Knowledge Center

Knowledge Center Items Podcast Episode 12

Everything You Need to Know About Transportation Right Now

Published on

A lot has been happening with trucks on and off the road for the last several months. 

The good news is, it seems like everyone is starting to get back to work. 

Before they do, you'll want to talk with your clients to make sure they're carrying the proper coverage for the trip. 

The last thing you want is for their policy to hit a pothole while they fight to keep their business on the road. 

RPS' new National Transportation Practice Leader, Mark Gallagher, helps you understand what your clients need to know and where everything is heading.

 

For more Change Insurance episodes, click here.

Full Episode Transcript

Joey Giangola: Mr. Mark Gallagher, how you doing today, sir?

Mark Gallagher: I'm doing great, Joey. Thanks for having me. How are you doing today?

Joey Giangola: I'm doing all right. I'm doing all right. So Mark, I got to know, I'm not sure exactly where you're at in terms of how open things are in your area, but what are you looking forward to getting back to? What's the thing this is the first thing I'm doing when I can get out and get back to somewhat of my normal existence?

Mark Gallagher: On the personal side, I'd say enjoying some sporting events with our friends and family. Enjoying maybe going out to a restaurant and those type of things. But we've got some ballplayers in our family. We've got 16 year old twins and a 10 year old son all actively involved in sporting events and swimming and baseball and lots of different things that they're involved in. So we're excited to get back to that. Seeing a lot of the friends and family that we enjoy being around.

Joey Giangola: Yeah. So high school baseball is that we're dealing with?

Mark Gallagher: Yeah. So I'm in Weston, Iowa. So the state of Iowa is actually the first state that is opening up high school baseball, high school softball, and they opened it up June 1st. So we'll look forward to participating in that and our 10 year old son plays quite a bit of baseball actually over the course of the summer. So looking forward to enjoying those games and experiencing that with them and creating memories.

Joey Giangola: That's nice. I mean, I didn't think they would get summer baseball back in. But that's a good to hear that some places are getting things going.

Mark Gallagher: Yeah, it's going to change how they do things. I don't think anybody's going to be hanging out in the dugout for example. They're going to be spread out in chairs. The parents are going to be spread out in chairs across the outfield and along the first and third base lines. So it'll be an interesting experience, but they can apparently get it done and do it in a safe manner and probably limit games and those types of things, where they can still participate yet, be cautious about it.

Joey Giangola: Hey, anything to not miss a summer of baseball that's for sure in my opinion. But you know, Mark, what's going on in terms of transportation? What are you seeing? I mean how is that reacting to everything? Things are getting back to normal a little bit, but what are you seeing in terms of that activity and what should we be looking out for?

Mark Gallagher: To give you an overview of what was going on prior to COVID and the industry was running along really well. Things were rolling, freight was up and there was a lot of opportunities out in the economy for a lot of different varieties of transportation. And the public auto segment and the business auto segments and the trucking segment. When COVID hit, it obviously affected a lot of industries across the world in a lot of different segments of the marketplace. And so you've got changes within each different segment, particularly in transportation. Truckers were hit on the auto parts hauling segments, pretty substantially. The construction hauling standpoint, that took a hit. And while others were doing well from bottled water, food, necessities, those type of things. So you saw a transition of truckers that tried to adapt their abilities to haul what they were consistently hauling and used to hauling and moving over into areas that created an over-saturation quite frankly, of truckers in industries that drove freight rates down.

So it took a hit just across a variety of different segments. But what we're seeing now is people are getting back to work. People are still buying things and they always have. You're starting to see changes across the country in terms of what's going on, the things that are needed, people spending a little bit more money on some things that weren't necessarily being purchased two months ago. So it's going to take some time, but I think that truckers are always going to be needed. They're adaptable. That's what we'll see moving forward. And I think there could be a big uptick of opportunities depending on what the segments are.

Joey Giangola: Yeah. I mean, so how does that look in terms of a coverage standpoint? I mean, are we just going to pick back up where we left off? Is there any adjustment or adaptation to what we're seeing now? How are the carriers responding in that regards?

Mark Gallagher: So you saw a lot of carriers adapt and be flexible with their products. Lower mileage minimums, allow vehicles to be taken off. You saw party buses and limousines that truly were not operating at all, have some ability to lower some coverages, reduce some limits, reduce some radius within their policies. So I think as the economy picks back up again, I think you're going to start seeing those options be a little bit more limited. Maybe you're attracting some of those options. And we're starting to see that a little bit where carriers have said, "For a two to three month period, we're going to be able to do this." But now we're going to be backing that off and not necessarily business as usual. We'll still remain flexible.

But at this point, let's try to get back to normal and try to figure out exactly what coverages are needed and then move on from there. And a lot of truckers out there I think are still feeling their way through that. We're not back to where we were and it may take a while before we get there. But carriers are wanting to keep business, wanting to retain it. And agents are having a lot of conversations with their clients, communicating, "Okay, what's going on with your business?" And I think that's the main part, communicating with our clients and them communicating back with us and letting us know this is what's going on. Can we find a solution for them?

