Trucking Risk and Insurance Podcast

Beyond Insurance: How 831B Captives Benefit Trucking Companies, with Van Carlson

• John Farquhar & Chris Harris • Season 2 • Episode 100

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Mastering 831B Tax Code: Risk Management and Financial Strategies for Trucking Firms

In this insightful episode of the Trucking Risk and Insurance Podcast, hosts Chris and John engage with Van Carlson from SRA 831b.com to explore how trucking companies and other businesses can leverage the 831B tax code to manage risk and enhance profitability.

The discussion covers the concept and benefits of 831B insurance plans, the use of pre-tax dollars for risk funding, and practical applications for both large and small businesses.

Van shares his journey from a property casualty agent to an 831B expert, illustrating the code's role in business resilience and compliance. The episode also dives into the broader context of captive insurance programs, the financial impacts, and geographical considerations, providing real-world examples and strategic insights for optimizing cash flow and safeguarding operations.

Whether you own a trucking firm, an auto dealership, or a construction business, this episode will equip you with valuable knowledge on navigating today’s challenging insurance landscape using the 831B tax code.

Get in touch:
Email: sra@831b.com

Website: https://www.831b.com/

Phone: 208-424-2249



00:00 Introduction to Trucking Risk Management
00:37 Understanding 831B Tax Code
01:08 The Role of 831B in Risk Financing
02:47 Business Interruption and Self-Insuring Risk
04:55 Van Carlsen's Background and Expertise
06:44 Practical Applications of 831B for Trucking Companies
10:48 Managing Risk and Compliance
14:23 Bipartisan Support for Small Business Safeguards
14:42 Understanding Premium Methodology and Captives
15:13 Funding and Regulatory Details of Insurance Programs
16:45 International Expansion and Insurance Challenges
17:21 State Operations and Business Interruption Insurance
18:42 Risk Sharing and Client Collaboration
19:25 Canadian Captive Programs and Provincial Differences
21:02 Federal Recognition and Tax Implications
25:28 Ideal Clients and Risk Management Strategies
27:38 Final Thoughts and Contact Information



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Chris Harris, Safety Dawg:

Do you want to learn how many trucking companies and transportation organizations are lowering their risk and making more money? That's what we're talking about today. We have Van Carlson. He's from SRA 831b.com and he's a risk manager that specializes in controlling transportation risk. That's next on the Trucking Risk and Insurance Podcast.

John Farquhar, Summit Risk Solutions:

Welcome, Van. Thanks for joining us here on the Podcast with, uh, with Chris and I. So, uh, you've got an interesting term that, uh, I, I can't say that I've heard of before. 831B. What, what the heck is 831B? Is, is it, is that, it's obviously not my plane seat. I know that.

Van Carlson, SRA 831b.com:

