John Farquhar, Trucking Insurance, Dawg On-It Trucking Pawedcast

John of Summit Risk Solutions joins Safety Dawg LIVE. John has some interesting views regarding how COVID has changed Trucking Safety Departments, Trucking Insurance, and in general the whole audit process. 
ELDs in Canada, if time permits we will get into ELDs as well.

Here is John Farquhar's contact info:  
Summit Risk Solutions, 
John@summitrisksolutions.ca,
http://www.summitrisksolutions.ca/

Transcript

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Before you say now, because we are in life, I'll be a good blank. Okay. So Just going to wait until 10:00 AM and we will go live at that time. And as you can see the guest on the screen, I know we're covered in red, but that's the countdown timer. Just give us a few minutes and we have at least one guest watching. So leave a comment, let us know who it is. I'll give you a shout out. I did tell a couple of people, we were doing this so well, I actually put it on socials yesterday as Well. So we might just get a view or two. Cool. But it was an interesting conversation we were having earlier in the week. So let's, let's see how that goes. And I know I've got summit risk solutions up. It is. Hello, John and Chris from SUD. Hey Well said, can hear us. Kimberly is beating him up. Oh, Kimberly's beating him up. Yeah. So on a PMTC conference, there's a game section and a Kimberly is just Points wise. Whoops, what the heck is this? Oh, and ready check has joined as I'm really screwing this thing up this morning. Here. I'm ready? Check. Good morning, Chad or Michelle. Oh, it's Chad. Chad's online with us. So good morning, Chad. Good morning side and oh, suds. I'll I'll share this with you in just one second here. Let me okay. I'm going to take that. So there it is. It says zero. Now we'll take that off the screen, that off the screen. And let me do a welcome here. I'll come in and Hey, welcome. We are live on the podcast. The Dawg con trucking podcast. Forgot What the show, what show I was doing. We're live Today. And not many people have the courage to join. To join me. Live on YouTube. Andrea Morley of healthy trucker has done it in the past. And this week, a returning guest who also has a great deal of courage, Mr. John Farquhar from summit risk solutions. Good morning, John. Good morning, Chris. Good Morning. Hey, first of all, let me drag these things here. Can I do that there? So there's hello from SUD and now that's in my way. You probably can't. Hopefully you can't see all that way. And I will give a shout out here, Chad, as well. Ready check. Now, I want to know how, how do I get rid of these things? I put them on the screen and hopefully I can figure out how to get rid of them podcasts with Ted Michelle. I liked that one. Well there, I'm glad you listened. So you, oh, not only can't I get rid of it. I can't move it either. Is that why we're in the Dawg house? We must be in the Dawg. I was here a while. I'm trying to figure that out. John. I just want to bring our listeners up to speed here. So John and I had a brief conversation earlier in the week and I'm going to bring John on by himself for a second while I try to figure out how to remove the comments, but his comments about, I asked them what I thought was kind of an innocent question. John, what do you think is happening? Because of COVID in the trucking industry and his thoughts? I said, John, you got to come on the show. So with that, John, let me ask you again. What changes have you seen or what long-term effects have you seen from COVID on the trucking industry? What are your thoughts? Well, I guess, I guess probably one of the big things I'm seeing is a lack of accountability. You know, when you're looking at a motor carrier and the, the things that they're supposed to be doing, they're not quite doing what they should be. And the problem there, the, how do I want to say this? I wanna just wanna try and say their feet are not being held to the fire, right? So when you, when you've got something going on and they're not paying attention to what they should be doing, because nobody's holding them accountable, law enforcement, for instance, MTO and whatnot are, are just not as present as they used to be prior to the pandemic. You know, when you and I did converse there, we had talked about the insurance guys. The risk guys had come out to see the companies and talk to the, to the motor carriers. That's just not happening. It's more of a telephone call or maybe a video call. So you're not having that interaction that kept these carriers motivated to make sure that their safety programs were up to snuff and moving forward. Yeah. It's and the reason I think that's so important is there are changes about to happen as we get out of this COVID thing, the insurance companies are going to start showing up at your door again. Oh yeah, yeah, yeah. What Do you think's gonna happen when they are no longer doing their reviews on zoom and actually knocking the doors what's going to happen then? Well, I think what you're going to see is if you, if you were say even last year, the last time you had a visit, and if you haven't had a visitor or a conversation from your, your, your risk or safety person from the insurance side, they're going to be looking for what have you