If you think about it, there's already a ton of ways to monitor the way you drive.

Most cars on the road today come standard with safety features to help prevent accidents and keep you safe behind the wheel.

The challenge is figuring out a way to get those fancy tools into the big expensive trucks on the road.

Because most small trucking companies are buying their rigs second hand, which is slowing down the process.

Tommy Ruke, Founder of Motor Carrier Insurance Education Foundation (MCIEF), talks about the impact these changes can have on underwriting when they reach critical mass.

Joey Giangola: Tommy Ruke, how are you doing today, sir?

Tommy Ruke: We're doing well. Thank you, Joel.

Joey Giangola: Tommy, I got to start here just before we get into anything too seriously. I got to know what's something that you do that's overly polite to make somebody not feel uncomfortable?

Tommy Ruke: Smile.

Joey Giangola: All right, even if you don't want to smile?

Tommy Ruke: That's always kind of disarming here, and a lot of people read their facial expressions. I try to have the excitement and the smile when I'm around people whenever possible.

Joey Giangola: That makes sense. For me, it's something a little more nuanced. I will pretend to look at things in the grocery store that I have no intention of buying, if somebody is in the spot that I need to get just to not hurry them along. I always hate when somebody pressures me into a shelf selection.

Tommy Ruke: I say, "Excuse me."

Joey Giangola: Well, I know they're busy. They're getting their thing, so I'll just casually look at some spices that I don't need to get until I can get over to the baking flour or whatever. Anyways, that's just me. On a more serious note, Tommy, on the other side of that what we generally see out on the road is a little bit some people would like to call it rage potentially, but what's going on in terms of people out on the road within the transportation business? How are things getting back to some version of normal, or have they been that way for a little bit of time now?

Tommy Ruke: The recovery from the COVID shut down has changed the transportation industry and the food chain or the supply chain. Right this minute there's a lot of product to be moved, but not that many trucks. I think we've all heard about the fuel shortage and about the pipe line being shut down, but that was not a critical part. The critical part was there's no trucks to move it from the pipeline or from the refinery's location to the filling station. During the pandemic, if you remember a year ago, the gasoline became more prevalent because, I mean, not used as much, people weren't traveling and all that.

A lot of these tanker operations shut down and started hauling flatbeds and other kind of things to keep their units busy, so now cranking back up, those drivers aren't doing that anymore. To drive a truck with fuel in it, the driver has to have special driver's license, special because it's a HAZMA, special training, so there's a shortage of the transportation part. Right this minute there's more demands of transportation than there are trucks, quote drivers being able to do it.

In fact, I was listening to some rates and lane pricing the other day on the radio, and I've never heard of it, but the outbound out of California is going $4.20 a mile loaded. Last year, it was about $2.50, and it's almost double. Today the truckers are getting 20, 30% more than a good time because of the demand for transportation because there's a lot of things that need to be moved back to get to normalcy, and there's not enough drivers. The other part of that coupled with that is two other things is that the driver training schools were shut down for a period of time as well as the department of vehicles.

Both of those things slowed down people getting into the business because then the driver training schools couldn't graduate them, and then the DMV could not give them proper road tests and all to let them have a CDL so they could drive. The other thing is the drug testing house has taken about 70,000 drivers off the road since it started 16 months ago, last January. Those things have just crippled that part, and, again, the demand is up. The freight rates are the highest it's been in a long, long time, higher than I remember. It's a good time to be a trucker from a capacity standpoint or, excuse me, a demand standpoint.

Joey Giangola: That's a lot that's going on that's impacting things. I mean, in terms of, one, getting more drivers back on the road, what does that process look like? Then, are truckers making the switch back to the fuel tanking to be able to, again, supply that, like you said, overwhelming demand?

Tommy Ruke: Well, you obviously put the grease on the squeaking wheel. Right now that's so, and it'll eventually catch up, but there is going to be a shortage for a long period of time based on a projection. The other thing is some people who quit. The average age of a truck driver is 52, 53 years of age depending on what you have. When this pandemic started, those people that age are now two or three years older, and they're used to being at home like a lot of people are. How many of your office people don't want to go back to the office anymore?

How many truck drivers on the road now have decided not to go back but either other careers or now with the benefits there they say why it's worthwhile that hard life back after being home. It's going to be a while. It's always cyclical in that area where you then catch up. The reason there's going to be more tank haulers is because it's going to pay more to get it done. That's why the fuel costs that you pay for your gas every day is up about 40 or 50 cents a gallon in my area. I assume it's the same with yours from where it started about two and a half, three weeks ago.

The pipeline was an excuse, but that did not cause the demand or the shortage in general. There might be spot locations to catch up with it, but it was already shortage because of the fuel, the transportation here. I think it's going to be awhile, the consumer goods, the big change in the marketplace. I was driving home from actually South Carolina yesterday. Coming through there what's amazing to me is all these outlet malls are shut down because there's no need now because you can buy these discount items that used to be at the Nike or the Coach or these outlet stores that the last year's things.