Well, you hope not, right? Yeah. That's a big plane. Um, here it is. It's part of the U. S. tax code. Right. Uh, have you heard of 401ks? Uh, 831b? All that. So, you know, everybody's kind of, you know, got the terms captive insurance out there. Um, there's a macro captive, which, you know, we see a lot of our trucking companies use, utilize that through traditional channels. And then there's a micro captive. The micro cap is really the small, smaller captive arrangements. Uh, Congress passed a tax code back in 1986 and it was the 831B. And basically what it is creating an incentive for business owners that were self insuring risk are taking on more first dollar dollar risk when it comes to their traditional insurances and all that stuff. And, uh, we call that an unfunded liability. And basically what Congress provided was, uh, do you, if you're going to have an unfunded liability, how do you want to fund it? Risk financing, right? All that good stuff. All these terms that we throw around as insurance geeks, I guess we'll call each other. Um, that, uh, do you want to use pre tax dollars or after tax dollars? And the 831B, all that allows you to do is, as you, as you fund an 831B plan, very similar to 401k, so you're expensing it at the operating company level. This entity, this 831B, has its own tax returns electing under the 831B. So it's a C Corp and all those other structures and no different than a traditional microcap, uh, micro, uh, macrocaptive is, right? It's, it's a C Corp, right? So this is a C Corp as well. As long as you stay under the threshold of the premium contributions and you meet the qualifications, there's a four part test, there's regulations and all that fun stuff. You can defer that inside the C Corp, meaning that the premium is not taxable income. So now you're utilizing tax deferred dollars to fund that risk financing versus after tax dollars. And the best example I give you guys is really the PPP here in the United States where, um, You know, obviously Congress got together and exactly when we printed up six trillion dollars make believe money, threw it out to the business owners. Now, they did that because there was no business interruption on traditional policies. We're going to trigger that as we know, right? I mean, you guys probably, I mean, I, you guys probably know that's been an idea, but in March of twenty. 20 had traditional businesses, traditional insurance covered those claims. Under business interruption, it would've been $440 billion just that first month. And, and the United States, we collect about $260 billion at that time. I think the number's gone up because rates, but we collected about $260 billion in all lines across the board in United States, in any, any one year. So, you know, this, this, the solvency of those insurance companies would've been tested immediately. So the point there is, is the insurance is never gonna cover these, these types of risks. When it comes to being, you know, from the political risk standpoint, if you want to call it that, or just simply saying from the health, health issues that go on in our country today, uh, or in the world for that matter. So that's really where we kind of spun up. And we, we've been doing this since 2008 due to our great recession we had in the United States. I saw business owners that were just, they knew leverage. They knew how to grow their business through debt. Uh, they bet every year was going to be better than the previous year based on the current tax code of the United States. Accelerated depreciation is. is an incentive to spend money, um, and create velocity of dollars that we need in order to get our GDP running. Right? So, um, unfortunately I saw a lot of my clients that when I was selling traditional insurance go out of business and I was exposed to this idea of self insuring risk utilizing an 831b tax code from a, from an RV manufacturer. And that's really where the light bulb went off for me that all business owners should at least understand this. And it is a tool in the toolbox. Uh, there's, there's issues, there's rules and regulations to it. And, and, and where we fit in is the administrator of these plans. No different than a 401k administrator. Right.

John Farquhar, Summit Risk Solutions:

Right.

Van Carlson, SRA 831b.com:

You want to make sure. So

John Farquhar, Summit Risk Solutions:

before

Van Carlson, SRA 831b.com:

we go too much further,

John Farquhar, Summit Risk Solutions:

um, let's tell our audience who the heck you are and why you know so much about this, because we jumped right into the 831B, which is great. Thank you very much for that. But. Yeah, let's let our audience know who's Van Carlson and what the hell does he know about 831Bs?

Van Carlson, SRA 831b.com:

Yeah, so I kind of hit on it already a little bit. You know, I was, I was a property casualty agent, ran a pretty successful agency leading up to 08. Um, top one producer, all those good things and, and had plenty of plaques on the walls and all that good stuff. But, um, you know, I was introduced to the idea early on, didn't find it really appealing, you know, for the clients, you know, trading pennies to dollars to self insure didn't make any sense. But, You know, as an, as an agent, the guy that sold these things, you know, half the time I was telling my clients, Hey man, if you turn this in, it's not going to be covered. And here's why, or, Hey, if you turn it in, here's the outcome it's going to happen to you. And so I realized that business owners were self insuring risk. I did think it came home to roost really in 08, 09, um, for me. And that's really when I decided to make a pivotal change in my company. Um, other than that, you know, I, I pride myself on, um, uh, an entrepreneur, quite honestly, uh, I own four, four other operating companies. Um, I, uh, I love to hunt and fish. I live in Idaho. Um, and I recently become a Papa and there's probably no better thing than being a, than, uh, having grandkids. Uh, yeah, it's, uh, I tell people it's one of, uh, if you haven't had him yet, uh, it's, you sort of have one of the best things to look forward to in life. Is what I tell

John Farquhar, Summit Risk Solutions:

people. Great. Well, congratulations on that. I'm one as well. So yeah.

