on any tort reformbecause it's helped the
insurance industry.
And what it's done is it'schanged the statute of
limitations on claims from fouryears to two years.
MedPay caps 1 21 70, variousthings that have helped.
rates a lot.
That tort reform is alreadyhelping rates a lot in Florida.

(22:43):
Is it mean we can open the doorfor new tort reforms?
I insure taxi cab fleets 600 carfleets, 300 car fleets.
I insure limo fleets.
charter bus fleets.
non-emergency medical fleets.
everybody is fighting the samebattle, increases in insurance.

Oh.

is it a thing where the profits are being
pocketed?
I wouldn't say in today's world,in 2026, in the nineties I heard
about that happening.
But, that person got in troubleand

tell that story real quick, right?
Because,'cause our view, ourviewers are now gonna wanna be
like, hold on, somebody did buythe yacht with the, so, so give
us the brief version

company back in the, in the, nineties, early two
thousands they had people at thetop pocketing profits, and or
spending the company profits toour towards expenditures that
probably were not expendituresthat benefited the company in
any sort of way, personalexpenditures.
that company didn't have themoney to pay claims.

(23:36):
claims shot up and it wentunder.
we've seen a lot of car carrierslike that.
I don't know if that specificsituation with, using funds for
personal use has it been in anyof the other, I think a lot of
times what happens is you see alot of underpricing, people that
want to come into a market as acarrier, and that what they will
do to take a segment of thebusiness is they will price too

(23:59):
low

Yeah,

come in without the proper data.
Maybe they have data, maybe theydon't care about the data.
I've seen this happen to us afew times, with programs that
come into Florida and justcompletely undercut the
marketplace.
And then in two or three yearsthey're gone and it's like,
what, what happened?
And it, and basically it takestime for these million dollar
claims to hit the books.

(24:20):
that's why I think this tortreform has helped a lot, is it
gives them a timetable now to

well.

claims fought,

And back up for a second, Joe, explain that.
Because I think, one of thethings that happens with
insurance is we've heard aboutthe reinsurance market.
We've heard about all thesedifferent pieces, but to a
certain extent, like, and, and Ias as transparent as you're
willing to be with me, but youknow, a lot of people look at
this as, I pay them an amountevery month.

(24:47):
It goes there.
If I'm trying to figure out likewhat percent of that premium
actually goes to a broker, whatpercent of that premium actually
goes to like setting aside for aclaim?
is there like a set way tounderstand that business?

So think of it this way.
if you take the makeup of a riskretention group, or you take the
makeup of a.
Captive operation, which,

Yeah.

are two different types of insurance
models.
and then you have guaranteedcost type companies like rated
carriers.
a lot of these models you canlook into and see the
differences right there of whereyou're gonna have a, an amount
of money that has to go to legalfrom the pool, right?

Right,

is a pool of people, it's a pool of
operators, it's a pool ofproperties.
whatever you're insuring.
and so that pool is the moneypool.
That money needs to be used toadjust claims.
So you're gonna have anadjusting arm, right?
So you're gonna have to go and,and, and hire a team of people
that are gonna go out and figureout what happened at the claim,
Then you have legal fees, theexpense, of hiring lawyers to

right,

I feel like you're gonna have to go Chart
your premiums being used for theclaims themselves,'cause you
have fees, right?
Those are

right.

the expenses are separate than the money being
used to actually pay claims.
And then you have with, thosefees with a carrier.
Let's say you have like an arated carrier or somebody that's
been around a long time, theyusually have.
You know, to pay regular fees,to be in a state, whether it's
an admitted type of situation oran ENS type of situation,

(26:18):
there's gonna be a lot.
So those premiums get spreadaround to all these different
groups,

Okay.

different pools.
some people start their owncaptive programs.
We've, know, started and quotedcaptive, uh, whether it's a
standalone, like there's silocaptives, there's group
captives, silo captives, meaninglike something that is just that
insured.
And there's such a big heavybackground that, that insured is
siloed to their own claims andnot at the expense of the claims

(26:45):
of another operator, let's say.
And then you have a groupcaptive where that particular
operator might be in a group,and you are now subject to the
losses of the other people inthe group.
Now there's payin fees andthere's other kinds of levels.
But I'm not gonna get into, likeI

Give, give us, give us the really simple thing
there, because there's a couplethings.
I can tell you this year I'vehad people come up to me like,
have you met our Lord and Saviorthe captive?
And I'm like, all right.
I get that.
It sounds like a wonderful idea,but what my understanding of
captives and what, my insurancefriends and the experts that I'm
lucky enough to deal with theinsurance industry have kind of

(27:23):
told me is a couple things.
captives are not a short termsolution right now.
You shouldn't be changingcarriers frequently anyway, but
you really don't want to be in ascenario where you are changing
them.
Frequently, no matter what on acaptive, you know, you do that
with insurance carriers.