You buy that online now and get it delivered to you without going to an outlet mall. We passed a half a dozen of them coming home yesterday, and they just are empty. Then the other thing we saw was two or three new, large warehouse facilities on both I went up 95 and back home or 75. Those things are now being built to get a product closer to the consumer, so you can meet this, "I want it today." I mean, everybody wants it today or tomorrow.

It's shifting from, "I'm not going out to get it. I want it sent to me in a day and a half." I think the big shift is supplying these warehouses and then getting the last mile delivery or the local delivery the next day. I think that's changed the dynamics, and we're just in the start of that transition.

Joey Giangola: That's interesting because it's not like it's taking any trucks off the road per se. It's just, I guess, relocating them in terms of where they're going. What impact does that have, though, in terms of instead of getting the merchandise to a retail shop as opposed to a warehouse? What does that look like on the transportation, and how do business owners need to prepare for that? Then, ultimately, how do they cover that in their business?

Tommy Ruke: Well, the more efficient places, and this is where the drop and hook operations, which I'm sure you're familiar with in trucking, if that becomes maximized, so the trucker comes in, drops a full trailer at the distribution area and picks up an empty trailer to go forward. He or she does not have to spend any time there. It's going to maximize their time on the highway versus waiting the two or three hours to have it loaded and unloaded.

This is what you get the efficiency of these warehouses close. This will make the large asset, the $150,000 truck, more useful, generate revenue coming out of there, and the driver get more use of their time, so that they don't bump into that 14 hours, all I can drive a day time. They could get some more miles in and then have the local deliveries, which will be even smaller trucks, less expensive trucks, less expensive drivers, younger drivers.

You get them home. You don't have to worry about the interstate problem to the local individual houses or at the local store. I see that that's where we're going, in my opinion, in the next year or so as we adjust to this new economy that we're used to, "I want it now. I ordered it online, and I expect it tomorrow afternoon."

Joey Giangola: What do you think that looks like in terms of the business owner, the person owning the trucking agency, how do they have to adjust their business to take advantage of that and then-

Tommy Ruke: Are you talking about the agency or the trucking company?

Joey Giangola: Yeah, company I guess would probably maybe be the better word. I use agent. It's more of an insurance habit than anything. How are they going to have to adjust to-

Tommy Ruke: They're making more per mile than they have in a long time. Their cost is slightly up because of the fuel cost, the driver cost but not as much as they're getting the additional revenue. The question that they're going to have to ask and that we have as an insurance provider have to worry about is are you going to substitute quantity versus quality? Where is the driver? Are they going to reduce their screening of that driver just to get it moved from point A to point B? What will that do on the safety records or crashes later? We haven't seen that yet.

The good trucking companies advertise they're safe. They advertise safe drivers. They do the background checks and all that, but will they pass up a load to make sure their driver is staying that criteria or that quality, or will they reduce it and say make a few exceptions. This is going to end up being a ripple effect and being dealt with more crashes. We don't know what's going to happen in that area. It's going to depend, I guess, on the commodities and the discipline of the motor carrier that we're dealing with.

Joey Giangola: From an insurance standpoint, how do you think we prepare for that, or is there any way to get ahead of it?

Tommy Ruke: The first thing you have to do is not get ahead of it. You got to recognize it maybe. It's a changing world. I did a webinar today that we're going to publish in a couple of weeks just the cameras in the trucks and the necessity for having at least forward cameras in the truck. The idea that now you have electronic log devices and all the data electronic log devices that helps us to track where the trucker is, where the truck is going, how the driver is operating. The new cameras in the truck, the driver-facing cameras can now even see if you're texting or you're going to sleep, and it'll warn you pay attention to the wheel because they're watching your eyes and things like that.

We haven't seen this yet, the outcome of this and how it's going to affect insurance. It's got to intuitively know it will because this is the big brother watching everything and feedback. There's these new platforms, these new programs out that will grade the driver based on speed, based on location, based on their attention and all that. They will even give some immediate training to that driver when they next stop to tell them, "Here, the last 10 hours, you drove or 11 hours or depending if you stopped for fuel or food, here's where you did something wrong. You need to watch that next time," whether it's speeding or whatever.

We haven't seen all this yet. Will that allow for less experienced drivers because now we can not only train them before they get behind the wheel with somebody, a trainer in it, but we can now also both train them and watch them as they now start their career and have somebody monitoring their activities. I like the idea of monitoring. It's not disciplining. It's not that because they got to be used to us helping them get rid of habits that might lead to crashes. The question we're going to have is how's that going to be involved in the insurance industry?

