ExtraMileIssue10

2018 ISSUE 2
NOTES FROM NATIONAL INTERSTATE INSURANCE FOR OUR PARTNERS IN RISK
For some companies
THERE IS
NO DRIVER
SHORTAGE.
See page 16 for ideas to increase driver retention and make
your company a place where drivers want to work.
Economic Outlook
by Bob Costello
on page 24

Contents2018 ISSUE 2
LETTER FROM THE PRESIDENT AND CEO 3
EXTRA MILERS JOE DARWAL, MEGAN BENDER, HOLLY SPEARS AND JELENA POVICH 4
5 WAYS TO INFLUENCE YOUR INSURANCE RENEWAL 9
EXECUTIVE SPOTLIGHT: STEVE WINBORN 10
PRODUCT SPOTLIGHT: WASTECAP 12
INSURANCE IN PLAIN ENGLISH: REINSURANCE 101 14
While the team at National Interstate works hard every day to provide an insurance experience built around you, it is not always easy to
provide world-class customer service every day to every customer. But, I like to think that as a company, we do often get things right, and in
the long run, that extra effort really matters. Which is why I was so thrilled to recently receive the following message from one of our longtime
customers, Dennis Altnow, CEO of Tiger Lines. Dennis forwarded me an email he sent to an insurance broker who was soliciting his business.
With his permission, I’d like to share it here as Dennis captures the essence of what our 700+ team members seek to provide every day. Thank
you, Dennis – I can’t think of a better testimonial, and thank you to all of our hardworking National Interstate employees who go the extra mile
every day.
Sincerely,
Letter from the President and CEO
TONY MERCURIO
THE SECRET SAUCE TO INCREASING
DRIVER RETENTION 16
Dear (insurance broker):
Tony Mercurio
President & CEO
INDUSTRY & ECONOMIC OUTLOOK BY BOB COSTELLO 24
TRENDING TECHNOLOGY 26
WORD SEARCH 28
Thank you for reaching out to us!
Your offer of a cheaper alternative, in my humble opinion and experience, may not be cheaper nor sustainable in the long term. As you are
aware, there is a significant difference between low price, and lowest cost; between market pricing, and risk management.
Allow me to clarify!
Previous to our current arrangement, since 1977, I have participated in the annual insurance rate shopping exercise which was neither
productive nor cost effective. We were constantly subject to the wild ride of the insurance market cycles.
Subscriptions:
In contrast to this circus, our rates have remained consistent for almost a decade on the front end yet have contributed significantly to the
bottom line on the back end through our captive distributions. This arrangement has allowed us to regard our Risk Program as a profit center
rather than a necessary evil. These distributions have only been made possible through the Safety Culture we have been a part of via consistent
risk data feedback, workshops, captive group advisory board and safety committees (meeting four times per year), peer group feedback and
insightful but intense quarterly claims meetings with our local broker. All together, these activities have allowed us to focus on what really
matters; controlling our losses and running our business efficiently while minimizing our risks.
Extra Mile magazine is a free, quarterly publication offered by National Interstate Insurance Company in
support of its customers. To subscribe, call 800-929-1500 or email amanda.genther@natl.com.
Publisher:
Established in 1989, National Interstate Insurance is one of the leading specialty property and casualty
insurance companies in the country. Offering more than 30 different insurance products, including traditional
insurance, innovative alternative risk transfer (ART) programs for commercial companies and insurance for
specialty vehicle owners. Its customized solutions are made possible by its talented and dedicated team
members. National Interstate employs over 700 employees in offices in Northeast Ohio, HI, and MO.
© 2018 National Interstate Insurance Company
natl.com/facebook
natl.com/linkedin
natl.com/twitter
natl.com/youtube
Editorial Contributors:
Mark Adriance
Norris Beren
Bob Costello
Lauren Fronczek
Amanda Genther
Jody Jordan
Tony Mercurio
Chris Mikolay
Kate Mitchell
The service we receive from our broker at Dillon Risk is world-class with a local touch. Our carrier is personal to the point where I am afforded
biannual meetings with National Interstate’s CEO and his executive staff. That would be impossible within any other insurance carrier scenario.
Once again, thank you for your interest in Tiger Lines. I really do understand and appreciate that there is a huge place for many insurance
brokers in the insurance market place. However, as noted, we have been with National Interstate and our insurance broker since 2007 and,
because of the above reasoning, believe it’s still the most practical and logical choice for us. At this point, we have no intention of changing.
Best Regards,
Dennis Altnow
CEO
Tiger Lines LLC
3

Spotlights
in Claims
Too often in our industry, people love to Monday morning
quarterback, especially when it comes to claims handling.