Van Carlson, SRA 831b.com:

Yeah. Yeah. Well,

Chris Harris, Safety Dawg:

I think you can almost

Van Carlson, SRA 831b.com:

pass a tetacross right now. I'm thinking of the way you got the beard growing.

Chris Harris, Safety Dawg:

What's a good

Van Carlson, SRA 831b.com:

beard.

Chris Harris, Safety Dawg:

831B is a tax deferral program. How is it managed? Like if I put money into this, am I self insuring some of my risk?

Van Carlson, SRA 831b.com:

Yes. Yes. So, so,

Chris Harris, Safety Dawg:

uh, I was going to say, give me an example of how I could use it. Yeah.

Van Carlson, SRA 831b.com:

So we're, we're dealing with a lot of. Trucking companies specifically on first dollar losses when it comes to the commercial auto liability. I mean, I've, I've got trucking firms in Texas that are, they're on the hook for the first 250,

Chris Harris, Safety Dawg:

000. Right.

Van Carlson, SRA 831b.com:

Um, they've had claims.

Chris Harris, Safety Dawg:

How does this fit in?

Van Carlson, SRA 831b.com:

Well, that's an unfunded liability. So, which means now he, you know, until he hits the first 250, 000 of that claim, he's on the hook for that first 250, 000.

Chris Harris, Safety Dawg:

Right.

Van Carlson, SRA 831b.com:

Right. And so what we'll do is we'll do an 831b up just to handle that risk alone. Just to handle that loan. Now, he may have, uh, high deductibles on his comp and collision too on the vehicles as well, right? So, and then some of these guys won't even turn in claims, right? If it's less than 25, 000, they'll just eat it. So, the question is, it gets back to that question. Do you want to use cash flow, which is after tax money, which is retained earnings in a company? Or do you want to use pre tax dollars? Dollars you would have sent off to Uncle Sam in this case. Uh, to build up those reserves and surpluses. In order, our tagline, we embolden business owners through innovative risk management. That's what we do, as a whole. Um, and so from our point of view, what I've seen, you know, when you start to do these types of programs as business owners, it clicks. You know, they'll, they'll literally go and, um, they'll take on more risk. Why? Because they have the appetite for it because they've got these dollars piled up in the back room. So now to offset their premium costs, you know, they may, they may be have more of an appetite to take on more first dollar risk, right. Or, uh, first dollar loss, excuse me. So that those are things that, that we do specifically in the trucking firms, just offsets what's happening currently in the marketplace. Um, that's what we're doing there.

Chris Harris, Safety Dawg:

If I have a quarter million dollar deductible and I'm using after tax, sorry, before tax dollars to fund an 831B, I can then withdraw some of that money and It's an,

Van Carlson, SRA 831b.com:

so this box has to look and feel like an insurance company.

Chris Harris, Safety Dawg:

Right.

Van Carlson, SRA 831b.com:

So there's a profit. So you would submit a claim. Yep. So we as administrator will adjudicate the claim. We've run through the process. We assess that, you know, obviously make sure that, you know, we run and we actually hire an independent adjuster. It's no different than you guys would experience any other insurance carrier. I mean, there has to be that process to it. And then basically it comes down to a reimbursement. So if the client's out a deductible, he can get reimbursed by his 831B. And that's where he's being made whole, right? So now, you know, let's, for example, some of these guys may say, you know, I got the wherewithal to take on one, two, three of these things, right? Which is a substantial, a lot of money. But what happens if I got four? What happens when I have bad underwriting years where I'm getting really hit hard? Uh, or snow, you know, the things that the world of. Chaos, right? Um, you know, that's where it really can start to affect the business owner, the trucking owner itself. And that's really where, you know, um, Always tell clients, you know, if you have a good underwriting year, you got to maximize that. How do you maximize that? If you have a good underwriting year, then you've had Good profits as well. I mean pretty much correlate in my opinion based on what my experience with the trucking industry is Um, that means and you need to put some of that away in a tax deferral basis Because we know the bad years are coming. I mean, it's just it's just the fact of life, right so

Chris Harris, Safety Dawg:

It's cyclical. That's for sure.

