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You're listening to the ground transportation podcast with Ken Lucci of driving transactions and James Blaine of PAX training. Learn how you can build a thriving transportation business with real profits, repeat clients, and enterprise value. And now for your hosts, Ken and James.

James Blain: 0:30

Hello everybody and welcome back to the Ground Transportation Podcast. We are really excited about our guest today, Mike Marcoli. One of the biggest things that our industry is facing right now is raising insurance rates, right? They keep rising, they keep going up. And so we've brought Mike on from Epic Brokers. Mike's been a broker in the industry for a long time, probably one of the foremost experts in the industry. So we're very excited to have him as always. I am joined by my wonderful cohost, Ken Lucci.

Ken Lucci: 0:57

Oh, what wonderful. There are many

James Blain: 1:00

joined by my cohost, Ken

Ken Lucci: 1:01

yeah, there are many adjectives, but I don't, I don't usually see people saying wonderful, but that's okay. Great to be with you, James.

James Blain: 1:09

Appreciate it. So Mike, we want to kind of start by learning a little bit about your background, kind of how you got into the industry and really kind of your experience, if you can share that with us.

Mike Marroccoli: 1:19

I don't want to bore you too much, but, uh, I actually, uh, started as a licensed insurance agent when I was 18 years old. Um, my, my dad worked for MetLife Insurance Company and, um, I just, yeah, exactly. And I basically, uh, wanted to go into that business. So I went to, I went to, uh, college Seton Hall University and, uh, then went on for my master's degree. Uh, but I sold insurance, life insurance products all through my, uh, college, college years. Um, help support paying those, uh, tuitions. And, um, I, I, really enjoyed it. But then all of a sudden, um, I got an opportunity when I got my MBA from a, uh, Exxon Corporation, and they were starting, they were starting an office automation company, uh, called Exxon Office Systems. And, uh, I went to work for them. Anyway, we were calling on, um, calling on insurance agents, and I was a sales position. And, um, I,

James Blain: 2:29

sides then, right? Now you're, now you're calling the insurance guys instead of being the

Mike Marroccoli: 2:33

right, exactly. And I was like doing that for a couple of years and I've been pretty successful at it and, um, got promoted. And then I was like, you know what? These guys make a lot of money, these property and casualty guys. I'm being honest with you. And I was like, I think I want to get in this business. Anyway, went back to MetLife. MetLife had just purchased Century 21. real estate company with this concept of having property and casualty insurance brokers in these real estate offices to do that. Anyway, um, so I did that for a number of years. And, um, I also, uh, my family was growing and I was really involved I basically got into the property and casualty insurance agency business. Started my own agency and my family was growing and my kids were involved in sports. I started coaching youth football, coaching youth football. My, uh, one of my, uh, players father came up to me and started talking to me and said, Hey, I'm in the property and casualty business too. Uh, You know, we should really talk. And so his name is Bob Lowe and he owned capacity coverage, which is probably one of the biggest transportation insurance brokers in the country. And, um, Bob and I really hit it off. And, um, I, I decided to join his firm as an owner. We, um, kind of merged if you would. And, uh, at that point. He said to me, you know, we have a specialty in transportation. I think this is something that you would really do well at. And I'd like you to pursue that. So I did it and pursued it and, um, grew my book of business. I have a lot of clients that, you know, have really, I think, because I'm very responsive and, uh, try to give them the right advice. So that's how I got into the transportation side of things. And, you know, that was, uh, 25 years ago. And, uh, since then, uh, you know, we, we did get purchased by Epic, uh, about five, six years ago. Epic Brokers is one of the largest brokers in the country, uh, overall, not just in the transportation, uh, segment, but, uh, overall property and casualty insurance broker. They're one of the top 10 in the, in the nation. Well,

James Blain: 4:53

you know, I think, uh, obviously anybody in this industry, everybody has insurance, but can you kind of explain how the insurance industry works? You know, obviously that could be a whole podcast on its own, but, you know, obviously you've got brokers, you've got carriers, you've got claims, you've got everything there. But one of the things that we keep hearing over and over is the reinsurance market, the reinsurance market, you know, can you kind of explain to us at a high level how your industry kind is laid out?

Ken Lucci: 5:21

Yeah, and the difference between the agent, broker, I, you know,

James Blain: 5:24

Absolutely.

Mike Marroccoli: 5:25

technically, in terms of definition, the broker represents the client. An agent can be an agent of a large company that has captive agents, but you're basically representing the carrier, not necessarily the client. We're, we're, we're brokers. We represent directly, um, many clients to obtain the best possible rate for them through the broker. The insurance companies that we represent. So, um, so we work for our, our, our clients, not for any insurance company. But having said that in referencing your comment, James, yes, we are in what we call a hard market right now. Uh, rates are skyrocketing. And, uh, one of the reasons for that is the reinsurance rate. So insurance companies do not keep a hundred percent of the risk. What happens is. They look at, um, their entire book of business, whether it's commercial, personal lines, whatever it happens to be specific niches. Um, and they look at it and they say, we cannot afford basically to keep all the risk. So what they do is they basically farm it out, if you will, to use a transportation, uh, uh, you know, word. They farm it out, and they share the risk with reinsurers. So reinsurers buy part of the risk, so that in the event you had some type of catastrophic loss, five, ten million dollar loss, part of that is being shared by the reinsurer. And the reinsurer obviously is charging the insurance company money to take on part of that risk.