We asked four of our Claims employees to share a specific
claim outcome that they are most proud of – an outcome
that was not just beneficial for our company, but also for
the insured and claimant. Here are a few times when
claim handling went right.
In my instance, our
insured driver was
attempting to get off of
a highway exit in the
early morning hours.
Our driver came up on
a motorcyclist, resulting
in a rear-end collision.
The motorcyclist was
propelled off of his
motorcycle and scene
photos and video footage
captured the motorcycle underneath our insured’s semi-truck.
Megan BenderClaim Representative
The claimant in this case was an active member of the military who
was on a leadership track to make General. As a result of the collision,
he injured his wrist and sustained a head injury. Through the military
medical facility he has access to, he was able to treat his injuries.
Meet Megan
What is the last book you read?
Would you recommend it, and why?
The last book I read was Extreme Ownership by Jocko Willink and Leif
Babin. I would highly recommend this book as it provides a lot of good
insight and direction into how to be an accountable leader who enlightens
others to have the same accountability. It focuses on leading by example
and not placing blame on others, but rather taking personal responsibility
and working to find solutions.
What are you personally most proud of?
I am most proud of my Catholic faith and my family. My husband Dan and
I have two girls - Madelyn Sophie, who is three years old, and Maria Rose,
who turns two this month. We are also expecting our third girl in May!
If I wasn’t working in claims, I would be…
Working as a counselor of some sort.
Very early on in the process, I reached out to the claimant and made
contact. In terms of Personal Property Damage, we were able to
take care of this very quickly. While no time is a good time to be
unexpectedly off from work due to injury, this was a particularly bad
time for the claimant as he was up for a review for his next promotion.
To ease some of his concerns, I continued to maintain communication
to keep him aware of where National Interstate was in the process,
speaking at great length multiple times per week, all while assuring
him that we would handle his claim fairly.
Within less than two months of this claim being reported, we were
able to reach an early, fair resolution without litigation. It was a
resolution that both the claimant and insured were very happy with.
The moral of the story is that timely claim reporting coupled with early
contact with the claimant will usually result in better outcomes and
lower claim costs.
What are three words your co-workers would
use to describe you?
I think my co-workers would describe me as devoted, responsible
and fun-loving.
What motivates you to get out of bed each day?
My family motivates me to get out of bed each day. I strive to be the best
person both at work and at home, and to do the best that I can for them
each and every day!
Any pets?
No Pets. We have a great arrangement with my dad’s dog, Rudy. He is a
labradoodle that we will occasionally watch for extended periods of time,
but then he returns home. My girls love him, and it is a good reminder that
our lives are too hectic for us to get a dog right now!
4
5

Holly Spears
Senior Claim Representative
During my tenure with
the company, I have had
significant experience in
dealing with fire losses.
In my case, our customer
was driving down the
highway and felt his
vehicle shimmy a little
bit. After checking his
mirrors to see if he had
hit anything, he instead
noticed smoke coming from the rear of the trailer. He safely pulled
over onto the side of the roadway and jumped out to the trailer to see
what had happened. At this point, flames had begun to significantly
overtake the trailer, causing the driver to retreat back to the front of
the tractor to retrieve his fire extinguisher. Unfortunately, the trailer
was already fully engulfed in flames. When the fire department arrived
on scene, they had a difficult time controlling the blaze due to the
cargo on board – vegetable oil and other food products. Each time,
fire personnel attempted to extinguish the fire, the oil only acted as
an accelerant, reigniting the flames again and again. It took over 30
minutes to fully put out the blaze and by this point the trailer and
tractor were both completely engulfed.
The semi-truck was towed to a towing and recovery facility, and while
it was there, I sent a Cause and Origin Expert out to determine what
caused the trailer to catch fire in the first place. Even though both the
Meet Holly
What is the last book you read?
Would you recommend it, and why?
I’m in the process of reading The Iliad by Homer, and I say “in the process”
because it’s over 700 pages long. It’s a lot to comprehend, so reading it
slowly is the way to go. I would absolutely recommend it to anyone who
loves to dive into a book and stay there for a while.
What are you personally most proud of?
My strong will. Someone once told me, “When someone tells you that you
can’t do something, you tell them ‘Watch me,’ and then you go do it.”
If I wasn’t working in claims, I would be…
Either an English Literature teacher or a History teacher.
trailer and tractor were burnt down to the rails, the Cause and Origin
Expert was able to determine that a brake issue caused the brakes
to seize, creating friction and sparks – which then caused the fire.
Thankfully, our driver was unharmed.
When I received this claim, I immediately worked with the tow facility
to reduce the insured’s towing expenses to a more acceptable amount,
as they initially were inflated given what was towed to the facility.
