Joseph Madiedo: 0:00

This year we heard, at the state of the industry at the NLA CD show that I think it was Mr. Lucci that said, you expect a 14% increase in insurance in 2026. And where is he getting that number? Because this past year I did an average, or at least on all of the carriers and what

James Blain: 0:17

Yeah,

Joseph Madiedo: 0:17

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

James Blain: 0:55

Hello everybody and welcome back to another episode of the Ground Train Station podcast. I'm a little sad today'cause I don't have my partner in crime, Ken Lucci. He is probably off doing some kind of incredible financial deal that we'll find out about later. But I am super stoked because I have a good friend of mine, Joseph Maddo, from the Professional Insurance Center on, and we're going to dive into insurance. Uh, you know, we've talked about it a lot, but today I think we're gonna try and get some answers to the more hard quitting questions. The questions that I find a lot of a lot of guys try to kind of dance around. Um, and, and I know, I know we've heard a lot about the crisis and what's going on, but I think today we're gonna try and really dig into some of the things that people have thought about, but maybe not have the ability 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 bit about your family history? How did your family get into it? How'd you get into the business?

Joseph Madiedo: 1:54

Okay. So yeah, back in 1981. My father went to law school and pivoted into insurance, worked for Washington Mutual, and after a friend in Tampa, who owned a taxi company here, had struggled finding insurance, commercial insurance for livery. And Florida was very difficult to find at the time in the eighties. And so he decided open an agency and try to specialize in commercial auto he opened up a niche agency and with my mother as his partner in 1981. it was just them in this very building I'm sitting in. Yellow Cab of Tampa, was his first commercial auto account. And from there he created a, agency that specialized in livery insurance. And for myself, I grew up, surrounded by transportation. My godfather, his best friend, owns a major transportation company here. And I worked for that company, briefly. And then my father, when I was in college, I was, studying biochemistry and he sat me down and asked me, to consider taking over the family business,

James Blain: 2:57

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

Joseph Madiedo: 3:02

yeah, At the time, Uber and Lyft and TNCs didn't exist, so we had a lot of taxi business and we had a lot of limo business. and we were able to put together a lot of programs. And when I decided to make the move, I was still in college. I transferred from Florida State for University of Tampa and finished up there and switched degrees to marketing and business. I went into this agency, got my two 20 in 2005, my insurance license, and wrote my first piece of business,

James Blain: 3:32

are you doing black car? Are you doing limo? Are you doing a little bit of everything?

Joseph Madiedo: 3:35

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

James Blain: 3:56

wow.

Joseph Madiedo: 3:56

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

James Blain: 4:06

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

Joseph Madiedo: 4:16

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

James Blain: 4:19

yeah,

Joseph Madiedo: 4:19

clients

James Blain: 4:21

They tried to pull you back in, right?

Joseph Madiedo: 4:22

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

James Blain: 4:27

Ah,

Joseph Madiedo: 4:28

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

James Blain: 4:31

we no longer do your overflow.

Joseph Madiedo: 4:33

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

James Blain: 4:37

no way.

Joseph Madiedo: 4:37

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 other people out there that requested me. And, and so I just, I no longer was doing it it wasn't'cause I didn't want to, I had no time. I was

James Blain: 4:52

Yeah.

Joseph Madiedo: 4:53

I got married. so I, I stayed in the insurance game and specialized in that. and over the years I've sat on the CFLA Gola greater Orlando Limousine Association Board of Directors, the West Florida Limousine Association, now the board of Directors for the FLA, the Florida Limousine Association. I sit on the board of directors and I do their safety program and, and safety and insurance and, couple other committees I do as well, airport and, sometimes I chime in on the, the legislative committee as well.

James Blain: 5:23

I mean, you're the one that pulled me in. Right. You know, for, for those of that, that don't know, the, the Platinum Safety Program I don't wanna say a, a, a side effect or byproduct, but it, it was really kind of, I think spearheaded is probably the right word by Florida's kind of safety side. And I still remember, uh, I wanna say you and I were in Vegas when you came up and you're like, Hey, we're gonna do this big thing. We've got this great idea and. And you know, I think that's gonna be a huge thing. But you're involved on so many different levels in so many different boards. How many different ones are you sitting on right now?

Joseph Madiedo: 5:55

right now I'm only on the FLA.

James Blain: 5:58

Okay.

Joseph Madiedo: 5:58

we've been a member of the Transportation Alliance, formerly the Taxi Cab Limousine Paratransit Association. I put a team together that I thought was ideal. I got the safety directors from my clients at, Destination

James Blain: 6:11

Yep.

Joseph Madiedo: 6:11

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

James Blain: 6:15

Great guys.

Joseph Madiedo: 6:16

Gatis at Cable

James Blain: 6:16

Yep.

Joseph Madiedo: 6:17

President there. I got you. There's a lot of people that, we approached, but we got a good team together of Sarah spearheaded that whole program and she has taken it to another level. And I like what everything that's been going on with it. but as far as safety goes, even without that program I've been involved with promoting safety far before that,

James Blain: 6:37

Go,

Joseph Madiedo: 6:38

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

James Blain: 6:44

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

Joseph Madiedo: 7:06

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

James Blain: 7:16

Yeah,

Joseph Madiedo: 7:16

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

James Blain: 7:38

Yep.

Joseph Madiedo: 7:39

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

James Blain: 7:50

Yep.

Joseph Madiedo: 7:51

specific drivers score out. if you have a risk management program that's attached to like a camera system, right? And they can file with the state. For insurance credits and the carriers, no matter who the carrier is, can use those insurance credits to bring rates down, and apply them if they haven't already been applied. So the guys out there, the operators out there that aren't doing certain things like that, they don't have the cameras or the driver behavior or those kinds of things in their fleets. They may not be getting certain credits Not all carriers are gonna use the credits, but most of the carriers will and can use them. and so you want to make sure that the camera system you're using, if you want said credits is something that is using AI technology or analytics technology and things like that. Because I think the future is going to be not just the loss history, which gives us historical data to. Create profitability matrixes and see if the premiums are gonna be enough to cover a loss, et cetera, et cetera. We're gonna be using the telematics and analytics derived from the AI devices on how an operator's fleet is being run.