(27:44):
They're gonna know something'sup, they're gonna know your
price shopping, they're gonnaprobably look at you as a higher
risk with a captive if you tryto shop around captives.
It almost sounds like you'remissing the point to a certain
extent, because from what Iunderstand about captives, the
whole idea there is you'rebringing together a group of
similar operators.
You are spreading that riskamongst yourselves, and then you

(28:05):
are basically having thosepools.
But as time goes by, you're ableto pull money back from the
pool.
Is that, is that kind of the waythat this in a, in a really
simple, right, I don't want togo super deep and spend two
hours on captives, but can youkind of give us that overview of
how that works?

so So you have your single parent peer
captives, right through

Okay.

or your, what I, I think a silo cap, whatever
your single parent captives areowned by basically one company
and it sures only its own risks.
That's kind of like, it's almosta form of self-insurance.
captives themselves are a formof self-insurance that provide
cost savings.
lets you have a little bit moreflexibility and control in
managing risk because aninsurance company, basically a

(28:48):
first dollar guaranteed costcompany, they're gonna manage
those claims.
They're gonna control thoseclaims, they're gonna decide
what gets paid out their legalteam, right?

Right.
and that's a big point ofcontention right now here with
operators is like, Hey, theyjust paid this claim out.
You know, I think they shouldhave fought it.

Well, I want to get to that in a second.
on what I think about that Butgoing back to the captive

Yeah.

have group captives, owned by multiple
companies, right?
So it's owned

Okay.

The, and the owners of the captive are the
insureds themselves, right?

Okay.

own this group captive, oftentimes they pull
their risk

I.

in the same risk.
And then you have associationcaptives, which have been very
hard in our industry.
I've seen association captivesfor other, we've tried it.

Is that a captive owned by an association?

yes, it's usually formed by a trade
association.
You see it a lot with, medicalmalpractice.
They had an association captivehere locally that I was actually
looking to help move, et cetera,et cetera.
But, in our transportationworld, I have yet to actually
see an association captiverecently and I think a part of
that is because you have to havea good amount of risk pool, and

(29:52):
we have a lot of, fleets,

Right.

small operators, large operators, et cetera, et
cetera.
And to form an associationcaptive, you don't wanna leave
out any segment of yourassociation and what segment, I
mean, like, one car guy thatdoesn't fit the mold or fit the
requirements in

Well, that's gotta come with its own rules, right?
If you have an associationcaptive, you gotta have the door
open to everyone, right?

it's difficult.
we're still subject to the sametypes of things like
reinsurance.
Usually you have to reinsureyour captive unless you have
enough money that, that, thatyou can put up with the state to
do, which I've seen in very fewcases happen out there.
But, so you have association,captives that, that in our
industry, just, I haven't seenit happen yet.

Right.

captives, which are usually, captives formed by
agencies like myself, we'venever formed an agency captive.
some agencies will form agencycaptives, if they have enough of
a book to underwrite the riskfor their client, and

Okay,

Rent a Captives or protect, you know, which I
basically allows a company torent the portion of an existing
captive so they don't have tocreate their own captive.

so where would your national Interstates fall in?
I know they're one of the bigones.

they form their own captives.
And so National interstate canwrite different ways.
They have their own insuranceprogram, which is not in
captive, or they can havecaptive cells they've created
and group risks together,

Oh,

and then you might fit that captive, but it's
really up to the group orwhoever's controlling the
captive to decide if the riskfits the appetite of the
captive.
Do we want somebody that had.
A frequency issue, frequencybeing, how many claims are

it's

in a year

okay.

How many times do you go to your insurance for
those claims, et cetera, etcetera, or severe claims.
Do you have a lot of severeclaims?
If you had one, was it a not atfault claim?
There's gonna be a lot of thingsthat are gonna govern if you fit
the captive or if you

Okay.

Do you have enough, premium to fit the
captive?
Maybe, that particular captivehas a premium level.
You have to have 75,000, or youhave 150,000 in premiums.
I've seen captives where it'slike you have to have 750 K in
premium to fit into our captive.
You have to have 2 million inpremium to have a single parent
captive.
typically those captives have acorporate structure.

(32:02):
The ones within, like youmentioned, national interstate
captives, they have theadvantage of having national
interstate.
paper,

Right.

Otherwise, your captive is gonna have to get
fronting paper to front yourcaptive.

What now?
Now?
Yeah.
I was about to say definefronting paper real quick for.

by that is like, let's, you see Progressive on a
certificate Progressive Express,or state national, state
national is a common, frontpaper operation where they
charge a certain amount to arisk retention group

Yep.

to front the program to become a captive and
go into a state that requires arated carrier that has rates and
filings.
Maybe not rated carrier, butadmitted carrier, they have to
be vetted by the state, right?
and some states allow ENS orallow carriers that aren't
admitted

What is ENS

Excess and surplus lines.

Okay.

carriers.
but

I

when the admitted carrier, like an
admitted carrier is basicallygoing to be overseen by the
financial department of thatstate.

Okay.

that financial department, they have to adhere
to guidelines of solvencyguidelines, which may, you know,
so what happens if this carriergoes belly up?
The state will back the claimsto the end of your policy term
up to a certain limit, an ENScarrier won't have that same.
ability because they're notgoing through the state's
regulatory program.

(33:24):
That's kind of the difference.
and so back to the captives,captives are usually in specific
domiciles.
They could be on shore.
I've seen them in NorthCarolina.
I've seen them in Vermont, atDelaware, wherever.
Cayman Islands, Bermuda,there's, there's islands, you
know, and the domicile providesthat regulatory framework, which
is gonna be the capitalrequirements for the captive
formation, the for the taxrules, the governance

(33:45):
expectations, the standards ofreporting.
So there's a lot of stuff.
It's basically creating your owninsurance carrier

it's like a mini insurance company.
With risk sped tightly with whoyou're letting into your little
company that you're creating.