The insured and I created a united game plan to execute, one in
which we were constantly speaking to one another and able to build a
relationship. We spoke with the cargo insurance carrier and got them
to cover part of the towing invoice because the cargo was also mostly
destroyed and the tower had to remove what was left of it in order
to safely tow our vehicle away. The trailer was self-insured, meaning
National Interstate could not handle that loss, however I was able to
quickly handle the total loss of the tractor and get the insured back to
his pre-loss condition in regard to being down a unit and getting him
paid quickly and accordingly per the policy.
Overall, this claim settled in around two months, which is average for
fire losses. I was proud that I was able to negotiate and reduce costs
for the tow bill, because when you are dealing with a towing facility,
every day counts for the insured. Every day is another bill for them,
and I was able to quickly recognize that and work with multiple parties
and carriers to create a fair and equitable resolution.
What are three words your co-workers would
use to describe you?
Diligent, committed and opinionated
What motivates you to get out of bed each day?
The gym. Those weights aren’t going to lift themselves!
Any pets?
Madison, a Chow/Shepherd mix; Frankie J, a big, white cat; and Sophie, a
dark gray, long hair cat.
Joe Darwal
Claim Attorney
The claim outcome
that I am most proud of
occurred in Las Vegas,
Nevada. The claimant
was riding atop one of our
insured’s double decker
buses, and as the bus
was approaching a local
strip hotel, the claimant
fell down from the second
story to the first floor of
the bus, striking her head. All of the witnesses to this accident were
her family members. Based on this fact and discrepancies regarding
whether a hard stop occurred, we had a claimant who would present
well to a judge and jury in a difficult legal venue.
However, there were additional features with this case that added
further difficulty. First and foremost, our claimant was a teacher
vacationing in Las Vegas from the United Kingdom. She received her
medical treatment in the UK, and while her medical specials in the
U.S. were somewhat high, her medical treatment would have been
free in the UK. The claimant had a confirmed traumatic brain injury,
which completely changed her life post-accident. She could no longer
work as many hours, do household chores or be out in public for long
periods of time.
Meet Joe
What is the last book you read?
Would you recommend it, and why?
Scorpions: The Battles and Triumphs of FDR’s Great Supreme Court Justices
by Noah Feldman. This book is great for any History fan who wants to take
a peek into the proverbial back room of the politicians, lawyers and judges
who shaped our country.
What are you personally most proud of?
Winning the American Association for Justice Mock Trial National
Championship while at the University of Akron School of Law and now
being able to coach the very same program.
My favorite podcast is:
Hardcore History by Dan Carlin.
Traditionally, this kind of claim in this type of venue has a very
high exposure should it go to trial. From our analysis, we believe
that a verdict would have come from a jury had we taken this to
trial, possibly above our policy limits. I recommended that rather
than trial, we instead go into mediation. Normally, when I go into
a mediation, I prefer to not have an opening statement because it
tends to stall settlement negotiations instead of positively pushing
them forward. Rather than having an opening statement in this
case, I asked the claimant to tell us her story – how her life has
changed and what she believes would be a fair resolution. Following
her narrative, settlement negotiations began.
In the end, we reached a fair settlement that our insured was very
happy with. A couple of months after the settlement, I received an
email from the claimant via our insured thanking both of us for the
mediation and our handling of her claim. She was grateful for not only
having the opportunity to tell us her story, but for the respect that we
showed to her throughout the process and ensuring that all of her
expenses were covered and that she would be able to live her life in
the same fashion she had before the accident. I can tell you that it’s
not every day that I receive an email from a claimant like this one and
it has definitely stuck with me.
If I wasn’t working in claims, I would be…
Working as a litigation attorney for a civil defense firm.
What are three words your co-workers would
use to describe you?
Confident, ambitious and social.
What motivates you to get out of bed each day?
The expectations that I have for myself.
My favorite TV show is:
Seinfeld.
6
7

Jelena Povich
Senior Claim Representative
My area of claim
specialty is in workers’
compensation and I
recently had a claim
in which the claimant
was involved in a motor
vehicle accident after
losing control of his work
vehicle and drifting into
the highway median.
Another vehicle then
struck his truck at the gas
tank, causing the truck to erupt in flames. Our insured’s employee
suffered 12% burns to his body as a result of the fire. Additionally, the
accident did not occur in his home state, meaning we transported his
care across state lines to one of the best burn centers in the country
where he lived.
In this case, our insured’s employee not only drove his vehicle for
a living, but he also lived in his truck. After he was released from
Meet Jelena
What is the last book you read?
Would you recommend it, and why?