James Blain: 8:57

there's a talk that I give about the difference between proactive and reactive and essentially how winning teams stay winning teams. And one of the things that we talk about in there is you start with your training. no team on the planet that will like, Hey, I'm just gonna show up and go play a game, and then we'll see how we do. Right? That's not how anybody thinks. And so in our world, that kind of starts with your training, your practice, then you go out and you do it. That's where now you get into the reactive, your ai, your analytics, your telematics, all of these pieces are giving you real world feedback on what's going on. Where I think we're seeing the real kind of cut above the rest is the companies that come back and they're like, don't do that no more. Stop speeding. Stop doing this, Those companies that are being super reactive. I think the ones that are really gonna benefit are the ones that are finding trends, that are figuring out what's going on. just like a sports team, right? if you lose two games and did the same thing in both games. Your practice has to change, your training has to change the way you're doing Ask Change. You can't just tell your team, don't do that anymore. And I think that's one of the huge things we're seeing. Interestingly enough, we're also seeing a lot of people taking our defensive driving certificates. And this is something that we didn't push this. It's something that was kind of brought to us later. They're taking those defensive driving certificates and they're taking their certifications for what they've done in our platform, and they're sending that in to their personal insurance in addition to the company sending it in to their regular carriers. And some of these guys are starting 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 the companies that wanted to be better. The companies that want to do better, the companies that want to be at the top of the game. But now we're at a place with the insurance crisis. telematics are table stakes. If you're not gonna use something like Pax, that's fine. But having a solid training program is becoming table stakes. And I'm hearing more and more about carriers wanting to actually see, show me your training program, tell us what they're going through. Give us everything. How does that landscape shift? And most importantly, the question that everybody wants to know, how the heck did we get where we are today? Like how did it go from before COVID, five, 10 years ago not being a big deal to now insurance is all anybody talks about'cause people are going outta business because of it.

Joseph Madiedo: 12:00

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

James Blain: 12:06

Okay.

Joseph Madiedo: 12:06

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

James Blain: 12:11

You've got options

Joseph Madiedo: 12:12

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

James Blain: 12:19

Okay.

Joseph Madiedo: 12:19

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

James Blain: 12:35

Okay.

Joseph Madiedo: 12:36

risks. and it creates, an environment for insurance where instead of you have the carriers are gonna be a lot more picky and choosy in what they want to insure because of, pressure that's coming down from reinsurance. And when you have insurance programs, right, that paper that you have with your carrier's name on it, is gonna be backed up usually by a lot of other insurance carriers,

James Blain: 13:02

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

Joseph Madiedo: 13:14

I think that's a good example or a good way to think about it is, basically investing into a product. So like, let's say a reinsurance company has the option to invest into a workers' comp program, a property program, or a commercial auto program,

James Blain: 13:27

I.

Joseph Madiedo: 13:28

one is going to yield them some profit? they're businesses they're in it to make money for a long time, the commercial auto, whether it's pricing or improper underwriting or tort, we saw the advent of the Morgan and Morgan type of law firms, the big law firms that are basically other types of ambulance chasers, things like that, where they see a company name, right? You're gonna see a company name on the other side of a claim, like somebody brings this lawyer a claim and they see, oh, well, we should go after the max limits. And I'm not necessarily gonna say one, you know, they're not doing their due diligence, or they're not doing the proper investigation on the claim to make sure that they're. prospective client isn't lying, but a lot of the stuff we talked about technology is finding today that a lot of people out there are lying about their claim,

James Blain: 14:19

Oh, absolutely.

Joseph Madiedo: 14:20

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

James Blain: 14:36

Geez.

Joseph Madiedo: 14:36

she went after policy limits, and in a lot of cases in the past probably would've. Got it. what happened to the industry in that time period where cameras weren't involved, where, you know, underwriting was a little bit more, antiquated where they didn't have the technology they have today to do a lot of the background, data search, et cetera, et cetera. So you see a lot of nuclear claims, a lot of this, stuff that the lawyers were able to get away with, in my opinion. so I think tort reform, like in Florida and in

James Blain: 15:06

yeah.

Joseph Madiedo: 15:07

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

James Blain: 15:14

Right.

Joseph Madiedo: 15:15

but I was trying to get Florida to bring in more carriers and the first thing they 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 gotten worse. There's a list out there like California and Georgia top

James Blain: 15:31

It, it's all the major markets, right? So what, what I think we're seeing, and I think where a lot of this might've intersected is it seems to be New York, Miami, la, any market large market for our industry becomes a large market for those predatory attorneys. predatory towards us. so I guess my question becomes, knowing that, and seeing that you've got a lot of guys, and I think this is probably the number one complaint. You've got a lot of guys that are like, well, we've never, you know, I have no claims. I've got an awesome loss run. I've got everything solid, I've got everything buttoned up, and I'm still getting slaughtered by my insurance rates. how does it work in terms of. Those types of companies, is it, you know, a bad apple ruining it for everyone or what? What's the issue?

Joseph Madiedo: 16:21

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

James Blain: 16:42

Right?

Joseph Madiedo: 16:43

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

James Blain: 16:54

Right?

Joseph Madiedo: 16:54

gotta, we want to have driver training year round.

James Blain: 16:56

Yep.

Joseph Madiedo: 16:57

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

James Blain: 17:05

Oh yeah.

Joseph Madiedo: 17:05

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

James Blain: 17:15

Predictive,

Joseph Madiedo: 17:16

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

James Blain: 17:20

right?

Joseph Madiedo: 17:20

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 claim in two years? I mean, there's a lot of prediction with, especially with ai right?

James Blain: 17:31

Oh, yeah.

Joseph Madiedo: 17:31

Come out. There's a lot of new ways to predict it. This year we heard, at the state of the industry at the NLA CD show that I think it was Mr. Lucci that said, you expect a 14% increase in insurance in 26 or 2026. And where is he getting that number? Because this past year I did an average, or at least on all of the carriers and what

James Blain: 17:52

Yeah,

Joseph Madiedo: 17:52

and the ones I represent, oh, about a 17% increase across the board from 20, 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

James Blain: 18:06

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

Joseph Madiedo: 18:21

Maybe. Right.