They, there's a lot.
The captive functions likeinsurance.
They'll issue the policy,collect the premium, pay the
claims, buy the reinsurance.
Remember reinsurance is still anissue on the captive

Right?

unless you have an amount of

Just a ton of money to cover that difference, right?

have the reinsurance, which I've rarely
seen over time you're gonnabuild a reserve and surplus from
premiums To pay those claims,those

right.

losses that'll eventually come about.

So what's the catch?
Right?
There's gotta be a catch.
This all.
I mean, and that's kind of thereason that I hear operators are
like, man, we're gonna make ourown captive.
It's gonna be great.
We got all these guys that don'thave any issues.
We're gonna, save all thismoney.
Where does the catch come in?
Or where's the'cause?
'cause everything's got a proand a con.

premiums can have a deductible within a cap.
They, there's

Okay.

and tax considerations.
again, every captive kind of hasdifferent tax considerations.
I've seen some with really goodones.
I've seen some with like, kindof the normal run of the mill
captive tax considerations.
And the tax treatment candepends on sometimes the
distribution of the risk or theshifting or jurisdictional
rules.
But eventually what happens is,is if you have a captive or a

(35:06):
group captive that has a pooland they can audit that, right?
And, and it comes back to you insavings.
That's what you're talking aboutwhere people are like, okay, I
could save money because in 18months if our captive, or if our
group has not had any of thoseclaims payouts, then that's
where this quote unquote profit.
the imaginary, if you saysometimes because of the claims,

(35:29):
uh, the that these insurancecompanies may collect on when
their pro within their programscan instead be used to either
fund the captive surplus or getreturn, uh, you know, to the
insured in a, in a varioussituations, like we've seen,
it's kind of like we used to dosomething called a retro policy,
basically, uh, does an audit in18 months and if the premium,

(35:53):
um, we did this on onetransportation risk, my father
actually did it in 2012.
basically for one account withina carrier or the retro funded
policy, you pay an amount, let'ssay$8,000 a unit.
You have a minimum and a maximum25%

Okay.

sides or 50%.
And if the minimum is 4,000 aunit and you haven't had any
claims in 18 months.
You can actually now pay yournext premium at the minimum,

Okay.

instead of the mid premium or the max premium.
captives may function that way.
They may have like, okay guys,we've been great for two years
look at all these profits, we'regonna lower our paying cost, or
we're gonna lower our yearly.
Maybe you get some money back.
so they all functiondifferently.
especially the ones that arehoused within carriers function
differently than the ones thatare formed by a large

(36:42):
transportation company.
So like, if

Right.

really large, 2 million plus in premiums, that's
when you go back to, like theindividual ones versus the group
ones.

And, and we, we've seen that with a couple of our
very large customers areessentially self-insured,
they've got enough premium towhere they basically say, we're
gonna formulate it.
Now, when I say our larger ones,we're talking like massive,
massive companies.
And correct me if I'm wrong,what I've kind of found is this
doesn't seem like, and I'veheard the numbers shift around,

(37:14):
but the point I've heard issomewhere between 10 and 25
vehicles is where, you know, ifyou're below that mark, if you
don't have at least 10 vehicles,it probably doesn't make sense.
You're probably not gonnaqualify for the captive.
As a broker, how do you, thinkabout that?
At what point does a captivemake sense?

it makes sense for, so we have, when we have
fleets that are already incaptives.
And then when, when we havefleets that are very large and
have a a large amount ofpremium, they're paying to the
regular marketplace.

Yeah.

say you have 61 buses here and 60 buses there,
and you've grown, you were

Yeah.

K and then 800, then 1.5 million.
and you're a good risk, ifyou're doing

Right.

the safety, profitability.
That carrier starts to make moreprofit.
If you're not having a lot ofclaims, that would make, then it
would, might make sense to startlooking or searching for a pure
captive or a single parentcaptive.
Maybe if you are$2 million inpremium or 3 million But if
you're in the 7 50, 6 50 range,you might, or five 50, or like
you said, down to one 50,$200,000.

(38:16):
I know that there, then youmight qualify for those group
captives.
there's a difference in size ofyour company.
you may want to create a captivefor only your group,

Right.

up transportation companies, if
you're, you know, growing andgrowing and growing and you're
very large and you have a lot ofrisks, then you only want your
vehicles in that captive becauseyou can control a lot

A lot

every captive has to meet a minimum capital
and surplus requirement.
that's why those premium levelsare gonna be, you need to have
'em up there if you want to bethe only one.
in that captive.
otherwise the captive needs togroup,

Right.

like-minded risks into a group, and then
they can ensure that group,together.
they all own, part of that, andwhoever the front company is,
whether it, it depends.
Like if you wanna state, I usestate National as a front paper,
right?

Yep.

in 50 states, so I think 50, don't take me for
that, but I think it's 50.
So if you can add somebody in,oh, I got a guy in New Jersey,
or I got a guy down in Georgia.
I Florida, I California.
You could start adding differentrisks from different regional
territories into your captive,um, because your front paper
allows it.
you can go into admitted statesFlorida is one of those states,

(39:27):
we do not allow risk retentiongroups here, without fronting.
And at that point they need tohave a rated, admitted fronting
paper company, like a statenational to come in here.
Now, laws may change.
I've tried to like be like, oh,we should open up this ENS we
should allow more carriers tocome in here.
I work with a lot of great ENScarriers.
Just because they're notadmitted carriers in my state,

(39:49):
doesn't mean they're not greatfor insurance or providing good
structure, good legal, goodpricing, good, claims

Right.