Van Carlson, SRA 831b.com:

Absolutely. And it's by, it's by company. You're right. I mean, it's, uh, the economics of it is one thing. I've had clients that had no claims in 4, 5, 10 years, and then boom, they get 3 in 1 year, and they're like, what, you know, what happened? And then they really find out if they really had the risk tolerance to do the, you know, to bite off on some of the risks they've taken, right? So, um, it makes it more palatable to do it through an 831B. Sure. Is what, what I've seen.

John Farquhar, Summit Risk Solutions:

Is there any, um, particular or preferred fleet size that works better with this program at all? Or it can be from one truck all the way up or what?

Van Carlson, SRA 831b.com:

Uh, one truck would be tough. Um, you know, it really, and here's a couple of things we didn't get into. There's a distribution of risk. There's a pooling of risk. You know, if I don't want, if the trucking firm doesn't have more than 32 risk exposure units, which means between the tractors and trailers, if he wants You know, there's other things we do in there that we can look at, um, but I got to have enough exposure units to where I can say, okay, you've got pulled risk, meaning that, meaning the claim can't happen all at once. Meaning, for example, a collision is a good example. Not all your truck's gonna be involved in the same accident, same time. So I got distribution of risk. One of the things IRS has challenged these things on is when you don't have that. The rule, the law of large numbers as we know insurance is that way, right? So what we'll do sometimes when the firms are small enough and this is across the industry lines Not just a trucking industry We'll actually create a pool a blind pool We call them where you may be pooled with other people and a percentage of your premiums in are at risk that are unaffiliated to you And that's that's some of the risk clients take on when they do these things Uh now if you're a big enough trucking firm and you've got you know You North of 25 units of between tractors are interested in say 20, if you had 25 tractors and you got trailers and you got cargo and we start, we can build out your, your risk exposure. And we can also show that, you know, you have distribution risk because not everybody can have a claim at the same time. And it becomes a little questionable if you have all your trucks and you know, a tornado comes through and blows them out of a, out of a yard or whatever, right. Or damages in the yard. But beyond that, we start to look at the distribution of risk. And that's a key component of what we do as an administrator. Peter. Cause we want to make sure our clients stay compliant. And it's one of the, it's one of the things that probably rubs business owners or, you know, what do you mean I've got to cover other people's claims? Well, this thing's not risk free guys, you know? Yeah.

John Farquhar, Summit Risk Solutions:

Yeah. Well, again, a captive is usually a model of group of companies, you know, and everybody shares in that. So at the same time, you want to be cognizant of who your neighbor is in that program, and you don't want to invite in the guy whose losses are always 150%.

Van Carlson, SRA 831b.com:

Well, and the nice thing is they're, they're dealing with reinsurance carriers, right? Where they got to watch the premiums and everything else. We're doing it. We got to, we got a limited risk here because honestly it's set to their deductibles or set to their, you know, you know, to make that, make that gap up. Right. Um, you know, some guys might just take cargo insurance on their own, uh, depending on what their ship, you know, what they're responsible for. But, and we see that more and more going on just because the cost is becoming kind of cost prohibitive, unfortunately.

John Farquhar, Summit Risk Solutions:

Sure,

Van Carlson, SRA 831b.com:

sure.

John Farquhar, Summit Risk Solutions:

What, what are, what, is there limits, uh, like, or a limit, I should say, as to how high you can go?

Van Carlson, SRA 831b.com:

Yes. So, couple things. When the code was first passed in 1986, it was 1. 2 million dollars is the most you can put into this thing.