James Blain: 18:22

Okay.

Joseph Madiedo: 18:22

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

James Blain: 18:28

Right,

Joseph Madiedo: 18:29

your, to fight for you, right? To, to say, Hey, this guy, look at 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 training going on. Look, he's in the safety program. He is got this. He is got that. So you're fighting to get that price reduced to a flat renewal or 5% increase something that's manageable in your own overhead we used to call an inflationary increase 4% in our industry. I, I've, I've had the terminology used by carriers before. Not all carriers have said that they do inflationary increases. what do I mean by that? Inflation on parts. we had some crazy inflation, after COVID, especially

James Blain: 19:08

repairs are insanity.

Joseph Madiedo: 19:09

Repairs, but not just repairs. The cost

James Blain: 19:13

Oh.

Joseph Madiedo: 19:13

a lawyer or the payouts on a claim, are the liability side of the inflation. A lot of people always can do the, oh, well, car parts and the price of a vehicle has gone up and this and that, that's on physical damage or whatnot. But when you look at the liability side, the cost to fight a claim has gone up. The cost to defend a claim has gone up. The cost to, I think I, I read something in five years, we had a 60% increase in Florida in the amount of, uh, legal fees.

James Blain: 19:41

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 it was like 14 years, 14 straight years of not being the profitable segment of insurance, of not being able to make that profit. And I guess my question becomes, it get to kind of the max or the ceiling on that? Or is it something where it's gonna 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'm paying. If I'm paying all this money and I'm not having any claims, this guy's gotta have a new yacht. He's gotta be buying a boat this year. Right. Something's not adding up. And I, to a certain extent, I think that's, I, I'm not gonna say it's unreasonable because I think that feeling of we're we're not having claims and we're paying in and paying in and paying in is a really tough thing, especially if you're an operator that's worried about going outta business and you're paying in more and more on claims. I guess at what point do you say this is where we think it's gonna plateau or it's gonna peak off? Because I think there's a lot of people that are really scared about the next couple years.

Joseph Madiedo: 22:01

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

James Blain: 22:06

Right?

Joseph Madiedo: 22:06

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

James Blain: 22:10

I,

Joseph Madiedo: 22:10

modeling Florida. But our tort reform in 2023, HB 8 37, which Morgan and Morgan, by the way, tried to overturn

James Blain: 22:18

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

Joseph Madiedo: 22:21

our governor, well, they tried to overturn it with another bill, and our governor said he would not backtrack on any tort reform because it's helped the insurance industry. And what it's done is it's changed the statute of limitations on claims from four years to two years. MedPay caps 1 21 70, various things that have helped. rates a lot. That tort reform is already helping rates a lot in Florida. Is it mean we can open the door for new tort reforms? I insure taxi cab fleets 600 car fleets, 300 car fleets. I insure limo fleets. charter bus fleets. non-emergency medical fleets. everybody is fighting the same battle, increases in insurance.

James Blain: 22:57

Oh.

Joseph Madiedo: 22:57

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 trouble and

James Blain: 23:08

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

Joseph Madiedo: 23:15

company back in the, in the, nineties, early two thousands they had people at the top pocketing profits, and or spending the company profits to our towards expenditures that probably were not expenditures that benefited the company in any sort of way, personal expenditures. that company didn't have the money to pay claims. claims shot up and it went under. we've seen a lot of car carriers like that. I don't know if that specific situation with, using funds for personal use has it been in any of the other, I think a lot of times what happens is you see a lot of underpricing, people that want to come into a market as a carrier, and that what they will do to take a segment of the business is they will price too low

James Blain: 23:59

Yeah,

Joseph Madiedo: 24:00

come in without the proper data. Maybe they have data, maybe they don't care about the data. I've seen this happen to us a few times, with programs that come into Florida and just completely undercut the marketplace. And then in two or three years they're gone and it's like, what, what happened? And it, and basically it takes time for these million dollar claims to hit the books. that's why I think this tort reform has helped a lot, is it gives them a timetable now to

James Blain: 24:25

well.

Joseph Madiedo: 24:25

claims fought,

James Blain: 24:26

And back up for a second, Joe, explain that. Because I think, one of the things that happens with insurance is we've heard about the reinsurance market. We've heard about all these different pieces, but to a certain extent, like, and, and I as as transparent as you're willing to be with me, but you know, a lot of people look at this as, I pay them an amount every month. It goes there. If I'm trying to figure out like what percent of that premium actually goes to a broker, what percent of that premium actually goes to like setting aside for a claim? is there like a set way to understand that business?

Joseph Madiedo: 25:02

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

James Blain: 25:10

Yeah.

Joseph Madiedo: 25:10

are two different types of insurance models. and then you have guaranteed cost type companies like rated carriers. a lot of these models you can look into and see the differences right there of where you're gonna have a, an amount of money that has to go to legal from the pool, right?

James Blain: 25:26

Right,

Joseph Madiedo: 25:27

is a pool of people, it's a pool of operators, it's a pool of properties. whatever you're insuring. and so that pool is the money pool. That money needs to be used to adjust claims. So you're gonna have an adjusting arm, right? So you're gonna have to go and, and, and hire a team of people that are gonna go out and figure out what happened at the claim, Then you have legal fees, the expense, of hiring lawyers to

James Blain: 25:48

right,

Joseph Madiedo: 25:49

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

James Blain: 25:56

right.

Joseph Madiedo: 25:57

the expenses are separate than the money being used to actually pay claims. And then you have with, those fees with a carrier. Let's say you have like an a rated carrier or somebody that's been around a long time, they usually have. You know, to pay regular fees, to be in a state, whether it's an admitted type of situation or an ENS type of situation, there's gonna be a lot. So those premiums get spread around to all these different groups,

James Blain: 26:23

Okay.