They might be doing all those things, but
state rules don't allow them tocome in here, which, might make
your state more difficult?
major metropolitan areas likeNew York City, la, The rules are
different there.
the regulatory rules insurancerequirements and the things that
the carriers that are allowed tocome into certain states, et
cetera.
everywhere you go is different.
You have to deal with that.

(40:17):
with captive, sometimes if youhave, a spread, if you have a
good, you know, if you have agood front paper, if you have a
good, uh, pool of risks, you,you can go into any states and
pick up other risks to add toyour captive, and you can be
picky and choosy.
And it's up to the members ofthat captive you mentioned
national interstate.
Sometimes it's up to the companyitself.
where the captive's domiciledin.

if you're a 10 car or less company, is there a
point where a captive becomes aviable option Or is this more
skewed towards, the larger sideof the business?

my experience has always seen it in the larger
side.

Okay.

rarely seen the 10 or less, uh, in captives.
I

Yeah,

never like.

same thing here.
I bring that up because I'mseeing a lot of people saying
that as an option.
we talked about this on aprevious episode, I actually
gave a call to action to theindustry.
in our world we've got insuranceas a state problem, when we were
with NLA and we went to Day onthe Hill, one of the big things
there was we asked for aninsurance task force.

(41:15):
and you're lucky enough, you sitacross multiple industries like
I do, you've got, you know, theTTA side of things where you've
got NEMT and taxi.
They're facing the same crisisbus is facing the same crisis.
And so what you guys were ableto do with tort reform on a
larger scale, at least in mymind, from everything I've heard
from everyone on the insuranceside, is that appears to be the

(41:38):
best long-term solution.
But the big caveat there beinglong-term, right.
None of that is anything we'regonna get done in the next
month.
It's something that is gonna bea long-term fight

Yep.
the long-term fight.
I've always thought tort reformis the best way you want to all
benefit, right?

Right.

carriers doing business in a state to benefit.
You want the best, the A rated,the B rated, the non-rated.
You want all your carriers tobenefit from something that will
allow them to price things in away that's affordable for the
consumer.

Right.

what is the insurance crisis?
It's unaffordability which we'reseeing in a lot of
unaffordability across the boardin, various forms of insurance
that now the markets aresoftening.
Like my homeowners went up,right?
My,

Yeah.

my personal auto went up.
you're seeing some softening inthose markets and I mean, you're
not seeing it in our industry.
And I think what's happened isthe frequent claims, collisions,
property damage, the highliability exposure, bodily
injury, third party, all all ofthat stuff has, has, has
created, made us a high risk,segment

How many carriers do you think there are?
Like if you said across the US,how many actual, like total
number of carriers would you saythere are that'll write kind of
the passenger groundtransportation industry?
Do you have any kind of idea offthe top of your head?

so again, I mentioned big carriers since I
started here, like CarolinaCasualty,

Yep.

stopped writing public auto.

I,

mean they won't come back?
no.
I've seen Northland who stoppedwriting public auto a few years
ago.
Leave before and come

come back.

depends on, what's going on in the industry
or state.
I've seen a lot of othercarriers leave the four higher
space.
I think eight to 10 is probablya decent number, a good

Yeah.

there might be more in some states that allow
ENS carriers, which is one ofthe things in Florida, I've seen
some of the Florida operatorstry to say, Hey, can we open up
our state to ENS carriers?
because right now we only allowthe admitted carriers here, and
there's other states do thesame.
so I think that, one of the,like I, we were talking about
one of the issues with therising claims.

(43:50):
Is affecting the reinsurance, isthe lack of carriers is when you
wanna put a program together,usually you go to target

No.

And where you're gonna find all the reinsurance
carriers saying, Hey, what areyou trying to start a program
for?
Like, when you say livery,commercial, auto passenger
transportation, I don't thinkit's appetizing anymore to these
reinsurance carriers to startthese programs.

Talk about that for a second.
What do you mean by that?

I don't develop programs for insurance right
now.
that's not what my specialty is.
But from my understanding, Youhave to find a front end carrier
willing to work with deliveryrisk directly or work with the
agents, right?

Right

they have to have reinsurance, companies that
cover different layers becausethat company won't have the
money to cover the claims intheir program.
So when the program getsdeveloped, they go to target
markets or meet directly withthe

now.

they need to get a certain number.
Sometimes I've heard fivereinsurance companies, maybe
more, those reinsurancecompanies all get together and
negotiate with the peopleputting the program together.
they have to, negotiatereinsurance treaties that
recognize, and price the fleetmanagement risk control stuff.
So they're gonna say, how areyou guys underwriting?
What's the fleet managementline?

(45:03):
What's the underwriting?
they also have to ensure therisk transfer meets regulatory
tax standards.
There's a lot of technicalitiesinvolved, but what I met was
with the profitability is theyalso don't wanna do something, a
program that they feel is we'renow high risk.