John Farquhar, Summit Risk Solutions:

Okay.

Van Carlson, SRA 831b.com:

Um, there were some issues with the code. It got hijacked for estate tax planning. You know, I tell people, uh, you know, the Boston Tea Party was a real thing. Uh, Americans hate paying taxes. And, uh, and so, you know, if there's a code out there that's a benefit to the taxpayer, some smart law firm somewhere is going to figure out another way to utilize it that really wasn't intended for. Right. And you know that, you know, it's part of our innovation. You know, that's what we do. But anyway, , uh, anyway, got abused. Uh, they've cleaned it up under the PATH Act in 2017, and, and they got rid of some estate tax planning, but what they did do is they increased it by another a million dollars and put a CPI increasement on it. So now, uh, and by the way, both aisles, Republicans and Democrats are a believer in this program. It's, it's a great safeguard for small business owners specifically. Sure. Uh, to utilize this. I mean, um, that being said, you know, so now you're at 2. 8, we got an inflation. Uh, we're at 2. 8, 2. 8 million dollars. Now that's the max you can put into. Right. There still has to be a methodology to your premium, meaning, you know, actual royals tied to and all that kind of stuff. And you guys, you guys are familiar with that. If your audience isn't familiar with it, you know, they, you know, I think everybody's in your industry, in the trucking industry, I think has some knowledge of captives. You know, uh, I would think so, but just know that, um, you know, there is some, um, There is a cap, um, and also, um, there's some methodology. Just because you can put that max in, it doesn't mean you get to. Right, right,

John Farquhar, Summit Risk Solutions:

right. Well, it's basically you're funding a program. You know, it's, it's, I like to lay, uh, look at it as layers of an insurance program, right? Yeah. So, you've got multiple insurers in the game. Um, you're deductible. You're insuring that portion. So if we said you had 25, 000 deductible, you're insuring that program. And then if your reinsurance goes up to 2 million, you have an insurer there. If it goes 2 million to 5 million, you have another reinsurer again. So right. So this gives you that ability that the larger you are in the, in the larger amount of risk you want to take on, you can take in. Put that through this program. So if I said, Hey, I'm going to self insure to a million dollars with my insurers. I could be looking at the 80, 831B here to do that first million dollars for me.

Van Carlson, SRA 831b.com:

Yeah. And typically in those scenarios, we, we allow up to three years to fund up to that. And then once you get to that limit, you're not, I mean, it's one of these things that, you know, it's not going to, once the, once the exposure has been covered, although you have to, you have to pay premium every year in order to get the policies and all that stuff. You know, we're going to, again, these are the back, these are the details of the deal. Just, just know that there's, there's things that we regulate on. You can't just keep piling money up in this thing and not have claims, uh, for example. Um, and you, you know, and if you don't have claims, you're not going to keep being able to put money into it. So those are things that, that those take about three to five years to show themselves honestly, but that's true about any underwriting. This is a new, uh, This is a new idea. This is a new concept for the business owner going in. Um, and, and I will tell you guys, we're the largest manager of these plans in the country. Um, and, uh, we are going international. I'm speaking at an international conference in Miami actually, you know, this month. Talking about, uh, because the same thing that's going on in the United States is going on all over the world, obviously. Oh, yeah, yes,

Chris Harris, Safety Dawg:

yes,

Van Carlson, SRA 831b.com:

yeah. You know, you're getting, you're paying more and getting less today when it comes to your insurance program. It doesn't matter what business you're in. Yes. I was going to say,

Chris Harris, Safety Dawg:

you're paying more and getting less in groceries. So why should insurance be any bloody different?

Van Carlson, SRA 831b.com:

So, so true.

Chris Harris, Safety Dawg:

Let's, um, what states do you operate in or are there any limits?