Joseph Madiedo: 26:23

different pools. some people start their own captive programs. We've, know, started and quoted captive, uh, whether it's a standalone, like there's silo captives, there's group captives, silo captives, meaning like something that is just that insured. And there's such a big heavy background that, that insured is siloed to their own claims and not at the expense of the claims of another operator, let's say. And then you have a group captive where that particular operator might be in a group, and you are now subject to the losses of the other people in the group. Now there's payin fees and there's other kinds of levels. But I'm not gonna get into, like I

James Blain: 27:02

Give, give us, give us the really simple thing there, because there's a couple things. I can tell you this year I've had people come up to me like, have you met our Lord and Savior the 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 insurance friends and the experts that I'm lucky enough to deal with the insurance industry have kind of told me is a couple things. captives are not a short term solution right now. You shouldn't be changing carriers frequently anyway, but you really don't want to be in a scenario where you are changing them. Frequently, no matter what on a captive, you know, you do that with insurance carriers. They're gonna know something's up, they're gonna know your price shopping, they're gonna probably look at you as a higher risk with a captive if you try to shop around captives. It almost sounds like you're missing the point to a certain extent, because from what I understand about captives, the whole idea there is you're bringing together a group of similar operators. You are spreading that risk amongst yourselves, and then you are basically having those pools. But as time goes by, you're able to pull money back from the pool. Is that, is that kind of the way that this in a, in a really simple, right, I don't want to go super deep and spend two hours on captives, but can you kind of give us that overview of how that works?

Joseph Madiedo: 28:24

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

James Blain: 28:26

Okay.

Joseph Madiedo: 28:27

or your, what I, I think a silo cap, whatever your single parent captives are owned by basically one company and it sures only its own risks. That's kind of like, it's almost a form of self-insurance. captives themselves are a form of self-insurance that provide cost savings. lets you have a little bit more flexibility and control in managing risk because an insurance company, basically a first dollar guaranteed cost company, they're gonna manage those claims. They're gonna control those claims, they're gonna decide what gets paid out their legal team, right?

James Blain: 28:55

Right. and that's a big point of contention right now here with operators is like, Hey, they just paid this claim out. You know, I think they should have fought it.

Joseph Madiedo: 29:02

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

James Blain: 29:08

Yeah.

Joseph Madiedo: 29:08

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

James Blain: 29:11

Okay.

Joseph Madiedo: 29:12

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

James Blain: 29:16

Okay.

Joseph Madiedo: 29:17

own this group captive, oftentimes they pull their risk

James Blain: 29:21

I.

Joseph Madiedo: 29:21

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

James Blain: 29:29

Is that a captive owned by an association?

Joseph Madiedo: 29:31

yes, it's usually formed by a trade association. You see it a lot with, medical malpractice. They had an association captive here locally that I was actually looking to help move, et cetera, et cetera. But, in our transportation world, I have yet to actually see an association captive recently and I think a part of that is because you have to have a good amount of risk pool, and we have a lot of, fleets,

James Blain: 29:53

Right.

Joseph Madiedo: 29:54

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

James Blain: 30:08

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

Joseph Madiedo: 30:14

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

James Blain: 30:33

Right.

Joseph Madiedo: 30:34

captives, which are usually, captives formed by agencies like myself, we've never formed an agency captive. some agencies will form agency captives, if they have enough of a book to underwrite the risk for their client, and

James Blain: 30:46

Okay,

Joseph Madiedo: 30:46

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

James Blain: 30:54

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

Joseph Madiedo: 30:58

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

James Blain: 31:10

Oh,

Joseph Madiedo: 31:11

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

James Blain: 31:25

it's

Joseph Madiedo: 31:26

in a year

James Blain: 31:26

okay.

Joseph Madiedo: 31:27

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

James Blain: 31:40

Okay.

Joseph Madiedo: 31:40

Do you have enough, premium to fit the captive? Maybe, that particular captive has a premium level. You have to have 75,000, or you have 150,000 in premiums. I've seen captives where it's like you have to have 750 K in premium to fit into our captive. You have to have 2 million in premium to have a single parent captive. typically those captives have a corporate structure. The ones within, like you mentioned, national interstate captives, they have the advantage of having national interstate. paper,

James Blain: 32:08

Right.

Joseph Madiedo: 32:09

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

James Blain: 32:14

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

Joseph Madiedo: 32:17

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

James Blain: 32:30

Yep.

Joseph Madiedo: 32:31

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

James Blain: 32:49

What is ENS

Joseph Madiedo: 32:50

Excess and surplus lines.

James Blain: 32:51

Okay.

Joseph Madiedo: 32:52

carriers. but

James Blain: 32:53

I

Joseph Madiedo: 32:54

when the admitted carrier, like an admitted carrier is basically going to be overseen by the financial department of that state.

James Blain: 33:03

Okay.

Joseph Madiedo: 33:03

that financial department, they have to adhere to guidelines of solvency guidelines, which may, you know, so what happens if this carrier goes belly up? The state will back the claims to the end of your policy term up to a certain limit, an ENS carrier won't have that same. ability because they're not going through the state's regulatory program. 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 North Carolina. I've seen them in Vermont, at Delaware, wherever. Cayman Islands, Bermuda, there's, there's islands, you know, and the domicile provides that regulatory framework, which is gonna be the capital requirements for the captive formation, the for the tax rules, the governance expectations, the standards of reporting. So there's a lot of stuff. It's basically creating your own insurance carrier

James Blain: 33:52

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

Joseph Madiedo: 34:00

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

James Blain: 34:10

Right?

Joseph Madiedo: 34:11

unless you have an amount of

James Blain: 34:13

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

Joseph Madiedo: 34:16

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

James Blain: 34:23

right.

Joseph Madiedo: 34:23

losses that'll eventually come about.

James Blain: 34:26

So what's the catch? Right? There's gotta be a catch. This all. I mean, and that's kind of the reason that I hear operators are like, man, we're gonna make our own captive. It's gonna be great. We got all these guys that don't have any issues. We're gonna, save all this money. Where does the catch come in? Or where's the'cause?'cause everything's got a pro and a con.

Joseph Madiedo: 34:42

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

James Blain: 34:45

Okay.