Right.

means is they may not make a profit.
uh, we've had high loss ratiosand then off, the data itself.
We've had poor telematics data,fragmented loss histories,
things like that, which I thinkis improving.
And that's something I think isgoing to change.
When you've heard people thatare optimistic, right?
Like

Right,

maybe the telematics, maybe the ai, maybe
all of the ways that we look at,at, uh, loss trends and the way
that we we do things now isgonna change to a, format or
aversion where we have more eyesin the insurance industry on the
operations.
cause why, when you get peoplethat aren't, that are lying to
their insurance agent, lying totheir insurance company and

(45:58):
getting insured by that samecompany, that the operator doing
things correctly is gettinginsured by now you have a very
risky person in a program thatyou're in.

right.

when those risks, when you have a lot of
that going on, it creates a kindof a effect where now they have
to get pressure from thereinsurance to raise their
rates.
Those reinsurance companies comein yearly on an annual basis,
normally, normally.
To a carrier who has a programlike the front, like
progressive, they'll say, youneed to raise rates.

(46:29):
get more money for this risk,across the board,

Right.

just the bad ones.
You need to be more picky.
You need to have a ratio ofcharter buses to smaller units.
You need to have this ratio, 15%of this type of business.
And that we don't want any morethan that.
And the reinsurance can kind of,the reinsurance companies put
pressure on carriers and on thecaptives.
Certain types of captives.

(46:53):
There are various, there areunique ones out there that don't
have that reinsurance pressure.
but most of them do.
And that is where a lot of thiscomes from.
A lot of price increases arecoming directly.
You've heard it over and overand

Oh yeah.

I'm sure is coming from that top-down
structure.
what are we doing to combatthat?
tort reform is huge, groupcaptives gain scale.
And as they gain scale, theygain gain credibility with
reinsurers.
So maybe they get less top-downpressure if they have a good
scale.
that they combine the telematicsdata now that we get with the
ai, the devices, the cameras,with the underwriting which will

(47:29):
help you negotiate betterinsurance pricing.
a lot, uh, different kinds ofstuff.
Structured reinsurance,multi-year loss portfolio.
There's different, differenttypes of things in the
background that reinsurance cannegotiate with the front
company.
so I I, I have definitely seen alot of carriers.
that you guys are all insuredwith in the marketplace are

(47:50):
strategizing to get rates down.
I think there's a misconception.
That sometimes they're raisingrates and don't care.
I always say if they didn't careand once you disappear, all the
operators, start disappearingand there's less and less and
less to ensure, that's lesspremiums for them,

Right.

less premium for them to obtain.
The goal is to get to a pricepoint where everybody can pay
and feel comfortable it createsnew operators, expanding our
industry more livery, moreoperations, more vehicles being
added because the rates are notkilling you.
Right?
Because a lot of times people, Ithink the operating side is
they're looking at thatinsurance rate.

(48:28):
If they want to add a vehicle,if they want to expand, if they
want to get bigger.
'cause those insurance rates cango from they can afford to
something that's unaffordable.

let me ask you something.
one of the things I hear all thetime is, well, you know, these
big carriers, they insure somany different people.
They don't care how hard theysqueeze us.
How many of these carriers, youknow, we've had Tim Delaney on,
we know that Lancer, you know,kind of born in the, the limo
and the bus industry, that'stheir bread and butter, How many
of these carriers are heavilyinvested like that, if any?

(49:02):
a lot of them are prettydiversified.
And for a lot of customers it'stough because they're like,
well, you know, they're, they'resqueezing on me.
They're squeezing on a bunch ofdifferent industries.
what does that landscape looklike?
is it just a bunch of really bigcompanies How many of those are
kind of specialized?
What does that landscape looklike?

So you have special like Lancer?
Uh, awesome.
They've been a specialized inour industry for a long time.
Philadelphia has differentspecializations.
They have program, thereforehire program, and has a good
reputation.
but that doesn't mean that's allthey do.
but some don't like a lancer,you know, they completely
probably specialize in passengertransportation, whereas some

(49:44):
carriers are much larger inother segments.
we had a carrier in Florida thatthey were specialized in
commercial auto and for highertransportation and moved into
workers' comp and

Yeah.

a lot of other types of business.
now they don't do commercialpassenger transportation

Oh, they stepped out completely.
Yeah.

Yeah.
So they were the largest carrierin Florida for passenger
transportation, and moved out ofpassenger transportation, I
think four or five years ago.
they no longer do it, butthey're still there and doing

Right.

They, I've send risks

I.

I send risk for, different types of things.
you have programs thatspecialize, right?
The program within the carrier.
New York Marine in general mighthave a taxi specialist, program.
So you quote stuff through thattaxi program that are taxi cabs.
Then they have a limo program.
So you quote things throughthat, that, that's a limo.
Then you have companies thathave tried to combine several

(50:36):
types of transportation and

Are they pooling that together Because that's one
of the big things that I knowI've heard over and over is
that, we're getting lumped in.
how does that work at thecarrier level?
Is that something where each ofthose groups is getting assessed
or is it, all of the insurancethey work across?

that's gonna obviously depend on the
insurance carrier.
I'll

Okay.
Yep.

carrier structures their own, programs
different ways.
And you might have one company,that they have to separate
everything because

Right,

want one program to be bogged down by something
risky.
And,

right

things with adverse selection in certain
programs you don't get withother programs.
basically what that means is thetaxi industry has a lot of
frequency.
'cause they're on the road a lotmore.
They're

now.

they're not saying scheduled rides.
luxury transportation, evencharter transportation is more
scheduled than, on-demandtransportation like a TNC or a
taxi operation.