Ken Lucci: 7:11

They're taking a piece of the policy for that risk.

Mike Marroccoli: 7:14

Correct, correct. So they're taking that on and what we've seen overall in the insurance industry is that the reinsurers have said, Hey, we've gotten hurt because a lot of these claims. So we are raising our rates to you insurance carrier.

Ken Lucci: 7:32

Taking a bigger piece of the, policy.

Mike Marroccoli: 7:34

Yeah, exactly. So they're charging more back to, let's say, our end user, our consumer. Okay, because it's coming through the insurance company. You don't see it. You don't hear about it. But, you know, correct.

Ken Lucci: 7:48

Yep.

Mike Marroccoli: 7:50

So that's part of the reason, um, that has escalated, that part of the insurance cost has escalated incredibly over the last five years. But what we've seen overall, and it's not just in transportation, we've seen it in all kinds of commercial, Insurance and all insurance, but specifically in commercial, uh, whether it's liability, whether it's auto trucking construction, we've just seen claims with nuclear verdicts going through the roof and what's happening is the loss ratio because insurance companies are in the business to make money just like all of us, right? So we're seeing the loss ratio, the amount of premium being insurance Paid in versus what's being paid out deteriorated over the last five years and it's deteriorated consistently.

Ken Lucci: 8:37

define or tell the audience what a nuclear verdict is.

Mike Marroccoli: 8:42

Nuclear verdict is, is a large, large verdict that typically in the past may have been a couple hundred thousand dollars for a personal injury. Let's say claim using, using our, uh, our industry where someone is involved in an accident. Uh, they're injured in the accident and in the past, that person may have obtained an attorney and received, you know, a couple of hundred thousand dollars because they had either some type of loss of income or medical payments, so forth. Correct. Now, uh, because of the very aggressive nature of personal injury attorneys, we're going We are seeing verdicts that normally would have been two, 300, 000 becoming two, 3 million. And court system has become, uh, very liberal with that. And they have given out tremendous amounts of money. So insurance companies have been averse to going to court. They don't want to go to It's cheaper because they know if they go to court and they see a situation where, you know, you've got a dozen jurors looking at somebody who is injured and. Believe me, I've seen every part of this. Um, if someone's injured, in my opinion, and we have a liability there, they should be paid and they should be taken care of. But we have a lot of situations where people are seeing doctors who falsify documents or participating in fraud. Um, and we see attorneys doing the same thing. I hate to say it that way, but we see it. So what happens is, uh, insurance companies can't afford to continue to defend. So they, they agree to either sell the claim or if they let it go to court and they have this nuclear verdict, these large verdicts, um, it's very, um, it's very difficult to overcome.

Ken Lucci: 10:44

Now, Mike, the other piece of this, if I'm correct, because I was, I read the stat one day about the fact that 10 years ago, the average auto insurance accident. Something like only 18 percent of the people with personal injury got an attorney and now it's over half

Mike Marroccoli: 11:03

Absolutely. Yes.

Ken Lucci: 11:06

so so You know, it's easy to it's easy to beat up on attorneys. It's a favorite pastime of mine, but it's true okay, Talk to us about the insurance industry and the shared risk. It's not just my loss runs that are determining my rates.

Mike Marroccoli: 11:25

not yours. Okay. It's mine. It's ABC limo. It's XYZ bus company. It's the entire industry itself that impacts your rate. So you could have phenomenal losses with, you know, very good safety, um, features in within your company to protect yourself and prevent accidents. Yeah. But overall, what's going to happen is, uh, other people who are not being as, um, forthcoming as you are, they're affecting your rates, they're affecting your rates and, um, it impacts. Everybody. So you can't really, so we have to look at the industry as a whole, meaning the insurance industry, then we look smaller at a niche with let's say our industry, which is, I say that the bus and limo industry and what's going on there. So it's not just, Hey, I run a, a tight ship. I run a good company and I don't have losses. Why am I getting hit with increases? Well, insurance companies have had to increase even the best and the worst performers. Not this not equally, but there have to get a minimum amount of premium increase And that's what we're dealing with in this hard market to try to make profit And so they are passing along those increases to almost everybody

James Blain: 12:53

that ties into something interesting that you and I have talked about as well Right being in training and you being an insurance for kind of neighbors almost we're doing everything we can at a company to push risk Down obviously, you know as a broker you're winging to bring those rates down One of the things that you and I have talked about that I think is worth bringing up in this conversation Is there's also a lot of companies that if there's a small incident or accident are trying to pay that out of pocket, not report that to the insurance company because they're terrified of a rate increase or having an issue. And then because of what you brought up, Ken, right? The fact that we're in a super litigious society, sometimes those kind of come back and rear their heads. I don't know if you can talk about that, Mike, and kind of do a better job of I am than explaining that. Because I know you can inform your insurance agency without making an actual claim or report. And I think a lot of companies don't understand that.