Where are we going to start recognizing that equipment as an insurance provider, or when we're going to start requiring it as a part of underwriting or makes it underwriting decisions that do we do something? Do we actually subsidize some of this because one of the advantages of subsidizing it then we can get access to those records, so we can then determine how to write the insured. Do we write their mileage based on the ELD mileage of where they're going? We subsidize their LV. We demand those records. We'll know the vehicles. We know each vehicle how much miles it goes.

We know where it's going and where it's not going. That's better than information we had before where you've got so much data out there now. It's just overwhelming. There's so many apps and companies here trying to give us more data, meaning the motor carrier also from an insurance standpoint for us, because we can use that to choose who we want to insure or not. To me it's a great time learning all this and then figuring out where it's going to be at the end result. There is already more public information about a motor carrier than any other business you could ever write, any other business that anybody can.

That starts with the stuff in the federal website, SAFER, and what they tell the government about who they are, what they haul, how many units they got, how many drivers they got, all about their address. Then we monitor their roadside activities at least the inspections they had, where they have. We got the incident reports and tell the states they drive in, the [inaudible] states there. Now on top of that, we have all on-the-road activity.

Now with ELD information, the taking the electronic control module information, the hard stops, how fast they're going, where they're going, the actual hours they're driving, actually places in states they're driving. Are they going to Miami? It's [inaudible] going to Miami or Jacksonville? That's a difference in $10,000 a year premium powering it depending on where they stop in Florida. We're now going to decide how to best use that information. That's going to happen in the next two to three years.

It's a good time to be a trucker. They're making money, but how are they spending that money? Just putting it in the bank? Are they buying this technology to be safe will be the trucker of the future. We in the insurance industry because the insurance industry, even state rate filing requirements require us to look backwards on things. Well, we don't have statistics to show how, if any of this stuff affects our losses or even frequency. We're going to have start capturing what's the equipment on the truck, how did it affect frequency ones with and one without, and then how does it play out at court time?

It seemed to get to the point where I saw a court case the other day filed where the plaintiff's attorneys were alleging that this truck that hit that damaged their claimant for not having this crash mitigation equipment on their truck and even named the manufacturer in it for not having it on the truck. What they were asking to have on the truck wasn't even available when the truck was bought new.

The claimant's attorneys were attacking that saying, "You know, if you spent $350, you wouldn't have hit our people. You mean you, aren't going to be able to spend $350 unwilling that could have avoided this crash," and therefore asking penalties like that or the manufacturer not doing it. Now that was an outlier in that particular allegation, and the complaint can clearly be defeated because there's a lot of law that says you can't expect the manufacturer to have equipment that wasn't available on a truck or on any kind of equipment.

There's been many case laws that you can't compare three years or four years or five years old stuff with what you have available today, everything from dishwashers, cleaning fluids, anything like that. That's where it's going to go, and what are we going to do about it? The other thing that was important, and if your agents are hearing me, Florida just ruled that they had a dismissal of a case based on the evidence of a camera, a front-looking dash cam.

Today anybody who does not have a dash cam in their truck, I'm not talking about a GoPro, I'm talking about a legitimate dash cam that captures what's happening for when a crash happens, is way behind times. In fact, if I was an insurance provider, I would not insure a truck that did not have a dash cam in it.

Joey Giangola: That's a lot. What struck me, one, is how, again, obviously the trucking industry, again, like you said, has the most data available to it of almost anybody that they could be looking to do business with. They're pushing the technology limits in terms of what can happen. What does that look like in terms of claims? What kind of claims are happening today that we're seeing that maybe can, I don't want to say be prevented in the future, but we can more adequately prepare for it, and how is that going to impact underwriting moving forward?

Tommy Ruke: Well, we already touched some of it. Unfortunately, even with the pandemic with fewer people on the road, last year there were more crashes than before. We've got to factor those in, and some of them were severe because you go faster, so the severity went up in a lot of cases. I'm not talking about nuclear verdicts. I'm just talking about average severity, so we got to adjust back on crashes. I don't know the less experienced drivers are going to increase those or not, but I totally agree with you that the technology is there.

The insurance carriers are just going to have to start, and I've been saying this for a number of years, ask the insured, or at least recording insurance the underwriting standpoint, what equipment they have that have the claims people report back that kind of equipment to develop that or to see what will help us to determine those things and how we can use that to defend us in court. It's the crash avoidance equipment, the anti rollover stabilization for tankers, flatbeds, the lane deviations, I mean, 80% of the stuff you got in your car, if not 90% now. It's just not in the trucks yet.