Joseph Madiedo: 34:45

and tax considerations. again, every captive kind of has different tax considerations. I've seen some with really good ones. I've seen some with like, kind of the normal run of the mill captive tax considerations. And the tax treatment can depends on sometimes the distribution of the risk or the shifting or jurisdictional rules. But eventually what happens is, is if you have a captive or a group captive that has a pool and they can audit that, right? And, and it comes back to you in savings. That's what you're talking about where people are like, okay, I could save money because in 18 months if our captive, or if our group has not had any of those claims payouts, then that's where this quote unquote profit. the imaginary, if you say sometimes because of the claims, uh, the that these insurance companies may collect on when their pro within their programs can instead be used to either fund the captive surplus or get return, uh, you know, to the insured in a, in a various situations, like we've seen, it's kind of like we used to do something called a retro policy, basically, uh, does an audit in 18 months and if the premium, um, we did this on one transportation risk, my father actually did it in 2012. basically for one account within a carrier or the retro funded policy, you pay an amount, let's say$8,000 a unit. You have a minimum and a maximum 25%

James Blain: 36:09

Okay.

Joseph Madiedo: 36:09

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

James Blain: 36:19

Okay.

Joseph Madiedo: 36:20

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're gonna lower our paying cost, or we're gonna lower our yearly. Maybe you get some money back. so they all function differently. especially the ones that are housed within carriers function differently than the ones that are formed by a large transportation company. So like, if

James Blain: 36:43

Right.

Joseph Madiedo: 36:43

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

James Blain: 36:50

And, and we, we've seen that with a couple of our very large customers are essentially self-insured, they've got enough premium to where 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've heard the numbers shift around, but the point I've heard is somewhere between 10 and 25 vehicles is where, you know, if you're below that mark, if you don't have at least 10 vehicles, it probably doesn't make sense. You're probably not gonna qualify for the captive. As a broker, how do you, think about that? At what point does a captive make sense?

Joseph Madiedo: 37:33

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

James Blain: 37:43

Yeah.

Joseph Madiedo: 37:44

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

James Blain: 37:48

Yeah.

Joseph Madiedo: 37:49

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

James Blain: 37:53

Right.

Joseph Madiedo: 37:54

the safety, profitability. That carrier starts to make more profit. If you're not having a lot of claims, that would make, then it would, might make sense to start looking or searching for a pure captive or a single parent captive. Maybe if you are$2 million in premium 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. I know that there, then you might qualify for those group captives. there's a difference in size of your company. you may want to create a captive for only your group,

James Blain: 38:24

Right.

Joseph Madiedo: 38:25

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

James Blain: 38:37

A lot

Joseph Madiedo: 38:37

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

James Blain: 38:51

Right.

Joseph Madiedo: 38:52

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

James Blain: 39:05

Yep.

Joseph Madiedo: 39:06

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 different risks from different regional territories into your captive, um, because your front paper allows it. you can go into admitted states Florida is one of those states, we do not allow risk retention groups here, without fronting. And at that point they need to have a rated, admitted fronting paper company, like a state national 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 to come in here. I work with a lot of great ENS carriers. Just because they're not admitted carriers in my state, doesn't mean they're not great for insurance or providing good structure, good legal, good pricing, good, claims

James Blain: 39:56

Right.

Joseph Madiedo: 39:57

They might be doing all those things, but state rules don't allow them to come in here, which, might make your state more difficult? major metropolitan areas like New York City, la, The rules are different there. the regulatory rules insurance requirements and the things that the carriers that are allowed to come into certain states, et cetera. everywhere you go is different. You have to deal with that. with captive, sometimes if you have, a spread, if you have a good, you know, if you have a good 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 to your captive, and you can be picky and choosy. And it's up to the members of that captive you mentioned national interstate. Sometimes it's up to the company itself. where the captive's domiciled in.

James Blain: 40:36

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

Joseph Madiedo: 40:46

my experience has always seen it in the larger side.

James Blain: 40:49

Okay.

Joseph Madiedo: 40:49

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

James Blain: 40:53

Yeah,

Joseph Madiedo: 40:54

never like.

James Blain: 40:54

same thing here. I bring that up because I'm seeing a lot of people saying that as an option. we talked about this on a previous episode, I actually gave a call to action to the industry. in our world we've got insurance as a state problem, when we were with NLA and we went to Day on the Hill, one of the big things there was we asked for an insurance task force. and you're lucky enough, you sit across multiple industries like I do, you've got, you know, the TTA side of things where you've got NEMT and taxi. They're facing the same crisis bus is facing the same crisis. And so what you guys were able to do with tort reform on a larger scale, at least in my mind, from everything I've heard from everyone on the insurance side, is that appears to be the best long-term solution. But the big caveat there being long-term, right. None of that is anything we're gonna get done in the next month. It's something that is gonna be a long-term fight

Joseph Madiedo: 41:49

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

James Blain: 41:57

Right.

Joseph Madiedo: 41:58

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 to benefit from something that will allow them to price things in a way that's affordable for the consumer.

James Blain: 42:12

Right.

Joseph Madiedo: 42:12

what is the insurance crisis? It's unaffordability which we're seeing in a lot of unaffordability across the board in, various forms of insurance that now the markets are softening. Like my homeowners went up, right? My,

James Blain: 42:23

Yeah.

Joseph Madiedo: 42:24

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

James Blain: 42:46

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 say there are that'll write kind of the passenger ground transportation industry? Do you have any kind of idea off the top of your head?

Joseph Madiedo: 43:00

so again, I mentioned big carriers since I started here, like Carolina Casualty,

James Blain: 43:05

Yep.

Joseph Madiedo: 43:06

stopped writing public auto.

James Blain: 43:07

I,

Joseph Madiedo: 43:08

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

James Blain: 43:16

come back.

Joseph Madiedo: 43:16

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

James Blain: 43:27

Yeah.

Joseph Madiedo: 43:28

there might be more in some states that allow ENS carriers, which is one of the things in Florida, I've seen some of the Florida operators try to say, Hey, can we open up our state to ENS carriers? because right now we only allow the admitted carriers here, and there's other states do the same. so I think that, one of the, like I, we were talking about one of the issues with the rising claims. Is affecting the reinsurance, is the lack of carriers is when you wanna put a program together, usually you go to target

James Blain: 43:56

No.

Joseph Madiedo: 43:57

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

James Blain: 44:13

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

Joseph Madiedo: 44:15

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

James Blain: 44:26

Right

Joseph Madiedo: 44:27

they have to have reinsurance, companies that cover different layers because that company won't have the money to cover the claims in their program. So when the program gets developed, they go to target markets or meet directly with the

James Blain: 44:41

now.