Ken Lucci: 13:48

So what do you advise from a practical perspective? What should I pay out of pocket, et cetera, versus report to you

Mike Marroccoli: 13:57

so first of all, I think Everything should be reported. I really do. Um, you never know what's going to happen with a particular claim and there's a way to report it for information purposes only

Ken Lucci: 14:10

to your broker, Mike, or to your carrier

Mike Marroccoli: 14:12

to the carrier,

Ken Lucci: 14:13

to the carrier? Okay.

Mike Marroccoli: 14:14

Yeah. I think you should call your broker and have a conversation with the broker about, you know, the, the magnitude of this claim. However, having said that I have seen claims where. You know, I've had a call from, from a client and say, Oh, it was nothing. It wasn't even a scratch on my car. But you know, the other guy had 300 worth of damage. What should I do? What I advise this particular individual is make sure if the guy's going to give you, you know, an estimate from a body shop for 300, Get him to sign off on it

Ken Lucci: 14:53

A release.

Mike Marroccoli: 14:54

you from all liability moving forward.

James Blain: 14:56

you're closing the

Mike Marroccoli: 14:57

So make sure you get that. However, in some situations, uh, I'm not as comfortable with that. Uh, and I say, let's report it for information purposes only. And if we're going to try to settle it ourselves, then let's get a sign off and take care of the guy's physical damage and hope and, and hopefully he signs it and it goes off and it goes away. Um, but then for information purposes only, you've notified The, uh, the

James Blain: 15:23

And why is that

Mike Marroccoli: 15:24

one thing.

James Blain: 15:25

Like, why is it important to notify the carrier? You know, for someone listening, what does that do for them?

Mike Marroccoli: 15:30

You have to realize that you're dealing with their million dollar, one and a half million or 5 million limit of liability and their money it's, you know, it's, it's your insurance premium, but they're the one that has the face amount of the policy at one and a half million or five, whatever they happen to carry. So you got their money at risk. So they want to know. especially the better companies that are out there in our industry. They want to try to attack these claims as soon as possible and try and settle them as soon as possible or make sure that they have clearly defined if there are any serious injuries involved. So that's why it's really, really important. Um, I've had clients that have not reported things right away and have allowed Let's say the injured party to go to an attorney to start to develop, start to develop a case. And by the time the insurance company finds out about it, we got a big problem as where if they had an opportunity to contact them within a few days, The individuals may say, well, you know, I'm okay, but at least, you know, I had to rent a car and I had to rent a car to go to work every day and just pay me 1, 000 and I'm done. And they paid the thousand and they're done and it's over with. However, if that lingers and now they're talking to attorneys and now they're talking to their friends who says, Oh, you could get a lot more money from that for that accident. Now, all of a sudden it develops into something that hits your loss runs when it shouldn't have. It could have been handled immediately.

Ken Lucci: 17:10

so let's just double, circle back on this. If I'm calling my carrier and saying, I'm informing you for information purposes only, does that go against my loss runs? Does that hurt me?

Mike Marroccoli: 17:23

No, no, it doesn't.

Ken Lucci: 17:25

Because there's been no payout.

Mike Marroccoli: 17:27

right, exactly. And if it gets settled satisfactorily between both parties, it's going to show zero on there and it's not going to show anything at all. But now the, the the insurance company knows about it.

Ken Lucci: 17:41

Yep.

Mike Marroccoli: 17:42

I've seen people be cancelled by insurance companies because they've had what they call lag days between when the claim occurred, the date of loss, and the date that it actually was reported to the carrier. And that is a no no. They do not

James Blain: 17:57

What is their expectation on that? How quick do they expect you to report it?

Mike Marroccoli: 18:01

I would say, you know, within 24 hours.

Ken Lucci: 18:04

20 24, 48. Anyway, if it happens over the weekend,

Mike Marroccoli: 18:08

And it's really important that, going back to the training issue, that that you train your drivers on how to report the accidents and what to say and what not to say. And you know, that's something that I take pride in with with my clients is no matter if it's a small operator with a couple of vehicles or the larger operators that I have. Make sure you have an employee handbook and safety manual in place that details the policies and procedures of what that driver is supposed to do, what he's supposed to say or not say in the event he's involved in an accident and some documentation. Because particularly like in the New York area, you could have an accident. And unless there's serious injury, you're going to wait there all day. No, no policeman's going to ever show up. I got news for you. But in other areas, the cop will come and they'll take a report. That's fine. But your driver must have his own statement that he comes back to the office, completes a form. Where did it happen? When did it happen? What, what happened exactly? So that you can document as much as possible. Because what happens is, you know, If this claim develops and six months down the road, the driver, A, might not even be with you anymore. And B, if he is with you, he may remember everything. He may forget certain details which are critical. So very, very important to have proper driver training on how to report accidents, what to say, what not to say. And again, this should all be part of an employee handbook. I happen to put something together that's a, um, kind of a standard that I recommend to people as a sample. And, um, it's pretty thorough, and I let them customize it, but it's 90 percent done. I tell them, in my disclaimer, to have your attorney or HR person look at it. However, it provides a good basis for