done. And if you've not done anything, if you're not progressing further, they're going to start to question, well, if you can't do this without my help all the time, then the question is going to be, why should we continue to insure you? So underwriters are going to get quite concerned because well, if Mike only has to go out and always be on these guys to get their, their recommendations completed, get their safety features into play. They're going to be like, well, do we really want them as a customer? You're supposed to be responsible on your own. You shouldn't need the risk as for the insurance company to tell you what you need to do. And John explain to the listeners and the viewers briefly, what's your background and what makes you an authority when you're talking about insurance and stuff? Like what we're, we're Talking about here. So, so I'm just shy of 18 years in the insurance industry. So it was back in 2006 ish, 2000. Yeah, 2005, 2006, where I transitioned from transportation risk management. I had my own consulting firm back then and started working for a very large global insurer with transportation risks and progressed myself up into becoming a manager across Canada for a team of risk professionals that would do just what we're talking about, going out and working with their clients. And then I worked with those guys for just over seven years and then switched to another insurance company where we built a bigger and better program and carried on with the same process. So, you know, for the last 16, 17 years, I've worked directly with insurance companies and customers, and it's been about what do we do to help you? But at the same time, you have to help yourself. Yeah. And, and John, I'm seeing the exact same thing where these people, they think because they're not being reviewed as closely as they once were. They're letting things slide. And I really think it's going to be devastating for some com companies. Some are going to get away with it virtually unscathed, but others they're going to pay a dear price. Exactly. And this is not everybody by all means. You know, I've been working with a couple of clients that are like, no, I need to do better. I don't want to slip. I want my insurance company to know that I'm being progressively active in, in my safety management programs. But there are some that are like, I'm not worried about it right now. No, no. You know, I need to get these drivers hired. It's like, you're dropping your guard. You're letting your protocols go and not keeping your standards up. It's just going to come back to bite you. The old phrase is going to be, you can pay me now or you can pay me three times as much later. It's kind of like preventative maintenance. If you don't do it, you end up paying two, three times more for the same repair on the road. Yeah. And that two to three times from an, from a motor carrier, from an insurance perspective could be in premiums or it could be, you know, what are going to is going to cancel or non-renew. Yeah. And canceling of course puts you in facility. And John, what are, I know you're no longer in the insurance side of things, but facility rates. Do you have an idea? One of my friends, who's an underwriter always expresses it as a multiple of normal rates, but do you have an idea what a facility rates are currently? I I've actually heard from a couple of insurance brokers that I work closely with. And they're seeing anywhere from 60 to $80,000 per power unit for somebody that's going to be us. Yeah. That's outrageous. I had a client that was at $70,000 per unit for An annual. I, I don't, I don't know how anybody could sustain that. Like there's not enough margin in the trucking industry as it is right now. Now that you're taking go from, you know, maybe 15 to 20,000 a power unit on up to 70, how's that possible? Well, in my opinion, the only way it's possible is to cheat something. Somebody being short changed somewhere. And of course we know that there are changes coming to the facility market. Some changes have already happened and there's more coming to make it more accountable, I think is exactly correct. Yeah. So what would you suggest that carriers do moving forward to prevent their insurance company, the safety people from those damn insurance companies being upset with Them? Well, Both of us being former in that role, I, you know Exactly, exactly the big thing is, is own it, own your responsibility. You know, it's not the insurance company's responsibility to come up and tell you what you need to be doing. If you're in the trucking industry, it's, it's like any industry that you're in, you need to know the rules and regulations of how to operate within that environment, you know, so own it. Yeah. And ready check. Chad says, I agree. 