Joseph Madiedo: 44:42

they need to get a certain number. Sometimes I've heard five reinsurance companies, maybe more, those reinsurance companies all get together and negotiate with the people putting the program together. they have to, negotiate reinsurance treaties that recognize, and price the fleet management risk control stuff. So they're gonna say, how are you guys underwriting? What's the fleet management line? What's the underwriting? they also have to ensure the risk transfer meets regulatory tax standards. There's a lot of technicalities involved, but what I met was with the profitability is they also don't wanna do something, a program that they feel is we're now high risk.

James Blain: 45:18

Right.

Joseph Madiedo: 45:18

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

James Blain: 45:36

Right,

Joseph Madiedo: 45:37

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 is gonna change to a, format or aversion where we have more eyes in the insurance industry on the operations. cause why, when you get people that aren't, that are lying to their insurance agent, lying to their insurance company and getting insured by that same company, that the operator doing things correctly is getting insured by now you have a very risky person in a program that you're in.

James Blain: 46:07

right.

Joseph Madiedo: 46:07

when those risks, when you have a lot of that going on, it creates a kind of a effect where now they have to get pressure from the reinsurance to raise their rates. Those reinsurance companies come in yearly on an annual basis, normally, normally. To a carrier who has a program like the front, like progressive, they'll say, you need to raise rates. get more money for this risk, across the board,

James Blain: 46:31

Right.

Joseph Madiedo: 46:32

just the bad ones. You need to be more picky. You need to have a ratio of charter buses to smaller units. You need to have this ratio, 15% of this type of business. And that we don't want any more than that. And the reinsurance can kind of, the reinsurance companies put pressure on carriers and on the captives. Certain types of captives. There are various, there are unique ones out there that don't have that reinsurance pressure. but most of them do. And that is where a lot of this comes from. A lot of price increases are coming directly. You've heard it over and over and

James Blain: 47:05

Oh yeah.

Joseph Madiedo: 47:05

I'm sure is coming from that top-down structure. what are we doing to combat that? tort reform is huge, group captives gain scale. And as they gain scale, they gain gain credibility with reinsurers. So maybe they get less top-down pressure if they have a good scale. that they combine the telematics data now that we get with the ai, the devices, the cameras, with the underwriting which will help you negotiate better insurance pricing. a lot, uh, different kinds of stuff. Structured reinsurance, multi-year loss portfolio. There's different, different types of things in the background that reinsurance can negotiate with the front company. so I I, I have definitely seen a lot of carriers. that you guys are all insured with in the marketplace are strategizing to get rates down. I think there's a misconception. That sometimes they're raising rates and don't care. I always say if they didn't care and once you disappear, all the operators, start disappearing and there's less and less and less to ensure, that's less premiums for them,

James Blain: 48:06

Right.

Joseph Madiedo: 48:06

less premium for them to obtain. The goal is to get to a price point where everybody can pay and feel comfortable it creates new operators, expanding our industry more livery, more operations, more vehicles being added because the rates are not killing you. Right? Because a lot of times people, I think the operating side is they're looking at that insurance rate. If they want to add a vehicle, if they want to expand, if they want to get bigger.'cause those insurance rates can go from they can afford to something that's unaffordable.

James Blain: 48:38

let me ask you something. one of the things I hear all the time is, well, you know, these big carriers, they insure so many different people. They don't care how hard they squeeze us. How many of these carriers, you know, we've had Tim Delaney on, we know that Lancer, you know, kind of born in the, the limo and the bus industry, that's their bread and butter, How many of these carriers are heavily invested like that, if any? a lot of them are pretty diversified. And for a lot of customers it's tough because they're like, well, you know, they're, they're squeezing on me. They're squeezing on a bunch of different industries. what does that landscape look like? is it just a bunch of really big companies How many of those are kind of specialized? What does that landscape look like?

Joseph Madiedo: 49:21

So you have special like Lancer? Uh, awesome. They've been a specialized in our industry for a long time. Philadelphia has different specializations. They have program, therefore hire program, and has a good reputation. but that doesn't mean that's all they do. but some don't like a lancer, you know, they completely probably specialize in passenger transportation, whereas some carriers are much larger in other segments. we had a carrier in Florida that they were specialized in commercial auto and for higher transportation and moved into workers' comp and

James Blain: 49:56

Yeah.

Joseph Madiedo: 49:56

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

James Blain: 50:01

Oh, they stepped out completely. Yeah.

Joseph Madiedo: 50:03

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

James Blain: 50:13

Right.

Joseph Madiedo: 50:14

They, I've send risks

James Blain: 50:15

I.

Joseph Madiedo: 50:15

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

James Blain: 50:37

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

Joseph Madiedo: 50:53

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

James Blain: 50:56

Okay. Yep.

Joseph Madiedo: 50:58

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

James Blain: 51:07

Right,

Joseph Madiedo: 51:07

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

James Blain: 51:13

right

Joseph Madiedo: 51:14

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

James Blain: 51:23

now.

Joseph Madiedo: 51:24

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

James Blain: 51:34

Right.

Joseph Madiedo: 51:35

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

James Blain: 51:46

it's a different risk profile.

Joseph Madiedo: 51:47

But what happens, right? You need underwriting That's what I was talking about. in the past you've, we've, we used to call'em glorified taxis, so you might get people sneaking in. that are on demand people or are Ubers and Lyfts or operating the TNC stuff where you don't want that kind of exposure in your program, but you're trying everything to stop it, but it's still happening.

James Blain: 52:09

right.

Joseph Madiedo: 52:09

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

James Blain: 52:14

I've said this a million times to the podcast. I'll say it a million more. I get people that call me all the time that say, Hey, my insurance company wants to do a safety audit with me. How fast can you get me the certificates? So I could tell'em I did all the training. And the, the same thing I always come back to is, twofold, one. That's part of the problem, Don't be part of the problem, be part of the solution, but two, they're assessing risk for a living. If you think an insurance company coming out to do a safety assessment, you can BS your 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 the day of the claim. And, and I don't, I would love to get your kind of thought or assessment on that, because I feel like for a lot of operators it's. Make the payment, make the payment, 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 found out that that's where they're also seeing differences in the carriers and how they handle a claim, what they do after the claim, those types of things. I think that's the harder part though, as an operator to try and guess and, you know, am I willing to pay, you know, so many thousands more I hear from operators all the time being in the training space, as soon as there's a claim, it's like, Hey, we gotta fix our training program. We gotta do this, we gotta do that. And that's when they're really kind of learning what they paid for, if that makes sense.