James Blain: 20:00

And I, I think you're hitting on something really important. Cause one of the big things that we teach in PAX is when something happens, the last thing you want to do is admit fault. Because the, it, it doesn't matter if it is your fault, right? Even if it actually is your fault, right? Or your employee's fault. If they get out of the vehicle and they admit fault, you're instantly putting yourself in a position where. Where you're already behind the eight ball. And so one, yeah, one of the things that we, we teach and I very firmly believe in is they've got to work with law enforcement. They've got to talk to law enforcement. They've got to provide facts to law enforcement. You never want to be in a position where someone is not being forthcoming or not compliant or not talking. Right. But for the love of God, don't talk to the press or media. Only talk to law enforcement. And the other big thing that we've always really pushed is. Don't admit fault, provide that officer the facts, deal with that. And then if you've gotten it used to be, and Mike, you probably know more about this than I do, because I came into the industry as this was already phased out, but it used to be a lot of carriers would have those accident kits with the little disposable cameras. And so now. The big thing is getting as many pictures of everything you can we were in and mike I think you were there with us We were in florida and there was a larger company doing a presentation and one of the things they talked about Is they had a really bad accident and they were able to go to neighboring companies, right? I believe it was a one was a gas station I know another one was like a car dealership and asked them for that. Yeah. And they were able to get that camera footage and stay on top of

Mike Marroccoli: 21:36

I remember that.

James Blain: 21:36

keep those people tight lipped. And because of jumping on top of it quick enough, they, even though we're in a bad position with the accident, we're able to make that situation a thousand times better than it could have been. So I think what you're talking about is especially relevant when it comes to responding to an accident. If you have one.

Mike Marroccoli: 21:56

Yes, absolutely. And you know, I know we'll touch on it later in the conversation, but I can't tell you how critical it is to have cameras in the vehicles today.

Ken Lucci: 22:06

Well, it, it's tel it's the full telematics suite.

Mike Marroccoli: 22:10

right,

Ken Lucci: 22:11

So, you know, I, I have to, I have to say this. I should, I'm remiss, I should have said this the beginning. I, I, I know tons of, tons of brokers in this business and a lot of'em call me to try to get business. And Mike is one of Mike. You gotta be one of the hardest working guys out there. Every single operator that has you said they rave about the service you provide. So talk for a minute about the broker's role. What role you feel you play for your customer? Because, you know, let's face it. In any situation like what I do, they're good. They're good. I'm not a quote business broker, but there are people who in M and A that do a lot of work like we do. And there are other people that just, you know, create a file and put it on the market. Where do, what do you see your role moving now and moving forward over the next five years? Do you see the insurance broker role changing?

Mike Marroccoli: 23:03

I think the insurance broker needs to be A responsive. I think that's so critical to be responsive. And that's something I pride myself in. Um, you know, I, I try to treat people the way I would want to be treated if I was an operator. Um, and they have questions. They don't understand certain things, whether it's a policy issue or whether it's a, you know, what to do in the event of a claim. Um, you know, with claims, there's a lot of questions. Um, what to do in terms of shopping my insurance every year, those kinds of things. So, you know, you need to be responsive. You know, my wife laughs at me. I take calls at 10 o'clock at night from people, believe it or not, and weekends and Saturdays. And

Ken Lucci: 23:44

Yeah, Mike, they're in a seven day a week business. So they think you and I, all of us on this call, we are automatically in a seven day a week business, but it's good.

Mike Marroccoli: 23:53

but I'm on it. I mean, honestly, I answer those questions and I answer the phone and I respond to them, but it's critical to have, and there's a lot of good brokers in our business. It's critical to have a broker that a. really surveys your risk and tells you, Hey, you should be doing this, this, and that to improve your loss experience. Um, you want to have a broker that represents all of the leading transportation, passenger transportation, insurance carriers. That's critical with my team. What we do is 60 to 90 days before everybody's renewal. We look at it. We say they're with XYZ company. We think that based on the losses, This company, this, we send it out to every insurance company for them to look at to at least give us an answer. No, we don't want this account because they're in New York City and we don't like New York City. Uh, okay, fine. This, that's great. So this way we know who else to go to. Uh, others say, Hey, yeah, we want to crack at this. Where do we need to be to get the best pot to get this account? We want this account. It's very profitable. The guy seems like he runs it well. He's got the right vehicles. Um, got the right drivers. What do we need to do? So I had those conversations with underwriters, but my point is that I send it out 60 to 90 days before. So if your broker's not doing that, that's something you should tell him you want to do. Look at your loss runs every year. Uh, ask your broker for loss runs. Even if you tell him, look, I'm not going to be shopping you. I'm happy with you. I love you. You're the greatest thing since sliced bread. Look at the loss runs because a, um, I've seen mistakes in the past. You know, you may look at a loss and at a claim that happened in 2022 and say, wait a minute, they're saying they're going to pay this guy. 200, 000 or 500, 000 wide, and that will be your opportunity to jump on it or the broker to call and say, Hey, we need to have a call with the, uh, with with the claims adjuster to say, Why is this at 250, 000? There's no reason. So you can provide maybe some information that will help the insurance carrier to better defend you there or to settle it or It could be a mistake. I had a claim on one of my clients. Um, that when, well, he's my client now, but he wasn't my client at the time. And I looked at the loss runs and there was this huge claim. And guess what? It wasn't for XYZ limo. It was like for XYZ trucking. It was the same name, but somebody Mislabeled it and put it on the wrong loss run.