100% John, take care of your books now to save and make it easier later. Thanks Chad. Yup. Yep. Awesome. Awesome. Chad, And by the way, Nelson was on, I don't know if you saw, I threw Nelson's comment up as well. And he just says, Hey, nice to see you guys. He's being polite because he probably knew I was going to throw it on the screen, but he just, He just knows who the good looking people are. So have we beat that, that subject up enough? Do you think that in your opinion, and I'm in a hundred percent agreement with you, people are letting their safety efforts slide a little bit and they're going to get caught in the short term because as we get out of COVID, the safety people from the insurance companies are going to return to onsite visits. Yup. So, so Interesting enough. I had a conversation with one of my clients yesterday and he has been of the mindset. When the work comes in, add more trucks, find more drivers, add more trucks, find more drivers. And it's just been a huge, huge undertaking for their orientation program, you know, hiring and whatnot, and interesting enough, it's just bottleneck them in their safety department. They can't handle it. So they've been letting their guard down, right? So in the conversation yesterday, he realized this is hurting him and he's put the brakes on. He threw the anchor out of the boat and said, okay, you know what? We got to read, look at this. So he's pulling back, he's going to get rid of some of his older trucks. He's going to let some of his bad drivers go and they're going to step up and own this better. And at the same time he informed me, he's looking at all his lanes of travel and he's, he's about 180 power units. He's looking at his lanes of travel and going what's profitable. What's not. And he's going to look at firing some customers, Interesting firing customers, what a novel concept. And right now I understand trucking is a fairly good at the moment, even though we're in, COVID the trucking industry, most of my clients say, Hey, they're about the same or up a little bit prior from the times prior to COVID. So I've heard the same thing. So things aren't too bad. No. Any other pieces of advice before I throw a conversation in that I didn't tell you we were going to have no, no, no Problem. Yeah. So perfect. I love that stuff. Make it all improv. But yeah. I want to add one more point here, because when you asked, have we beat this to death yet? Not yet. Cause there's something else that they need to realize these motor carriers need to wake up and realize it's just not the insurance company and it's just not law enforcement that's coming after them. It's the courts. You know, and, and I know the nuclear verdict has been beat to death. I'm not worried about that because we can manage that. But one of the big things that's really coming out right now, lawyers are using this against you. The plaintiff's lawyers are using this against the defense. And it's the basis of, are you operating with safety over profits or are you profits over safety? So, so in the, in the case of this client that I was just mentioning, he previously was profits over safety. Now he's realized I can't manage it properly. And it's hurting me. It's causing me a pain with my CBR scores, my SMS profiles. And he's realizing I got to pull back because I need to better manage the safety program. And when I do that, I will profit better. But when you are, if you're the type of carrier that's gone, you know what, it's a great time right now. I need to add more trucks and I'm going to shortchange hiring those drivers. I'm just going to get those trucks filled while then your focus is on profit, not safety. Yeah. And sorry, I just want to have that yellow truck go by there. But yeah, it's profits and not safety is short term. Yes, exactly. Not alarm long-term program. Yeah. So you mentioned safety. One of the things that I want to make sure people know about, and I'll put a link in the show notes shortly after we get off, this is the online CVOR. I know you know about it. You can now just for people to know, well, I'll throw it over to you. What do you have? You seen this new online CVR. It's what, two weeks Old, just seen one here two days ago. For the first time I got a copy of it from a client that needs a little help. And, and I had asked for a copy of their CPR, which is in fabulous shape by means, but, but it was really cool to see. I only saw PDF version. So apparently you're able to get electronic version where you can download it into an Excel or something. I didn't get to see that portion of it. Yeah. The new thing is really cool. I was fortunate. I was on a webinar and MTO did a short demo of it. And you can get your whole level two CVR online. It's virtually up to date. MTO stated that if you have a truck inspection today, it should be on your CVR level two tomorrow. Like wow. And the calculations are recalculated, everything. So, and it's free. So which, by the way, I, I don't understand. I know that it was always going to be free, but because of our COVID situation and the dollars everybody, all the governments have spent, I can't imagine it being it being free forever. I do see a subscription. I just see a subscription service. Let's say it's five bucks a month. Right. And I think every carrier would subscribe at $5 a month. It's not a lot of revenue, but it's a little bit, but what I want everyone to understand is your level two CVR is now online and it's up-to-date, it's flipping. Awesome. Yeah. So I just wanted to throw that out there. Last subject I wanted to throw at you June, June the 12th. Yes, sir. Date there. June the 12th, 2021. Oh, sorry. Before we go on John, I got a question in the comments here. So I'll throw this on the screen from ready check Chad. I believe it's, it's either chatter or Michelle, but