Joseph Madiedo: 53:41

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

James Blain: 53:50

Right.

Joseph Madiedo: 53:50

of the information I'm giving you is not from the carrier perspective. I'm an agent. I don't have the background or behind the scenes to every carrier. I could just tell you the way in general a lot of them operate, and I've think you've seen on the past, in the nineties, I mentioned the nineties of two thousands. I had a, I'm gonna use an example, I had a client come to me. He had 270 something units sat on the couch that you see behind you, and blamed a third party administrator, for his claims. a TPA claims handler. And sometimes you get programs that they can't manage all their claims. they set up the carrier, you know, they have the program, but they hire somebody, they say this service to this claims administrator, like NARS is one of the ones out there. There's others out there. They handle the claims

James Blain: 54:35

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

Joseph Madiedo: 54:41

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

James Blain: 54:45

Okay.

Joseph Madiedo: 54:45

this particular insured was very upset and told us, this, TPA claims handler, wasn't handling claims the way the insurance company wanted them to. and they, or, or we want a carrier that handles the claims themselves directly or has their own adjusters. and he specifically wanted that. So you don't always get that with insureds. He just felt that maybe that could change his performance, maybe his performance was being derived from the way the claims were being handled. I hear that often. before the meeting with you, I got off of a. Meeting with one of my clients and a carrier we have quarterly meetings on their claims, and they asked if I could get a carrier that would do that,

James Blain: 55:24

Yeah.

Joseph Madiedo: 55:25

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

James Blain: 55:30

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

Joseph Madiedo: 55:33

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

James Blain: 55:41

It's a fairly large company.

Joseph Madiedo: 55:43

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

James Blain: 55:53

right.

Joseph Madiedo: 55:53

the small units with that particular carrier. And then I have another company here that has all small units with that exact same carrier, and they do the same thing quarterly claims review meetings. Why? Because they say, we want the loss runs. We want a presentation on each claim and this carrier offers that.

James Blain: 56:10

is that the operator holding the insurance company accountable?

Joseph Madiedo: 56:15

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

James Blain: 56:22

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

Joseph Madiedo: 56:26

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

James Blain: 56:33

Right,

Joseph Madiedo: 56:33

used to mitigating, handling and doing a lot of the safety and whatnot themselves. And now we're going to a carrier that's gonna help us do all these things. We want to have a, a, a transparency

James Blain: 56:45

They want a partner. They don't want someone to just do it.

Joseph Madiedo: 56:48

most of the time, most carriers, will allow client to delve into a claim and what 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.

James Blain: 57:03

absolutely

Joseph Madiedo: 57:04

they don't want to pay the claim. So

James Blain: 57:05

no.

Joseph Madiedo: 57:06

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

James Blain: 57:14

Yep.

Joseph Madiedo: 57:15

that cares enough to do these things and to, and the operation wants a company that's willing to allow them, a word into the claims. But does it always happen that way? No. And, and you mentioned the small operators, those are gonna be the ones that might, you know, they'll, they're still gonna be carriers that'll meet with them or talk to them and say, Hey, this is what's going on with a claim. But they, they're gonna be the ones that are probably gonna have a, a policy limits hit or something that happens to them that hurts their insurance or their insurability or their pricing more than somebody that has a lot of premium.

James Blain: 57:47

Right,

Joseph Madiedo: 57:48

is why they, you don't see a lot of small operators in captives, because captive can absorb a claim from a guy paying$300,000 a year, right? So if he has a hundred thousand dollars hit, they can absorb it in the premiums and all the premiums might be affected, whereas a one car guy. Might have a huge claim and then all the, the payin isn't, isn't there? It's just, so that's why you have carriers that create just insurance programs where that they'll take anything from one car all the way up and then you have programs that they don't want anything under 10

James Blain: 58:20

right.

Joseph Madiedo: 58:21

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

James Blain: 58:42

Yep.

Joseph Madiedo: 58:42

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

James Blain: 58:54

I, okay.

Joseph Madiedo: 58:54

insurance companies a view of something else that can allow them to get credits filed with states to bring pricing down. states. track the payouts in, in various locations. We call it iso rating. Here in Florida there's rates that are base rates and then filed rates, right? So they'll give recommended rates by the state and you can file to go over, under those states. 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 times you'll see a rural area with a cheaper base pricing than a high

James Blain: 59:30

Then I.

Joseph Madiedo: 59:31

area, like a city, like a big city. and the same state, you'll see a completely different pricing structure'cause the exposure is different. And because those ISO ratings are different,

James Blain: 59:40

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 is some hope on the horizon. There's tort form, there's all these 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. What expectations do you set for them for 26, 27 and beyond?

Joseph Madiedo: 1:00:08

expectations I would set for them on insurance is, the same thing as it the state of the industry discussed recently was that we have a 14% average rate increase of, for 2026 projected. we've seen 17% rate increase average at, you know. year, this past year and remember, I'm just one individual agency. We're an independent agency and certain programs might have different numbers.

James Blain: 1:00:33

Right.

Joseph Madiedo: 1:00:34

individual programs might have different numbers. and I've seen 15% rate increases, 12% rate increases from carriers this year, mandatory set usually by their reinsurance treaties. those rate increases normally come from the reinsurance meetings on their whole book of business, So I think expectations in Florida and are different than New York or an expectation in another state. But I think overall as a whole 14% increase for the normal, operator, the small operators, is about a good, a good price point. I would say if you're doing everything correctly and you're doing the safety, you can work yourself down to like a 5% increase, a 10% increase, maybe no increase or a better price. If you have a good specialist making sure you're covering all of the markets available, you always wanna make

James Blain: 1:01:21

Doing the work.