Ken Lucci: 26:31

Mike, you're hitting upon something that I think, you know, is critical that I don't think a lot of brokers do. And perhaps some of the more unscrupulous ones wait until the last minute and they slide in a policy at the 23rd hour with a massive increase in it. Because they didn't shop at 90 to 100. Why would they do that? Is it just purely because they, they're maybe not the most aggressive in the world? Or what? Do you see that? Or was that just an anomaly that I saw recently?

Mike Marroccoli: 27:05

I mean, I see it sometimes, sometimes it's not the broker's fault. Um, you know, there are certain carriers that get us the numbers, you know, in advance, uh, you've got to be, you've got to be strong with the, with your carrier, with your underwriter and say, I need this by this date, uh, did they all comply with those requirements, uh, requests? Not all of them, but a lot of them do. Um, you know, I do a lot of work with Lancer. Lancer. is really good at getting us quotes early, particularly on larger size clients, um, when I'm asking, but even the smaller one or two unit guys, I say, look, you know, I don't want to stick this guy at the end. Let's get this to him three weeks in advance for the 30 days in advance. So I can get those kind of quotes, but it comes down to the broker managing his client base. A lot of, a lot of it does not, not 100%, but a lot of it. So that's really, uh, and then how many companies do you have? Do you have access to it? I mean, I know there's some brokers out there. Um, and not, not the larger, the better ones, but there's some out there. They only have one company. And so what are they going to do? They're not going to show other, they have nothing else to show,

Ken Lucci: 28:15

Well, you're hitting upon something that, when I was an operator, I didn't really I looked upon buying insurance like, um, a necessary evil. I didn't really look upon it as something that needed to be managed. And, even when I looked at companies to buy, I didn't look at their loss runs. So, but the market is completely changed. So, if, if I'm an operator today, I should be up to date, keep, have up to date records on my loss runs.

Mike Marroccoli: 28:46

Right.

Ken Lucci: 28:47

I should have an update up to date safety manual and employee manual. So talk to us about the telematics piece and how critical that's become. Because I have some clients that are like, Oh yeah, I have that. Tell him I have that system. I'm like, okay, so what reports are you running? What? I mean, who's reviewing, who's reviewing the cameras? Well, what, what do you, what do you mean? I mean, maybe when there's an issue, I'll review. What are you doing to change the bad behavior of your driver?

Mike Marroccoli: 29:19

right. Are you looking at heart breaking? Are you looking at speeding? You know, um, I, I, some of my, my larger clients are really on top of this stuff and it shows, it really shows, um, uh, one of them in particular has a chauffeur manager that that's all he does is review the telematics and then he reviews the telematics and we see that, you know, driver has this issue, speeding issue. It's only a question of time before this guy has it rear end somebody or has an issue, but so what do you do? Do you ignore it or do you bring them into a meeting and say there needs to be a change in the way that you're driving our vehicle? Our vehicle. It's not your vehicle? It's Our vehicle. because because and and what again whether you're a an operator with a couple hundred vehicles or an operator with Three or four vehicles or one vehicle. Whoever's driving your vehicle. That's person is affecting your livelihood You could be put out of business easily because if he has a terrible accident or there's some frequency there and Insurance no insurance companies want to write your business and offer you a policy on renewal. What are you gonna do? You're in big trouble and your livelihood is over. So if you have, you have a wife and you have kids and you have, what do you have income requirements? Guess what? You're done. You're over with if you're not really managing this and you got to manage it, whether it's you yourself managing it because that's the size of your entity or whether you're a larger operator and you have a general manager or chauffeur manager or somebody that's over looking. So you bring that driver in to a meeting and you have a conversation with them and then you Put together some type of training program to change that if I don't see a change I'm talking as if i'm the owner of the company if I don't see it or the manager If I don't see a change in you in the next 30 days You are no longer going to be working for my

James Blain: 31:20

And, and I, I think there's something really important there as well, because if you look at this and I was lucky enough to participate in a mock trial recently in the motor coach industry, you know, if you look at this from both sides, you've got the preventative side of it, which is where, you know, I impacts live, right? Trying to, to prevent that. But. As you're saying, Mike, you have to go in there with telematics and inspect what you expect. Now, I think something really important here is if you bring that person in and you talk to them and you put them back on the road and two things don't happen, right? If one, you don't document that. So I see a lot of companies that will do this inside of our training platform. So they've got the record, but two, if you did document it, but then you don't follow through on that, And you continue to allow that behavior to happen One of the things that i've heard from actual stories from companies that we work with Is that those attorneys when you get to court? Will try to use that against you and say you had a company policy That they had to do ongoing training you had telematics and they didn't apply what they were supposed to learn in training You talked to them about correcting the behavior and they never actually went through with it and made them correct

Ken Lucci: 32:37

and you never follow it up. You never

James Blain: 32:39

and and now you're

Ken Lucci: 32:40

where's your, and where's your signature? Where is your signature where you counsel that individual? Where's the corrective training program? Where's the proof that they're training? Because, you know, let's face it, they are driving a guided missile.

James Blain: 32:55

Absolutely.