Right.

tho so a lot of times you have to find taxi
programs, that are gonna ensuretaxi cab risks.
most of my livery programs thatinsure limos or luxury, don't
want anything to do with taxirisks.

it's a different risk profile.

But what happens, right?
You need underwriting That'swhat I was talking about.
in the past you've, we've, weused to call'em glorified taxis,
so you might get people sneakingin.
that are on demand people or areUbers and Lyfts or operating the
TNC stuff where you don't wantthat kind of exposure in your
program, but you're tryingeverything to stop it, but it's

(52:08):
still happening.

right.

to a claim and you're like, this guy was
trolling the streets for fareslike a taxi

I've said this a million times to the podcast.
I'll say it a million more.
I get people that call me allthe time that say, Hey, my
insurance company wants to do asafety audit with me.
How fast can you get me thecertificates?
So I could tell'em I did all thetraining.
And the, the same thing I alwayscome back to is, twofold, one.
That's part of the problem,Don't be part of the problem, be

(52:34):
part of the solution, but two,they're assessing risk for a
living.
If you think an insurancecompany coming out to do a
safety assessment, you can BSyour way through and they're not
gonna smell it.
I think to a lot of operators,all insurance carriers, all
prices are the same until theday of the claim.
And, and I don't, I would loveto get your kind of thought or

(52:56):
assessment on that, because Ifeel like for a lot of operators
it's.
Make the payment, make thepayment, make the payment, make
the payment right.
And then all of a sudden it's,well, now I need'em.
Now I have this expectation.
And I think operators have foundout that that's where they're
also seeing differences in thecarriers and how they handle a
claim, what they do after theclaim, those types of things.

(53:19):
I think that's the harder partthough, as an operator to try
and guess and, you know, am Iwilling to pay, you know, so
many thousands more I hear fromoperators all the time being in
the training space, as soon asthere's a claim, it's like, Hey,
we gotta fix our trainingprogram.
We gotta do this, we gotta dothat.
And that's when they're reallykind of learning what they paid

(53:40):
for, if that makes sense.

Absolutely.
what you're saying is very true.
I get, I have friends that areclients that locally that
mention the say like, especiallyas an agent, as a sales person,
right?

Right.

of the information I'm giving you is
not from the carrierperspective.
I'm an agent.
I don't have the background orbehind the scenes to every
carrier.
I could just tell you the way ingeneral a lot of them operate,
and I've think you've seen onthe past, in the nineties, I
mentioned the nineties of twothousands.
I had a, I'm gonna use anexample, I had a client come to
me.
He had 270 something units saton the couch that you see behind

(54:12):
you, and blamed a third partyadministrator, for his claims.
a TPA claims handler.
And sometimes you get programsthat they can't manage all their
claims.
they set up the carrier, youknow, they have the program, but
they hire somebody, they saythis service to this claims
administrator, like NARS is oneof the ones out there.
There's others out there.

(54:33):
They handle the claims

they're a third party claims handling company,
like an operator would offshorehis CSR, only for handling
claims, right?

sometimes you get that, and you may not know
if that's happening, but I

Okay.

this particular insured was very upset and told
us, this, TPA claims handler,wasn't handling claims the way
the insurance company wantedthem to.
and they, or, or we want acarrier that handles the claims
themselves directly or has theirown adjusters.
and he specifically wanted that.
So you don't always get thatwith insureds.
He just felt that maybe thatcould change his performance,

(55:08):
maybe his performance was beingderived from the way the claims
were being handled.
I hear that often.
before the meeting with you, Igot off of a.
Meeting with one of my clientsand a carrier we have quarterly
meetings on their claims, andthey asked if I could get a
carrier that would do that,

Yeah.

something specific to them when choosing a
carrier.
this carrier said, sure, we'llabsolutely do that.

how large is that company and how often are they
having a claim?

that carrier company has 375 units, small
units, 230 ish

It's a fairly large company.

small units that are under 15 passenger, and then
their motor coaches and theirbuses and whatnot, are
elsewhere.
but the company I'm in, inquestion ensures the small
units,

right.

the small units with that particular carrier.
And then I have another companyhere that has all small units
with that exact same carrier,and they do the same thing
quarterly claims reviewmeetings.
Why?
Because they say, we want theloss runs.
We want a presentation on eachclaim and this carrier offers
that.

is that the operator holding the insurance
company accountable?

they get to ask the claims, and the adjusters.
The adjusters were at thismeeting I was in, and not just
the director of

They're, they're, they're taking an active role in
their claims.
Yeah.

something that they wanted when they moved
their insurance.
They wanted a company they couldhave that active role in

Right,

used to mitigating, handling and doing a
lot of the safety and whatnotthemselves.
And now we're going to a carrierthat's gonna help us do all
these things.
We want to have a, a, atransparency

They want a partner.
They don't want someone to justdo it.

most of the time, most carriers, will allow
client to delve into a claim andwhat the anal, like, how it's
being handled.
they want input from drivers,from, the company to help fight
the claim.
more carriers go that direction'cause they don't.

absolutely

they don't want to pay the claim.
So

no.

that direct involvement is huge.
as far as like, they want, they,they want a, a company, an
operation.
cares, right?
The carrier

Yep.

that cares enough to do these things and
to, and the operation wants acompany that's willing to allow
them, a word into the claims.
But does it always happen thatway?
No.
And, and you mentioned the smalloperators, those are gonna be
the ones that might, you know,they'll, they're still gonna be
carriers that'll meet with themor talk to them and say, Hey,
this is what's going on with aclaim.
But they, they're gonna be theones that are probably gonna

(57:37):
have a, a policy limits hit orsomething that happens to them
that hurts their insurance ortheir insurability or their
pricing more than somebody thathas a lot of premium.