Van Carlson, SRA 831b.com:

No, no, no,

Chris Harris, Safety Dawg:

because I talked to insurance brokers or agents and of course, usually they're quite regionalized the state or two, but you're saying you can do this in all states.

Van Carlson, SRA 831b.com:

Yeah, just so you guys, I mean, we work with a lot of insurance brokers. Um, unfortunately, we're getting a lot of phone calls out of Florida right now. It's funny. I just, I was on a news broadcast last night with Tampa Bay. Yeah. One of our medical doctors down there, um, in Orlando, she lives in Tampa, but in Orlando, she didn't have any damage, but her practice is locked down for the last, well, since the hurricane. And she still doesn't have power and electrical. Insurance isn't triggering it, and she has business interruption going on. So we've actually insured that business interruption for her. So she's able to put a, she's able to put a claim against her own dollars now and bring it back in her operating company. Cause you know, her, her payroll didn't go away, her rent didn't go away, her loans didn't go. And then all those things kept coming, you know, very, very similar to, uh, unfortunately COVID, right? So, yeah,

John Farquhar, Summit Risk Solutions:

exactly.

Van Carlson, SRA 831b.com:

Yeah. So that's, that's what's going on there. But yeah, if we're getting a lot of calls right now for property casuates, because they got to find an answer and, and, and here's what I tell clients, this is not a silver bullet. You, you're going to have some risk in this thing, meaning that, you know, if you want to partake, you're going to, you know, if you're not big enough, you're going to have to share and risk and other fools, but I think, honestly, I think we do a really good job with that. And we have like minded clients and by the way, we share in our clients as claims, so it makes us fairly unique. And I think, um, If everybody wins, you know, if you win, I should win. If you lose, I should lose. Right. I mean, that's the kind of way I want to run my business. Um, we're consultants, but we're at the same time administering your plan. Um, we charge fees for that obviously, but if you start to have claims, uh, we'll push our fees back to you because, um, we want to make sure you, you stay in business. Yeah,

John Farquhar, Summit Risk Solutions:

exactly. Well, and it's interesting because here in Canada, we have a number of captive programs and in various lines of business as well. Um, transportation is, uh, well, top of mind with a lot of trucking companies at the moment. The, the, Obviously different, different jurisdictions, different rules and whatnot. So here in Canada, there is no federal type setup for this type of program. It is all based on provincial. Uh, and at this moment, we currently have two provinces who are set up to do, um, how do I want to say it? On the ground captives. Every other province has to go off board.

Van Carlson, SRA 831b.com:

Yeah. Okay.

John Farquhar, Summit Risk Solutions:

So, so that, which does make it a little more difficult and a little more aggravating for some folks, but there are a number of, um, how do I say service providers out there, uh, for offshore captive programs and whatnot. So, it's not difficult to put together, but I know a lot of people are going, gosh, I wish, particularly in Ontario. I wish they'd get it together. So we could just have a, you know. A domiciled captive here in Ontario, like they've done in Alberta and BC, but, uh, eventually it'll get there.

Van Carlson, SRA 831b.com:

You know, I, I think the market's going to dictate it. I honestly, I know, you know, when I first got going on this in 08, there was eight states promoting you to own their captives in their state domicile. There's now 44. Yeah. And, and they do it for revenue. They do it for premium taxes for all those other things. I mean, it becomes a passive taxable event to them. That's not necessary hitting all their constituents. Right. So, um, And you know, guys, we do it a little differently. We use a federally recognized tribe here in the United States, so we don't go offshore with our clients at all. Um, there was a law passed in 97 that if you, if it's a federally recognized tribe, um, you know, First Nation, as you guys know, in Canada, um, You know, you could form a company on their tribes, tribal land and do it. And you still, you get an EIN number, employer identification number, right? And you do it and you do a federal tax return. All these vehicles do pay taxes. So they pay taxes, not on the premium that's submitted. As long as you elect on A31B, which you do pay taxes on is investment income, realized investment income. So if you have dividends or you have a, you know, money market account or something like that on those reserves and the, and the surplus of those plans, you are going to pay taxes on those. Share a year at the corporate rate.