Ken Lucci: 32:56

And the larger piece of equipment, the worse it could be. But, you know, Mike hit upon something that I believe that, you know, I have my own suppositions as to why the rates are going, you know, through the roof. It's, it's definitely tort reform, it's definitely, it's it's definitely tort issues, it's the fact that all of these vehicles today cost a hell of a lot more to fix than they used to fix,

James Blain: 33:24

If you get the

Ken Lucci: 33:24

And then,

Mike Marroccoli: 33:26

Yeah.

Ken Lucci: 33:26

of things, but it's also to me, it's the small operator that does not take managing safety seriously. The sad part is, they're actually at a hell of a lot more risk than the big operator. Because the big operator probably has good liquidity. The big operator, you know, has the girth of lots of revenue. But if there's a catastrophic problem with a 5, car operator, like Mike said, it could literally put them out of business. We had a situation recently where a client's insurance 275 to 625, 000. So I said, okay, let me, let me just, let me just tell you the reality of this. You know, for a million dollars worth of business, your insurance should be between five and 7 percent of total income. We know, we know those, that knows numbers by the back of our hand for every percent, for every 10, 000, it goes up. You just lost a point off your profit. You have no ability to profit right now. You have no ability. Something's got to change. It's, it's, it's not rocket science. You either need to go way up on your pricing or you need to cut the infrastructure of the business. And their point to me is, well, you know, that damn insurance company, I'm like, you don't understand the ecosystem we live in. This, this, this hurricane in Florida and North Carolina is going to cause us massive problems on the commercial insurance market.

Mike Marroccoli: 34:50

yeah

James Blain: 34:51

and

Ken Lucci: 34:51

And that's what nothing Mike can do about it. There's nothing that the carrier can do about it. But, you know, my, I guess my whole point when I talk to people is, I say, what are you doing to mitigate your risk? And they look at me like when, when, when I try to take a ball away from my Jack Russell Terrier, they're like, they have this puzzled look on their face. Risk mitigation has got to be as big a piece of your business as trying to get that car from point A to point B. This is the world we live in. You can't, you cannot change the fact that you're living in a much riskier world. So, you know, to Mike's point, if you're not Teaching your drivers how to react even in the worst. I mean, excuse me, the best case scenario. They have a little bump in the parking lot, right? You have to train them how to, how to react to it. And you yourself as an operator have to know what steps to take. It's, it's, it's a, it's a total new world of risk management now.

Mike Marroccoli: 35:52

And, you know, a lot of times I get clients call me and say, you know, I've got this driver candidate and he's got a couple points on his MBR. And, um, you know, I really want him. This guy's good. I need him. Um, I'm really dying for drivers. And they try and talk me into going to the underwriter and getting a driver approved. And I'm not saying a hundred percent of the time they're wrong, but a lot of times when they try to push somebody through. You know, what are you doing? What, what, how are you setting the bar for your company in terms of putting somebody behind the wheel who has a poor driving record? You know, why do you even want that? Why do we want to be put in a position where in the event this guy does have an accident, we're in jeopardy because you know, as Ken said before, you know, these, these jurors are going to look and, or these attorneys are going to say, you know, You hired this guy and he had three speeding tickets over the last three years. You know, you were negligent

Ken Lucci: 36:55

Well, let's take it. Let's go ahead. I'm sorry. Good.

Mike Marroccoli: 36:58

No, I'm saying, and you're contributing to this so, you know, it paints a very poor picture for you as an operator.

Ken Lucci: 37:05

Well, and, and let's talk about it. Let's talk about the same with if a, if a chauffeur comes or a CDL comes from another company and you don't verify that they didn't get let go because, you know, they had harsh breaking, they were counseled three times and then they were let go. Okay? So the industry as a whole, the operators can't look and say, oh, what a coup. I just stole so and so from x, Y, Z company.

Mike Marroccoli: 37:33

Right.

Ken Lucci: 37:33

You just brought on a hell of a liability. So the attorney will go back and say, Uh, by the way, on this guy's resume, did you find out why he was let go? And then he has a statement from the old company that says, Oh, that company let him go because excessive, uh, speeding, uh, you know, uh, aggressive driving, et cetera, et cetera. But, you know, Mike, I think you'll agree. We've got a hell of a lot of tools in our quiver now, or arrows in our quiver that we didn't have years ago. Cameras in the cars. Telematics that, MVRs, telematics that say that you're speeding, says that you're aggressive driving. You know, a broker like you, who's designed a safety manual, we have PACS training, etc. We didn't have this years ago, and it's a shame. I don't think that a lot of operators have changed their behavior from 20 years ago.

James Blain: 38:28

And I think the key thing that you're hitting on there is, you know, if you think about where you're going to run into issues and Mike, correct me if you disagree, but, but I see two big things all the time, just like you said, Ken, we bring someone in from another company. Oh, well he left the other company. Okay. But you never bothered to verify. You never bothered to look. He might've left the day before they were going to let him go. Right. You're getting all of those bad habits. You're and I see this is probably the cardinal sin. I see of hiring experienced chauffeurs is company owners will assume they are trained and they know what to do and put them on the road. And I see that day in day out. Well, you know, this was an experienced chauffeur. He'd worked for another company. Well, guess what? If the other company was in a hurry and needed him on the road and got him out there, that means he didn't actually get trained how to do the job. He went out there for six months, a year, however long it was, and kind of figured out a way that worked for him, which is not what you want.