Joseph Madiedo: 1:01:22

A specialist. Right? A

James Blain: 1:01:23

Yep.

Joseph Madiedo: 1:01:24

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

James Blain: 1:01:41

Yeah.

Joseph Madiedo: 1:01:42

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

James Blain: 1:01:48

Yeah.

Joseph Madiedo: 1:01:49

are a tort reform in eight states this year. And analytics and AI and all this other stuff has been doing great and we've weeded out a lot of the illegal operators from the risk pool. A lot of the people that aren't following the rules, a lot of the people that aren't doing things the way that they're supposed to be done, a lot of the people that are, lying on their insurance applications and that's continuing and growing in each carrier, at each agency, everything, we're always trying to weed out the people that are not doing things correctly.

James Blain: 1:02:16

Right.

Joseph Madiedo: 1:02:16

it hurts the rest.

James Blain: 1:02:18

Well, I think the big takeaway for me, and this is something I've said for a long time and we've been saying since the early days of the podcast is one of those things where you put the work in, now you're gonna get the pay off later. You know, if you're the guy that's calling me and you're like, Hey, I got, I got my insurance renewal in a month, good luck. You know, if you're like, Hey, we're gonna try and get some telematics and we're gonna do it last minute, I think the companies that are investing in training. That are putting together solid programs that are investing in the telematics, that are managing the telematics and using it to drive the training. Right. I always say those two are interconnected and then that are making the right decisions on maintenance or making the right decisions on hiring are not putting up with the things that are going to lead to an accident, I think those are the companies correct me if I'm wrong, make your job easy.

Joseph Madiedo: 1:03:10

Absolutely. one of the things you're saying with a Verizon and cost of insurance, you're getting a lot of shopping.

James Blain: 1:03:16

No.

Joseph Madiedo: 1:03:16

that are out there saying, I need to find this lowest rate. It's out there somewhere. You wanna approach people that don't have, you know. if you're already have an agent that's accessing all the carriers, you, you want the new agent to say, listen, I, if those carriers are blocked, all I send is a name A-F-B-I-N number. I'm not gonna send any applications. I will only approach the carriers if maybe they haven't, placed it. If your agent has all the carriers, Make sure they're giving you a price point from every carrier to make sure that way that those carriers were approached. and then you wanna make sure the carriers are offering your needs. You said safety, driver training, all those things like a lancer they look for all those things.

James Blain: 1:03:53

Yep.

Joseph Madiedo: 1:03:53

A national interstate, you know, Philadelphia at Incline, they look for all of those things. They send loss control people out to those risks. They wanna make sure that the insured, the application they get in reflects the risks that they're insuring so yes, it's important to put all that in place. one of those things missing you won't be getting a quote for this carrier or that carrier, and you don't know that might be causing it. So you wanna make sure you, you have an expert in the industry. there are a lot of us, that know the requirements discounts or credits, to get you the best rate possible or your operational costs are going up every year. you can only raise your, your prices so much before your customers start driving off business. the seat I'm sitting in is not like a very fun seat to sit in. More often than not, I'm getting. Grilled lectured, yelled at, because of the rates increases or the lack of finding an insurance carrier that is gonna fit the price point you're looking for,

James Blain: 1:04:50

Right,

Joseph Madiedo: 1:04:50

a reason for that. And you wanna make sure to get those 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 I do driver training year round, if I do camera systems, having those two-way cameras to eliminate frivolous claims and lawsuits

James Blain: 1:05:09

right.

Joseph Madiedo: 1:05:09

is very important to the carrier. Very important to have it for your own, company so you're not sued, for something frivolous that didn't happen. making sure you have all the proper coverages, that you're not doing certain things. Like if you have DOT number and you, make sure you're abiding by whatever your DOT requirements are. You's very important because every carrier is looking at those safer reports or those cab reports that tell them everything going on with somebody

James Blain: 1:05:36

Absolutely.

Joseph Madiedo: 1:05:36

governed by the DOT. so you're helping yourself and will you have a rate increase because reinsurance pressured your company into raising their rates Absolutely. There'll be rate increases, but you're lessening the blow. If you're one of those operators that have all these things in place and you have your max credits are in there because you're doing all the right things, and you're

James Blain: 1:05:57

Right.

Joseph Madiedo: 1:05:57

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

James Blain: 1:06:11

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

Joseph Madiedo: 1:06:15

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

James Blain: 1:06:21

They're not gonna have access you need.

Joseph Madiedo: 1:06:23

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

James Blain: 1:06:27

Right.

Joseph Madiedo: 1:06:27

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

James Blain: 1:06:34

Yeah.

Joseph Madiedo: 1:06:34

need to be able to

James Blain: 1:06:35

I.

Joseph Madiedo: 1:06:36

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

James Blain: 1:06:45

Absolutely.

Joseph Madiedo: 1:06:46

tags you for it.

James Blain: 1:06:47

I really think it's one of those things where what you do now is gonna pay off later. Joe, I can't thank you enough for being on the podcast. I can tell you this is kinda the highlight of my week. I think you've got some incredible information that you've given these guys, if they wanna reach out to you, phone, email, what's the easiest way for someone to get in touch with you if they wanna have a chat with you?

Joseph Madiedo: 1:07:05

my email is emailJoseph@pickonline.com.

James Blain: 1:07:08

All right.

Joseph Madiedo: 1:07:09

our website's, P-I-C-O-N-L-I-N e.com. like I said, I'm one of the transportation specialists. It's all I do. I'm not doing other lines of business. I'm not expertise at other lines of business. I sit on, like I said, board of directors for associations within this segment, within the luxury transportation, taxi transportation, the non-emergency medical 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 people all the time.

James Blain: 1:07:38

if you have insurance questions, even if you're not insured by Joe, he is happy to help you. Alright, well I gotta tell you, this was a pretty enlightening episode. I know that insurance is gonna be a hot topic for years to come. I think what we do now influences what we pay later. thank you so much for being on and thank you everybody for listening. We'll catch you on the next episode.

1:07:58

Thank you for listening to the ground transportation podcast. If you enjoyed this episode, please 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. for more information about driving transactions and to contact Ken, Go to driving transactions.com. see you next time on the ground transportation podcast.