John Farquhar, Summit Risk Solutions:

Sure. Oh, exactly. Yeah.

Van Carlson, SRA 831b.com:

Yeah. Well, yeah, I keep forgetting you guys know a lot about captives. So I apologize. There's a lot of guys. That's all right. That's all right.

Chris Harris, Safety Dawg:

No, you got to remember though, um, well, John knows more about captives than I do, quite honestly. Um, I know something, but many of our listeners. This may be a brand new subject to them. So what else do they need to know about C, um, about 831B that you haven't said yet?

Van Carlson, SRA 831b.com:

You know, honestly, uh, the flexibility it gives business owners today. We're utilizing, uh, the first people to adopt these things were Fortune 500 companies, right? I mean, they're the first ones to adopt macro captives, right? I mean, and by the way, they don't care about the deductions so much. And, and by the way, I even know insurance carriers that we utilize 831Bs to isolate risk. You know, like, let's say you're in a high protection class nine and you got a lot of market exposure to that. Well, you may want to take some of those premiums, put them in a subset of an 831B, not pay taxes on those dollars as a, as a traditional insurance company. And, but isolate that risk and build up that, because, you know, that's a, that's a lot of risk you might be taking. So I see, I see, Utilization of this code in a lot of different ways, um, that we've worked with. We do a lot of stuff with warranties. Um, I have a ton of auto dealers that sell service contracts. Um, we pump a lot of the money into the 831Bs. Uh, it becomes a huge revenue source for them on the, on the outside. Uh, quite honestly, it's good underwriting. It's very profitable. That's why you get asked to, you know, everything you buy today, you're asking me to ask about a warranty, right? A service contract warranty. Yay. I get a kick out of Amazon. I think I ordered something this morning for 65 bucks. And I think flipped up to said, Hey, do you want to protect? I'm like, really? But anyway, Yeah, I mean, I, I guess some people would, I mean, I don't know, but anyway, um, uh, but you know, the bigger ticket items and we see a lot of trucking firms too, that are selling to Peterbilt. Their service contracts are, you know, those guys are doing the same thing. And so, you know, just because you're hearing about this for the first time, a lot of your listeners, uh, just know it's been around for a long time. And, you know, and it used to be a big boys club tool, quite honestly. It used to be an institutional tool. Um, again, when I got involved in 08, I wanted to price this product to, to my clients, uh, every, I mean, pigs get fed, hogs get slaughtered, and quite honestly, There's been a lot of hogs in this industry. I mean, they, they're asking too much too, too many fees, too much, but, you know, when there's competition and there's more people like me coming to the table, like we've done, uh, you should drive costs down. Right. And that's kind of what we're seeing right now. So, yeah. Yeah.

John Farquhar, Summit Risk Solutions:

Cause I know from the Canadian perspective, um, we've had a few captive programs going on in Canada for a few years now, but it's still in its infancy stages compared to other lines of business, you know, like you say in there, you know, um, liability and whatnot for some of the big guys that's been going on for years.

Van Carlson, SRA 831b.com:

Oh yeah. Yeah. Especially, especially the auto dealer guy. I mean, yeah. Anyway. So in, in the construction guys, I mean, these guys are paying so much money in premiums and if they run a good, if they got good loss controls, experienced workforce, why do they need to subsidize bad, bad, bad, uh, other, bad, their competitors that are not as well educated or better, uh, safe, safe, safe, safe, safe, safe, safe, safe, safe, safe, safe, Training and all that good stuff. So, no, I think it's a great tool for the right client. And again, it's, and you know, what I'm finding is more and more people are, are not, I would say, you know, 10 years ago, you probably didn't have nearly as many people's willing to take on more risks today, but I think they are, and it's not because they, they want to, it's because they have to.