Ken Lucci: 39:25

No, it's

James Blain: 39:26

But the other side of this is that we, we tend to see those things right in the beginning, but we also tend to see things later down the road with chauffeurs that have been on the road three, four, five years because And and this is something that at PAX we've really fought against there's a propensity to say He was trained once he's good forever and three four five years later. He's falling into bad habits, right? She's falling into bad habits. They're starting to fall into mistakes Safety is not the top priority and something that I know mike you and I talk about at length and and I think it's It's worth going into Is that building a safety culture means that you're proactive in training them as soon as you get them right. That's where I live. That's the soapbox that I spend most of my time on is training them when you get them, making sure that you're keeping them performing the way that you want and then actually doing that through and through. And Mike, you and I have talked about this at length. There's a lot of operators out there that think they can put a safety program like PACS training in place a week before the renewal and all of a sudden the rates are going to go up. And, Mike, you tell me, I mean, how often does that work? The insurance carriers aren't dumb.

Mike Marroccoli: 40:41

They're not done. And you know what, you know, the old saying, the proof is in the pudding. You've got to continuously have the training ongoing, whether it's somebody that's been driving for 20 years or driving for you for two weeks, it's got to be ongoing because it's got to consistently be reminding them of what they should be doing. And, um, I know the PACS training program is looked at very, very favorably by the insurance companies that I

Ken Lucci: 41:10

yeah. Oh, yeah.

Mike Marroccoli: 41:12

and it's got to be something that you continuously and you set M. V. R. Standards adhere to them. Don't, you know, don't sway. Don't get too liberal on them. Don't don't say, Well, you know what? He's been with us a while and no, because that is the guy that's going to have the accent that put you at a business.

Ken Lucci: 41:32

Well, and to that point, when you uncover the fact that you get a driver below a 90 percent safety score, uh, or 85, whatever the number is, you've got to, to me, you've got to have a company standard. Okay? We're gonna, we're gonna go for this. This is our, our safety goal that, you know, the way the manufacturing plants used to, Hey, we've gone 777 days without an accident. I do want to touch upon something and we're coming up on the end, but what is your position on cameras inside the vehicles and what objections do you hear from operators?

Mike Marroccoli: 42:08

I'm getting less and less push back on that from operators because of what we're seeing specifically with, uh You know, the bigger vehicles, uh, I mean, buses, um, you know, the sprinter vans, uh, everybody understands, hopefully that, you know, the, the recording devices that are showing the front of the vehicle and outside, that's an absolute necessity. That shouldn't even be a conversation. Um, but inside the vehicle, I know some people have had issues with privacy and so forth, but it's your vehicle. And, you know, I have seen situations where. Again, we've had like fraudulent claims where, you know, I've seen one of my, one of my clients had a situation where the individual kept getting up out of the seat. Uh, he pulled the vehicle over and said to them, please, you know, sit back in your seat, getting up, standing up. It's just going to, when I'm driving, this vehicle is not acceptable. We had the camera. The person ignored him, thought she was being funny, she fell. And, all of a sudden, she's got a herniated disc, and she's got this and that. You know, but we're showing the video that the dr the chauffeur took the initiative to say, this is not acceptable, this is against our safety procedure. So, so I think it's critical, and I think it's really, really important that, uh, you have it in both, both outward and inward. I think it's, I think it's good.

James Blain: 43:43

And that lines us up to because one of the things that I want to make sure we talk about kind of before we wrap things up is what are the top things, right? If you're listening to this and you're an owner and you're saying to yourself, I'm getting killed by my insurance rates, you know, obviously, you know, there's no one going around handing out discounts, but what are the top things an owner can do to Get that rate under control bring that rate down or fight an increase, right? What are their options? How do they do that? What can they do there?

Mike Marroccoli: 44:13

I think, first of all, having the right broker is important that's going to bat for you. Uh, I think it's also important that all the things that we just discussed that, you know, if you have a safety manual, but you don't require your drivers to read it and sign off that they understand it. If you have driver training, and you're not insisting that everybody goes through it on a regular basis, and that you check that they have finished their training. You know, various modules of it. If you're, if you have all these things and you're not making it part of the environment, uh, of your company, then you don't have a safety environment. So, you know, you need to make sure that whatever you put in place, it becomes part of a culture and people will get it. Um, one of my larger clients, I thought this was interesting. You know, we're always talking about negativity and trying to, uh, Bring people in and say, you know, you sped three times or you did this or you did that. One of my clients, um, has an actually like a, um, a program where they team up drivers and get, give them some type of, um, benefit or some type of prize. If they have good telematic scores, if they haven't had any accidents, so they team up different drivers so that these guys will support each other and cheer each other on. So I say, Hey, you know what? We're going to get that 200 gift card from Best Buy, uh, at the end of the quarter, at the end of the six month period. So it puts them in teams where when they see each other, they ask each other, how you doing? What are

James Blain: 45:57

It's an accountability

Mike Marroccoli: 45:57

making sure Yeah, exactly.