I think Chad was the one that signed in this morning says, could you quickly explain nuclear verdict? Who killer verdict? Yes. So, So new verdict is a term and it's, and it's, it's more geared towards the us than it is Canada, but it can involve a Canadian motor carrier, particularly if you run to the U S so nuclear verdict is, is, is a court reward that is much larger than normal. So, so kind of a thought is anything that goes 10 million plus is usually a nuclear type verdict, but it's, you know, something that's a couple million is not really a nuclear verdict because bodily injury, environmental spill, something like that could very easily go a couple million. But usually if it goes well over policy limits, and probably the majority of the motor carriers we know of are probably carrying over 5 million or eight, anything over that is going to get pushing that nuclear verdict. But the rule is anything over 10 mil of a reward is going to be classified as a nuclear verdict. And the trick is it's not something that happens on a regular basis. This is outside the norm. And it's because the plaintiff's lawyers have done a really good job at convincing the jury. Somebody needs to be rewarded because this motor carrier is just really, really bad at what they do. And you don't necessarily have to be bad at what you do. You could be pretty good, but one thing goes sideways and the plaintiff lawyers will just chew on that for hours and convince the jury they're a bad company. Well, it was you. And by the way, I just threw another comment up here. SUD says, I know that John is very passionate about road safety and nuclear verdicts is always something that scares everyone. Talk a little bit on that. So I think you've just achieved that goal. I just wanted to throw out there that you pointed me in the direction of Joe fried Joe fried. And what was the girl's name? Sorry, Cassandra gains. That's it? Yeah. Cassandra gains and had a wonderful talk with Joe fried Joe. Sorry, was the fried free, free freed Joe free, who is a prosecuting attorney in the trucking world. And I think if I remember he said he charges like, or earns $3,000 an hour or something crazy like that. But his comment that stuck with me is that he's never seen a nuclear verdict when the trucking company comes to the courthouse and says, I'm sorry, we screwed up what the WYO. Yup, exactly. It's always when they fight, fight, fight and say it wasn't my fault anyways. So true. I glad you addressed those two things by the way. Chad says, thanks, John. Chad. Ready check. So, and you answered sun's question as well. June the 12th, 2021, June the 12th, 2020 task. And John, how many? So June the 12th, 2021 is the day the federal mandate came into effect for electronic logging devices or ELD. John, how many logging devices have been approved so far? Oh, zero, zero. Can you explain to me then if we have a new law that we have to have logging devices, ELD is in our trucks, but there aren't any approved. How do I meet the law? You don't. Oh, okay. Yeah. Now with that said, the sad part is, so again, another customer visit I had this week and this was a topic, was the ELD. And they run a, this, this division runs mostly Canada And They turned on the ELD that they're using to operate in the U S so the U S division is running a, I believe it's Sam, Sarah, which is said that they're going to be approved, but not approved yet. It hasn't come through the system, but they're saying, Nope, we are in the system. We are going to be approved. But nonetheless, this operation said, we're going to take a step forward. And we're going to implement a device that we know works and helps our us division. And we're going to implement it on our Canadian division, across the board. And it was funny because they got a lot of slack from some of their competitors and peers in the industry gone, oh, you're crazy. You should just keep running paper logs and you don't need to worry about it. Cause you're not going to get a ticket or anything. And it's interesting because based on the conversation we'd had probably a month ago, it was suggested, and it's something that's practice implement your LDS, get your drivers used to them. Because if this is a provider that you plan on using, when it comes out the approved side, you're going to be ahead of the game. And there's, there's no law that says you can't use the non-approved ELD provider because, well, there's nothing to say that they're approved yet. Yeah. And the other part, John is why do we in trucking so often go to the lowest standard instead of stepping up and setting the bar high and going beyond what's required, it's called profit. Yeah. And I agree with you. I think Sam, Sarah, I think all the big boys and I'll name a few Isaac SIM Sarah geo tab, keep trucking PeopleNet. I think all, all of them, I haven't had conversations with all of them. I've had conversations with some of them they've all submitted. They've they all believe that they're going to be approved fleet complete. I saw a, a social media blast recently that they've rolled out what they believe to be a compliant Canadian ELD, to all of their trucks, that it's still in beta. And they call it from what I read it. It was in beta only because it's not approved yet. And so, but they believe it's their