Chris Harris, Safety Dawg:

Van, describe from a trucking company point of view or somebody in transportation, describe your ideal client. What size are they? Um, you can, which could be stated either by fleet size, revenue, whatever it is that, uh, thing, what is it that you're looking for in a transportation company? Who's

Van Carlson, SRA 831b.com:

ideal? You know, I would say five, five trucks or more, you know, um, they start to That's small, so

Chris Harris, Safety Dawg:

just about everybody.

Van Carlson, SRA 831b.com:

Yeah, honestly, it starts to pencil pretty early. And, and, and it's not because our fees and the way we structured it, you know, the client, the client wins, right? I mean, that client has to win. Meaning, meaning this at the end of five years, he calls no joy and says, Hey, I want to get out, you know, uh, because it's a C corp, he's going to be taxed at long term capital gains. Uh, versus ordinary income throughout the operating years of his company. Uh, you know, based on his fee structure, he'll come out and win on that, right? I mean, that's one of the things that makes the IRS upset, right? There's some tax arbitrage on that. Um, but at the same time, you know, there's a ton of risk these guys take on. And in my opinion, the smaller you are, the less likely you can take on some of that risk financially. And you guys probably see that. I mean, it's not like these guys are getting big point breaks on their units because, you know, they're probably paying the highest premiums they're going to pay when they're five or, you know, five to ten units per unit, right? I mean, it's just, you're not getting those price points until you get a much bigger fleet.

John Farquhar, Summit Risk Solutions:

Right.

Van Carlson, SRA 831b.com:

And meanwhile, you're still taking on the same amount of risk those fleets are taking on. And, uh, from what, from what I see,

John Farquhar, Summit Risk Solutions:

Well, resources have a lot to play into it as well, right?

Van Carlson, SRA 831b.com:

Yeah. And exactly. I mean, you know, I would tell clients if, you know, if you can't do more than 80, 000 in these plans every year, you probably shouldn't do it. Uh, quite honestly, it doesn't pencil. Um, but if you're, you know, if you're doing that kind of a thing and, and, and, you know, uh, you know, if not today, eventually, right. I mean, uh, hopefully become more successful with time. And, uh, you're, you're going to look at tools like this because it's just going to become part of your overall risk management strategy, quite honestly.

Chris Harris, Safety Dawg:

Um, hey, insurance is required by law, so if, you know, if you don't watch the pennies, as we know, so, and I would encourage your contact info is in the show notes down below, so if you are interested in finding out more, reach out to SRA, and then, and he'll be happy to answer your questions. Man, last word. Did we cover everything that was needed?

Van Carlson, SRA 831b.com:

Yeah, I think so. I mean, like there's the devil's in the details and you know, again, business owners, any business owner owes it themselves to educate themselves on any of these, do their own due diligence, really understand this thing. We do a good process. We do a good, I think we do a good job in educating clients and we tell them the good, the bad, and the ugly of it, right? This is not a silver bullet. By no means, um, it helps at the same time. I think you owe it to yourself to look into these types of tools, because as business owners, we take a lot of risk to do what we do. And if I can help mitigate those risks, um, and then maybe embolden business owners to take on more risks because they can, you know, They have a way to handle that more effectively and efficiently. All the better for, it's a rewarding part of our business, quite honestly. Yeah. Thank you guys. Really appreciate being on the platform.

Chris Harris, Safety Dawg:

And thanks for sharing all that with us, Van. Your info is in the show notes down below. For those of you who would like to reach out and learn more about SRA and the 831B in the States, please Contact Van Reachout and he will be very happy to give you the information. Information is money and saving money is how you stay in business. Thanks so much. That's it for this week on the Trucking Risk and Insurance Podcast. John and I appreciate you. Don't forget to click the like, subscribe, listen for that ding, and of course, please leave a comment down below.

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Chris Harris

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John Farquhar

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