Right,

is why they, you don't see a lot of small
operators in captives, becausecaptive can absorb a claim from
a guy paying$300,000 a year,right?
So if he has a hundred thousanddollars hit, they can absorb it
in the premiums and all thepremiums might be affected,
whereas a one car guy.
Might have a huge claim and thenall the, the payin isn't, isn't

(58:09):
there?
It's just, so that's why youhave carriers that create just
insurance programs where thatthey'll take anything from one
car all the way up and then youhave programs that they don't
want anything under 10

right.

exact reasons the captives don't like, Hey, we
wanna only see things with 10cars unless they're a great
operation and have many yearsof, of data that, that proves
that.
like, like I said, I thinkinsurance is a very reactionary
historical industry.
We look a lot at history, atdata.
the future is a lot of thesedevices you see going into cars,

Yep.

Philly tracks devices Progressive gives out,
AI devices like, Soliris camerasystems, Samsara Camera systems,
a lot of these things arescoring your drivers.
scoring your operation.

I, okay.

insurance companies a view of something
else that can allow them to getcredits filed with states to
bring pricing down.
states.
track the payouts in, in variouslocations.
We call it iso rating.
Here in Florida there's ratesthat are base rates and then
filed rates, right?
So they'll give recommendedrates by the state and you can

(59:16):
file to go over, under thosestates.
a lot of it's based on the, the,the liturgical environment or
the, the claims environment,the, the lawsuits, being in that
area.
So that's why a lot of timesyou'll see a rural area with a
cheaper base pricing than a high

Then I.

area, like a city, like a big city.
and the same state, you'll see acompletely different pricing
structure'cause the exposure isdifferent.
And because those ISO ratingsare different,

as we kind of wrap up, what do you say to someone
that is looking at insurance,that's looking at what's going
on?
You know, obviously there issome hope on the horizon.
There's tort form, there's allthese pieces, but if, if you are
talking to an everyday operator,we're coming to the end of the
year.
We're coming to the end of 26.

(01:00:01):
What expectations do you set forthem for 26, 27 and beyond?

Joseph Madiedo (01:00:08):
expectations I would set for them on insurance
is, the same thing as it thestate of the industry discussed
recently was that we have a 14%average rate increase of, for
2026 projected.
we've seen 17% rate increaseaverage at, you know.
year, this past year andremember, I'm just one
individual agency.

(01:00:29):
We're an independent agency andcertain programs might have
different numbers.

James Blain (01:00:33):
Right.

individual programs might have different
numbers.
and I've seen 15% rateincreases, 12% rate increases
from carriers this year,mandatory set usually by their
reinsurance treaties.
those rate increases normallycome from the reinsurance
meetings on their whole book ofbusiness, So I think
expectations in Florida and aredifferent than New York or an
expectation in another state.

(01:00:55):
But I think overall as a whole14% increase for the normal,
operator, the small operators,is about a good, a good price
point.
I would say if you're doingeverything correctly and you're
doing the safety, you can workyourself down to like a 5%
increase, a 10% increase, maybeno increase or a better price.
If you have a good specialistmaking sure you're covering all

(01:01:18):
of the markets available, youalways wanna make

Doing the work.

A specialist.
Right?
A

Yep.

And there's a lot of great specialists out
there.
the people I'm up against areexcellent at their craft.
Just like I try to be excellentat my craft.
Those are my other agents,right?
as long as you're a specialistin the industry, then you're
gonna have access to all the,all the great programs for
livery.
And those programs are alwaysinnovative, So I'm

Yeah.

the more we see analytics, the more we see AI
next year we're sitting at stateof the industry and they're
saying.
8% in

Yeah.

are a tort reform in eight states this
year.
And analytics and AI and allthis other stuff has been doing
great and we've weeded out a lotof the illegal operators from
the risk pool.
A lot of the people that aren'tfollowing the rules, a lot of
the people that aren't doingthings the way that they're
supposed to be done, a lot ofthe people that are, lying on
their insurance applications andthat's continuing and growing in

(01:02:10):
each carrier, at each agency,everything, we're always trying
to weed out the people that arenot doing things correctly.

Right.

it hurts the rest.

Well, I think the big takeaway for me, and this is
something I've said for a longtime and we've been saying since
the early days of the podcast isone of those things where you
put the work in, now you'regonna get the pay off later.
You know, if you're the guythat's calling me and you're
like, Hey, I got, I got myinsurance renewal in a month,
good luck.
You know, if you're like, Hey,we're gonna try and get some

(01:02:39):
telematics and we're gonna do itlast minute, I think the
companies that are investing intraining.
That are putting together solidprograms that are investing in
the telematics, that aremanaging the telematics and
using it to drive the training.
Right.
I always say those two areinterconnected and then that are
making the right decisions onmaintenance or making the right

(01:03:00):
decisions on hiring are notputting up with the things that
are going to lead to anaccident, I think those are the
companies correct me if I'mwrong, make your job easy.