Joey Giangola: What has that conversation been like with the agents? I mean, what are you hearing from them and what do we think are some of the things that they need be focusing on right now during all of this?

Mark Gallagher: I liken it to the trucking industry. If you made changes over the past couple of months to adapt to the types of freight that were available, what were those changes that you made? Did you need to convert your trailers to reefer trailers, for example, when reefer freight was a little bit more prominent? Or did you set your idol flatbed trailers, but now your flatbed trailers are up and running?

There's different types of cargo that's available, different types of cargo coverages that are available within a transportation policy that needs to be tweaked in some cases to adapt to what is being hauled. And I think those are the things that they need to focus on. What changes were made? Do you have the proper coverage for those changes that you implemented and then contacting us, contacting the carrier partners to realize, "Okay, what coverages are needed and do we need to change the policy back to the way it was? Or do we need to have it adapt to what they're doing now?" And in some cases, the policies have remained fluid. There was no changes that were needed. Other cases there was changes that needed to be adapted to, and those are considerations that need to be taken into account

Joey Giangola: From that agent's perspective, where do you think maybe the opportunity lies now in terms of what trucking is available? Where should they be focusing opportunities on? What really is something that is going to be getting back up and where should they be focusing most of their efforts looking for that next policy?

Mark Gallagher: Well, I think the things that took a hit, again, the auto parts haulers, the inter modal haulers, the clothing haulers, those type of things, construction. It's going to take a little while to move out of this rut that we're in from an economic standpoint. People aren't going to spend as much as they did prior to COVID, but are not going to go out as much as they did prior to COVID. They're not going to purchase as much, as many materials that aren't necessities at this point. I think they're going to be a little bit more cautious as we move forward. So I would say if they focus on continually focusing on keeping the client's communication open with their existing clients, and then looking at new business opportunities that arise. We saw a dip in new ventures, obviously during the COVID crisis. A lot of truckers and bus owners, party bus owners, limousine owners, non-emergency medical transport, those type of things people weren't getting into those segments during that time. Obviously it's a rough time to open a business.

There's going to be that reopening of those types of segments as we move forward, once again. There was a large segment of new ventures in the industry prior to COVID. And I think those are the of things that are going to come back. I think people are going to find ways to create income for their families. And I think those are the type of things that whether they go into the transportation segment or they go into the manufacturing segment and they get a job doing different things that maybe they weren't necessarily doing before. Agents are going to have to focus on figuring out the solutions that they can find for those clients and those insurers as they adapt to the different positions they may go into.

Joey Giangola: Yeah. It's interesting that you mentioned, I didn't really think about it from this standpoint, but there's going to be a lag in terms of, like you said, just new businesses in terms of surrounding transportation. That probably would trickle through the next six months, maybe a year until maybe I don't want to say catches back up, but that puts emphasis on that renewal. Every client they do have matters, right? You want to keep the ones that they have. Is there something that you're seeing even with some of the renewals that are maybe coming across your plate now that agents should be preparing for maybe a little bit more than they were in the past? To just again, really make sure that they've got everything locked in?

Mark Gallagher: Yeah. Is there anything that's happening in the industry that would cause them to have a coverage that they didn't have before. For example, or an option within the policy that is needed in order to cover the exposures that they have currently. So again, those reefer haulers that may need to have now a spoilage endorsement on their policy or a mechanical breakdown endorsement on their policy. Are you hauling different things than you hauled before? Are you looking to get into different segments and talking to your retailer? Is towing a more important option for you as you go into different areas where tow bills can vary across the country on physical damage. Are you hauling anything that would be considered a pollutant that you'd need to have pollution on your policy? Those type of things, as you adapt to what you do, you need to be paying attention to those type of things from a policy perspective.

The other thing that will be interesting, the trucking industry have had a need for infusion of drivers. Is our industry going to change as people are looking for jobs? Is the trucking industry a segment that can adapt to a point of view where welcoming drivers with a little lighter experience into the industry, be something that's a positive and infusion of new drivers, new potentials of employees that are coming into the industry. I think that's something that the trucking industry can consider and agents can be open to discussing with our clients. Are there drivers out there that necessarily maybe they drove years ago and they want to get back into the industry? Those are the types of things that I think we'll see evolve over the next few months and years as the industry begins to evolve.

Joey Giangola: I'm always curious about this Mark, as I feel that there's an interesting threshold when looking at different accounts, right? As agents are looking at those new opportunities or are just looking at their existing business, but is there something that you would point to that maybe increases the premium in terms of a transportation risk? That if you've got somebody that has this thing, it's really going to go a long way to making it a better account. Are there some sort of little subtle things that they can look for in the structure of the business that make it more cost effective for the agent to pursue?