belief that what they submitted will be approved and they've already rolled it out. So they would appear to be ready. And as I say, I believe I had a conversation this week with Geotab and they expect they're quite confident that they're going to be approved, keep trucking. I've had a conversation again this week and they are extremely confident. And so anyways, my point would be to all the carriers out there. Start time, start testing. Yeah. I Actually got a one, a new client that I met here this week and given them a hand with some insurance recommendations and one of the things as he's switching from his current ELD provider to a new one, and yet neither one of them are approved, but interesting enough. And I questioned him on this. I said, well, I'm glad you're, you're happy with the provider that you're going to go with because they're going to marry in a dash camera to go with it. A cloud-based dash cam. We're talking about actual what I said, the contract that you sign. Do you have an escape clause in there that says in the event they don't get approved. Can you get out of the contract? And sure enough in the contract was an escape clause that we don't get approved by transport Canada, the contract's null and void, and you get your money back. Awesome. And that's one of the things that I tell everybody is make sure you've got an escape clause. And I'm, if you're wondering why I'm looking over here, I'm looking at one of my other screens to figure out why my and why my sound effect didn't play. And I will figure that out in just a second, because I know why it didn't play. I've got the muted, but I've got another question and I'll throw this on the screen here. Andrew Westwood. Thanks Andrew. For the comment. When is hard enforcement date coming? Sorry. When is hardened forcement date for Canadian ELD? Whoops. John, do you know when the Hart enforcement date is June 12th, 2022? Yes. Now, one thing that I'm wondering about, quite honestly, they've said, what was the word? Educational enforcement or progressive enforce Soft, soft and educational enforcement. Okay. Is it clear that Well, When I first read that, I thought, okay, they're being very clear. They're not going to write a ticket for the next 12 months. Right. Which is really good. I've seen in some provinces though, where they've stayed starting January, the first, this isn't Ontario, by the way, not in Ontario, but starting January the first, they will start writing infractions that could affect your national safety code number. Yup. Oh, yep. Ontario statement. I think in, listen to my words, I think it was clear, but there's kind of a little thing in there. I'm not a hundred percent sure. I wish they would come out and say, we are not going to affect your CVOR June the 12th of 22. I think that would, that would handcuff him too much. I think if they said That. Yeah. So anyway, it, it may happen, right? That's one of the areas that I'm worried about as well. Yeah. So-so so if I could add to that, one of the things that, that, that motor carriers need to pay attention to is it's provincial regulations that are not French provincial enforcement that is saying they are going to do this often educational process. The federal law says June 12th, 2021, you got to put the ELD in place. So I know there's none available right now, but as they start to trickle out and come out of the approval process and say, the device that you're using, let's say is an example of Sam, Sarah. So if you're using Sam, Sarah already in the us, and you're going to implement it for all your trucks and it comes out next week as approved, well then as per the federal law, you should be getting that in right now. Right? So the concern is here, not the provincial enforcement, but holy crap, what happens if we get into a really bad crash in new Brunswick, and we're not using an approved ELD device. Cause we're still thinking I don't need it. I'll just do paper. But it's proven that you have that proof device in your fleet elsewhere. Guaranteed. A plaintiff lawyer is going to have a heyday. Yep. Very see, I got my side effects working. I don't worry. Absolutely. Right. It's the law. What the hell is the plaintiff's attorney going to do? If you are not complying with the law. Right. Great thoughts, John. We're already hitting. I can't believe that we've already hit like 30 minutes and 22 seconds. All right. This has been great. Last thoughts. Nope. Nope. It's it's work. It's work with your safety department. Listen to your safety professionals, whether you have a team of professionals in-house or whether you're using a, a consult safety consultant, risk management consultants, such as Chris or myself, listen to them, pay attention. What you do now will save you a lot of grief, particularly with your insurance company. And most importantly, with the courts, That was well said, John, thanks so much for having the courage to come on the show. Anytime. Love it, love it. Anytime I'm doing it. You know what? When I get hangout with the Safety Dawg in the Dawg house, that's a good Day. It is A great day. And Chad says time flies, chat of ready check says time flies when you're having fun. And we are at least I was thanks, John. Thanks for having me. Hey, not a problem. And with that, let's say the Safety Dawgs out.