Ken Lucci: 46:00

And I have a client that does it, that does a 2 percent bonus program. Very similar to that. And they, they, they have monthly meetings. Everybody signs up that they were there. What did they cover in their own words? What was the safety of the training about? But then they go over scores. Yep. Um, and they actually will review cameras. Okay, guys, what, what did we do wrong here? And at the end of the day, I think it's proactive management. Um, it's, it's definitely, we are past the point where checking off a box is okay. My insurance renews in April. You know, I think I'll get serious about looking at that sometime in March. And yeah.

Mike Marroccoli: 46:43

it's developing a culture.

Ken Lucci: 46:44

Yep.

Mike Marroccoli: 46:45

It's developing a culture of safety, responsibility and accountability and making sure that your insurance company knows that because if you change that in their eyes, you're going to get a more favorable renewal. You're going to get treated much better by the carrier and you're going to be more successful. Um, you know, changing your company's culture in the eyes of the carriers. So, so important. Um, it really is. And, you know, as, as everybody knows, they come in, insurance companies come in, they do loss control reviews to see what you're doing, see what you're not doing. So, you know, if you're in compliance with all your DOT, if you've got driver safety trends, uh, standards, if you got the employee handbook in place and you're utilizing this and you're making sure that everybody follows. It's going to end up in the results. The results will

Ken Lucci: 47:41

Yep.

Mike Marroccoli: 47:42

that you have a safer company, you'll get better rates from your carrier, and you'll be more successful. I,

Ken Lucci: 47:48

And you'll get a return on an investment on your telematics. If you're doing, if you're using telematics the right way, it's a good investment. If you're not doing anything, if all you're doing is to check it off a box, because my insurance company said I have to have it, you, you, you're really not, and, and to your point, I feel the same way about brokers. Your, your broker's gonna, if your broker's not working hard for you, and he's not showing you that he's working hard for you, maybe it's time to make a change. You know, universally, every time I ask the question, who's your, who's your broker? Who's your agent? They say, Mike Maricoli, and they're always happy. It's not the case with the other, some other people say to me, who do you, who do you, I got so and so, who, who, who do you recommend?

James Blain: 48:30

No, and and I think you make a really good point because I can tell you right now There is no lack of people out there that are going to try and write coverage for you and call the day and move on And I think one of the big things that we've really hit on is Is a lot of this comes down to running your company the right way. Can it something you and I talk about all the time,

Ken Lucci: 48:49

Yep,

James Blain: 48:50

not trying to push the standard, if you're not trying to be in that top five to 10%, guess what? You know, as we've learned here, you're probably going to have higher rates. You're probably not going to make as much profit, you know, all of that's going to eat into it. So I think one of the biggest takeaways here is that what you can do to help control your rates is what you should already be doing to be running an A plus company.

Ken Lucci: 49:15

absolutely. And it's no secret that the guy, the people with, that are way far behind on the financials, when we come to look at them, are also way far behind. They have the highest insurance rates. It's just the way it seems to go for some

Mike Marroccoli: 49:27

Yeah.

Ken Lucci: 49:28

You know?

Mike Marroccoli: 49:29

And don't get, don't, I'm talking to operators out there. Don't be fooled by the fact that, you know, you're, you're allowing your drivers. to dictate to you what's acceptable and what's not acceptable. You know, you may say, well, you know, we've had, you know, yeah, we had five or six accidents this year, but they were minor accidents. They were nothing. And I'm not going to fire the guy over that. Well, you know, frequency breeds severity. That's, that's something in our industry that everybody talks about. So, you know what the guy hit somebody in the rear and it's minor. Okay. I'm going to let it go. Okay. He comes back the next week and he backs into somebody else. I'm going to let it go.

James Blain: 50:11

How many till the

Mike Marroccoli: 50:11

of a sudden, the big one comes

Ken Lucci: 50:15

the golden nugget right

Mike Marroccoli: 50:16

and game's over. Game's over for

Ken Lucci: 50:18

That's the golden nugget of the podcast. frequency

Mike Marroccoli: 50:22

breeds, frequency Breeds severity.

Ken Lucci: 50:27

You can't say they weren't informed, Mike.

Mike Marroccoli: 50:30

Nope. So it's critical, critical. They just got to stay on it, develop a culture of safety and stick to it. And it's got to come from ownership to management, to the

James Blain: 50:42

Top down.

Ken Lucci: 50:42

Like so many other things that we've talked about.

Mike Marroccoli: 50:46

Absolutely.

Ken Lucci: 50:46

Well, thanks, Michael. Thank you so much for being part of the

Mike Marroccoli: 50:50

my pleasure. Thank you so much. I appreciate being here.

Ken Lucci: 50:54

well, we have, uh, we started thinking this is going to be once a month. It went to bi weekly and now it's we're dropping. We're going to drop once a week because we've got so many great guests like you lined up and we really appreciate your time. And, uh, thank you very much for everything you do for the industry.

51:12

Thank you for listening to the ground transportation podcast. If you enjoyed this episode, please remember to subscribe to the show on apple, Spotify, YouTube, or wherever you get your podcasts. For more information about PAX training and to contact James, go to PAX training.com. And for more information about driving transactions and to contact Ken, Go to driving transactions.com. We'll see you next time on the ground transportation podcast.