When it gets in the trucks, it's going to do the same thing that you're going to do when it's warned you when you get too close or actually stops you if you get too close. It might not stop the crash, but you'll be hitting them in a far less speed, so it won't be as damaging as before. That stuff has got to get in these big trucks, and the sooner the better to start doing that. Yeah, they'll be some not only less frequency of claims, but they won't be quite severe, if the truck start slowing down itself. I'm a firm believer, and I've seen the statistics, that this automated equipment can stop quicker than a human can. It can react quicker than a human.

I don't know what you have on your car, but my car stops me every time I get too close to my garage to that ice cooler right in front of my door here because I can't see it and I'm inches away. It stops me right there. I think all this eventually is going to be [inaudible] with us. Now the other question is when it's going to get to our insureds that most RPS agents write through RPS. That's the smaller motor carrier with two to four trucks. They typically buy a used truck. They don't buy them right at the factory. They buy the ones that have been used by the larger trucking companies for four or five years who might have all that equipment.

Before it really penetrates all the way down to the typical truck because 87, 88% of motor carriers have less than five power units. To get down to that it's going to take five, six years to get that equipment to down to that level. It's not something that's going to happen overnight. We just need to start quantifying how it does affect it and start deciding does it reduce frequency and severity? I had a discussion with two lawyers in the last couple of days, Ron Moseley and Jay Taylor, about this, and clearly the court systems have adjusted a lot, and the trucker at the current time has more sympathy from juries and all than they had before.

Even though they're still afraid of trucks, they now appreciate that they're bringing something to them from toilet paper to the vaccines. In fact, you saw where the vaccines rolled out and all those pictures of trucks leaving with that. That's all positive. The defense lawyers are learning how to attack this more like the plaintiffs are whose this reptilian theory is all emotion telling them that they need to punish the motor carrier because they been unsafe, don't worry about what they did that day.

Instead of now countering that with statistics only, they're countering that with more emotion. This is a family man, it was unavoidable. All that kind of stuff. As well as the court system has backed up so that now your mediations are virtual, but also you might not get court now for two or three years. In mediation, do you want your money today, or do you want your money three years from now?

This is helping a lot in getting the claims settled quicker. I didn't say it lower dollars because there is a point in time to walk away from a number, but it does give us greater opportunity to maximize the efficiency of mediation, get rid of the case as quick as possible, and cut off that long tail or the risk of going in front of the jury, which is 6 or 12 people that walk out of Walmart and say, "Come with me and make a decision about how much damage this big truck did to somebody."

Joey Giangola: All right, Tommy. I got three more questions for you, sir. The first one is what is one thing you hope you never forget?

Tommy Ruke: Relationships with people is the most important thing in life and that you accept people for who they are and where they are and be not judgemental.

Joey Giangola: Now on the other side of that, Tommy, what's one thing you still have yet to learn?

Tommy Ruke: Well, at my age, I have been around for a long time. I don't know about that. I mean, I could tell you the obvious, and I still can't spell. I can't write legibly, but those things are beyond my ability to learn anymore. Even spell check doesn't work when you don't get close enough to one of those words. I guess it would be to be content of where we are. I always have been, and I never looked backwards.

I always looked forward, so I'm happy in the place I am. I've had blips in my life. I mean, 24 years ago I had colon cancer, and I have survived those things. I learned how to survive those things by not looking back. In fact, somebody might be listening here that knows Edwin Rollins. Do you know who Edwin Rollins is? He owned RPS. Do you know Jimmy Proffitt?

Joey Giangola: Yep. I know Jimmy Proffitt.

Tommy Ruke: This is his uncle who he got the agency from. I taught him in an agency in North Carolina three weeks after I had my colon cancer. I just didn't let it stop me. I went foward even after that while I was taking chemo. Just tie it back through the agencies you have here, but I did a class in an agency. He came up and got his CE from me three weeks after I had colon cancer, two weeks after I got out of the hospital.

Joey Giangola: That's a pretty intense story there, Tommy. Last question for you, sir. If I were to basically hand you a magic wand of sorts to reshape, change, speed up, alter any part of insurance that you saw fit, what is that thing? Where's it going and what's it doing?

Tommy Ruke: Knowledge for everybody to know what they're doing and be serious of what they're doing. I find so many young producers are out there just selling, and they don't understand the product. I'm looking at cases they don't understand coverage. We teach coverage. I get questions all the time about what's covered and what's not. We have so much emphases on just bringing them through the door and just selling a commodity. We don't have a commodity. We have a contract to provide some service.

The example I use is like buying your car. How many people buy their car by how much it weighs? We buy insurance policies that way. You buy a car for all the features and watch you hear. You sell the features. We don't sell features in insurance. We don't do, in my opinion, well enough analyzing the coverages that are needed and more important explain those, take time to explain to the insureds. All we're worried about is volume, and that's my concern.

Joey Giangola: All right, Tommy, this has been fantastic, sir. I'm going to leave it right there.

Tommy Ruke: All right, my friend. You be safe. Stay well.