Mark Gallagher:                When you think about safety features that are implemented on the trucking side, for example, you talk about technology and you think of front end cameras and safety cameras and rear facing cameras, driver facing cameras. All of those things are an investment upfront for a trucker to understand. Do the benefits of that outweigh the cost?

And from our perspective, I think it does. You hear insurance carriers talk about the fact that a front facing camera, rear facing camera, driver facing camera can automatically, once a carrier has access to that information, they can really understand who is at fault in a claim. I mean, sometimes it's to the extreme benefit of the trucker to have that technology out there and seeing what happened in the loss and knowing that their driver's not at fault. Sometimes the carrier sees that yes, the trucker is at fault in that loss. And there's no sense in going to the point of defending that in court and figuring out exactly who's at fault and going through a trial in that case. So some of those technologies are extremely beneficial to the trucker. And I would say that's something that we'll see more of in the use of technologies.

Will COVID create more of a technology standpoint with the drivers and the communication and will they sign electronic forms rather than signature firms and things like that. Those are things that I think we'll see more of. But from a policy perspective, yeah, I think if you invest in technology, if you have additional safety features, if you keep track of your safety scores, I think that's the first thing that is going to help you in terms of figuring out exactly how to lower your insurance costs.

Joey Giangola: From a regional standpoint, are you seeing things in one area of the country that are maybe different than in others? Is there some sort of localized impact on this or is it pretty standard across the board?

Mark Gallagher: I would say from a safety standpoint, it's standard across the board. You do have various pockets of the country that have different types of transportation related entities. For example, in larger cities, you're going to have more public auto options. Sightseeing tours and those type of things where you can have more public auto entities that pop up more so than the middle of the country with less population. You'll have more livestock haulers, more machinery haulers, and those types of things in the Midwest than you would have out East. You may have more construction out East and more oil field equipment haulers in different parts of the country.

So I think every one of them faces the challenge of creating a safe operation. Looking at the safety scores, looking at the covers that they're provided and when you get into a specific transportation policy liability and physical damage, there are nuances to each one of those that you want to pay attention to from a liability perspective. You want to pay attention to, does your policy provide the CA-9948 pollution endorsement or not? Does your physical damage have a towing in excess of what's provided? But when you get into the cargo, that's the area that probably prevents, or probably provides the best opportunity to discuss with your clients what's going on, what is needed. And I think that is the thing that changes across the country in terms of one area versus another, depending on what type of commodities the trucker's hauling.

Joey Giangola: All right Mark, I've got two more questions for you. This one, probably the most unfair of the bunch, but we're going to give it a shot anyways. Where do you think we go from here? You know, what are we looking forward to with transportation, what can agents expect? Just what are your thoughts on that future climate?

Mark Gallagher: Well, I think with any future projecting, I think that's going to be difficult to understand exactly where things go. However, the one thing is that truckers always are going to be needed. They're going to be moving freight. They're going to be moving product. Anything you buy, sell, purchase, want is typically brought in on a truck. So the future is going to be bright for the trucking industry, but we're going to have some challenges, both from a client perspective, an agent perspective, an MGA perspective and a carrier perspective. Rates are still climbing on an auto liability segment. Carriers are still struggling from that perspective and truck clients are still struggling from a margin perspective.

So I think coming together and creating a four way relationship between all partners, I think that's what the future is holding. So the more communication, more relationship that can be created among all the entities, I think it's going to create an opportunity for everyone to succeed in transportation from the perspective of more freight, more abilities. If you improve your safety scores and you retain your drivers and those type of things, I think it's going to be a segment that it allows you to create more margin from a transportation perspective your insurance rates may go down. If your driver scores and safety scores deteriorate I think it's going to be a challenge for some of those truckers to have the amount of opportunities that may be available for preferred safety score truckers. So I think it's going to be a interesting 2020, and certainly 2021 as things continue to evolve within every segment of the world.

Joey Giangola: Last question to you, sir. The one thing I'm curious to know is forget everything we talked about. Forget industry standards. What's the one thing that you are most excited about? Where do you want to see the industry get to that maybe there's opportunity, maybe there's not. But, in your experience, what do you think the thing is that's right out there, just ready for the taking for us to innovate on and do things a little bit differently?

Mark Gallagher: I think if you look at any segment of the world right now, I think you look at Amazon as an example of what's going on and what can be captured from a speed of market and how does the insurance industry and how do agents and carrier partners capture that for their truck clients? Providing a speed to the market in technology and ease of use of all of the products that we create and provide in the transportation industry.

How do we get that to the truck line? How do we get that to the public auto partner of ours that we want to provide those products to? I think those are the things that are continually changing in our industry and is really exciting about what will happen? What will we be able to create together as a transportation segment that can make the product, the user, the truck line, the driver, make it easier for them to do their job? And I think that's the most exciting segment that we can capture moving forward and I think that's where we'll see a lot of changes.

Joey Giangola: Mark, well, this was a pleasure and I appreciate you taking the time, sir.

Mark Gallagher: Thank you, Joey. I appreciate you having me today.

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