Absolutely.
one of the things you're sayingwith a Verizon and cost of
insurance, you're getting a lotof shopping.

No.

that are out there saying, I need to find
this lowest rate.
It's out there somewhere.
You wanna approach people thatdon't have, you know.
if you're already have an agentthat's accessing all the
carriers, you, you want the newagent to say, listen, I, if
those carriers are blocked, allI send is a name A-F-B-I-N
number.
I'm not gonna send anyapplications.
I will only approach thecarriers if maybe they haven't,

(01:03:36):
placed it.
If your agent has all thecarriers, Make sure they're
giving you a price point fromevery carrier to make sure that
way that those carriers wereapproached.
and then you wanna make sure thecarriers are offering your
needs.
You said safety, drivertraining, all those things like
a lancer they look for all thosethings.

Yep.

A national interstate, you know,
Philadelphia at Incline, theylook for all of those things.
They send loss control peopleout to those risks.
They wanna make sure that theinsured, the application they
get in reflects the risks thatthey're insuring so yes, it's
important to put all that inplace.
one of those things missing youwon't be getting a quote for
this carrier or that carrier,and you don't know that might be

(01:04:15):
causing it.
So you wanna make sure you, youhave an expert in the industry.
there are a lot of us, that knowthe requirements discounts or
credits, to get you the bestrate possible or your
operational costs are going upevery year.
you can only raise your, yourprices so much before your
customers start driving offbusiness.
the seat I'm sitting in is notlike a very fun seat to sit in.

(01:04:36):
More often than not, I'mgetting.
Grilled lectured, yelled at,because of the rates increases
or the lack of finding aninsurance carrier that is gonna
fit the price point you'relooking for,

Right,

a reason for that.
And you wanna make sure to getthose reasons so you can correct
them.
And you just said it yourself,like this year I had to pay this
much, but I found out that if Ido driver training year round,
if I do camera systems, havingthose two-way cameras to
eliminate frivolous claims andlawsuits

right.

is very important to the carrier.
Very important to have it foryour own, company so you're not
sued, for something frivolousthat didn't happen.
making sure you have all theproper coverages, that you're
not doing certain things.
Like if you have DOT number andyou, make sure you're abiding by
whatever your DOT requirementsare.
You's very important becauseevery carrier is looking at

(01:05:30):
those safer reports or those cabreports that tell them
everything going on withsomebody

Absolutely.

governed by the DOT.
so you're helping yourself andwill you have a rate increase
because reinsurance pressuredyour company into raising their
rates Absolutely.
There'll be rate increases, butyou're lessening the blow.
If you're one of those operatorsthat have all these things in
place and you have your maxcredits are in there because
you're doing all the rightthings, and you're

Right.

programs out there.
there's a lot of great programsthat are ensuring these risks,
through an independent agent ordirectly through the carrier.
I would never suggest going toyour personal lines agent.
and I may, I'm not, I I'm nottrying to hurt people's feelings
but there's a lot of

No, you, you, you need an expert.
You really need an expert.

because why they won't have maybe the company,
they won't have the companies

They're not gonna have access you need.

they also may not know what you're talking
about.
When it comes to safety

Right.

to handling a claim, like if you call me up,
Joe, I'm in a claim.
I is on the I could tell youexactly what to do and where to
go.

Yeah.

need to be able to

I.

to, be able to work with and, and to know
delivery industry, know wherethose buses have to have that
proper signage so you can givesomebody a heads up before DOT
does,

Absolutely.

tags you for it.

I really think it's one of those things where what
you do now is gonna pay offlater.
Joe, I can't thank you enoughfor being on the podcast.
I can tell you this is kinda thehighlight of my week.
I think you've got someincredible information that
you've given these guys, if theywanna reach out to you, phone,
email, what's the easiest wayfor someone to get in touch with
you if they wanna have a chatwith you?

my email is emailJoseph@pickonline.com.

All right.

our website's, P-I-C-O-N-L-I-N e.com.
like I said, I'm one of thetransportation specialists.
It's all I do.
I'm not doing other lines ofbusiness.
I'm not expertise at other linesof business.
I sit on, like I said, board ofdirectors for associations
within this segment, within theluxury transportation, taxi
transportation, thenon-emergency medical

(01:07:30):
transportation, the charter bus,transportation, trucking.
We do a little bit of, but like,we're experts in all of that.
I answer questions for peopleall the time.

if you have insurance questions, even if
you're not insured by Joe, he ishappy to help you.
Alright, well I gotta tell you,this was a pretty enlightening
episode.
I know that insurance is gonnabe a hot topic for years to
come.
I think what we do nowinfluences what we pay later.
thank you so much for being onand thank you everybody for
listening.
We'll catch you on the nextepisode.
Thank you for listening to theground transportation podcast.

(01:08:02):
If you enjoyed this episode,please subscribe to the show on
apple, Spotify, YouTube, orwherever you get your podcasts.
For more information about PAXtraining and to contact James,
go to PAX training.com.
for more information aboutdriving transactions and to
contact Ken, Go to drivingtransactions.com.
see you next time on the groundtransportation podcast.

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