The last book I read was Is Everyone Hanging Out Without Me? (And Other
Concerns) by Mindy Kaling. I would definitely recommend it and found it
very empowering!
What are you personally most proud of?
I am most proud of the relationships that I have in my life including my
family, boyfriend and my friends. As I grow older, it’s amazing watching all
of our accomplishments unfold!
If I wasn’t working in claims, I would be…
Selling conch shells on the beaches of Turks and Caicos.
emergency medical care, he did not have a home to return to, which is
concerning in a case like this for a couple of reasons. With after-burn
care, we were very worried about the spread of infection and ensuring
that the claimant was continuing his wound and medical care. With
that said, I was able to secure a long-term stay at a hotel, which
afforded him a place to stay while he was healing. I also assigned
a local Nurse Case Manager to his case to assist in the management
of his care. The nurse was key in the claimant’s recovery as she was
able to visit him regularly to confirm his care was maintained and his
wounds were kept clean.
Throughout the course of his care, we communicated often, so I
developed a close relationship with him. He healed surprisingly quickly,
and soon after, I was able to offer him a fair settlement to resolve his
claim. He was highly-motivated to get back to work. I’m proud that in
this situation, I was able to get the insured’s employee back to work
as swiftly and safely as possible.
What are three words your co-workers would
use to describe you?
Positive, approachable and bubbly
My favorite movie is:
Silver Linings Playbook.
What motivates you to get out of bed each day?
Learning new things has always been a great motivator for me. Working in
the claims area is great for that because every day is different!
Any pets?
I have a soft-coated Wheaton Terrier named Josie. She is only 3 months old
and is the best.
5
Do not dread renewal time, embrace it. When your insurance renewal is approaching, use these tips to
W A Y S T O I N F L U E N C E
Y O U R I N S U R A N C E
R E N E W A L
avoid a last-minute fire drill, unplanned changes or misguided surprises. With ample timing, this list of
practical and proven risk financing tips will help you earn the best results from your next renewal.
1The THINK FINANCING RISK, NOT BUYING INSURANCE. savviest insurance buyers take into consideration
how they are going to manage risk over a time horizon 1
much longer than a 1-year insurance contract. They also
consider how they will balance collateral and cash flow by analyzing and understanding the ways in which large
deductibles, varying retentions, captives and other insurance products will impact their business over time. Often, a
cheap, short-term option can lead to years of heartburn.
MEET YOUR UNDERWRITER. Ask your insurance broker to facilitate a meeting with your current insurance carrier
well in advance of your renewal. Ask what influences 2
his or her pricing decisions, and how you can improve as a risk
in their eyes. Address any concerns the insurance company personnel may have, and work on developing a healthy
partnership so you are best positioned for the renewal.2
EMBRACE TECHNOLOGY, particularly in-cab video technology. We believe, particularly as Excess pricing has
3
significantly hardened and jury verdicts can be unpredictable, the best insurance policy against large claims can be
in-cab video cameras. Not only does a recording stand as an irrefutable witness, with coaching, you can improve
driver behavior.
AVOID HIRING YOUR CLAIMS. Incorporate Physical Abilities Testing (PAT) programs into your hiring process, and
4
ensure you are enforcing your hiring guidelines. A driver who is unable to physically perform the duties of the job
could end up costing your operation hundreds of thousands of dollars in potential workers’ compensation claims.
Make sure you are consistent throughout your hiring process.
TAKE THE RIGHT AMOUNT OF RISK. Work with a seasoned insurance professional to evaluate how much risk
a transportation company of your size should take. 5
What risk can you control and should you retain, and what risk
should you transfer? Understanding this distinction can help reduce your overall cost of risk.
Don’t wait, talk with your agent now about which of these tips would be most impactful for your next renewal.
JODY JORDAN
8
Business Development Manager
9

Executive Spotl ight
Steve Winborn
SVP Claims and Risk Management
In your own words, can you tell me what you do?
I have the privilege of leading National Interstate’s Claims and Risk
Management functions. This includes claim operations in Richfield, St.
Louis and Hawaii. Given the mobile nature of our niche products, our
claims professionals adjust hundreds of millions of dollars in claims
each year in every jurisdiction across the U.S. The Claims and Risk
organization serves our insureds in their time of need and provides a
superior level of personalized communication and customer focus. We
deliver on the promises that are at the core of each insurance policy
we provide.
What are the most import decisions you make as a leader?
The environment in Claims and Risk is fast-paced, and our approach
is one of proactive, aggressive claim handling to achieve fair, costeffective
resolutions. Therefore, it isn’t any one major decision that
you make that is the most important, but instead it is a series of
hundreds of everyday decisions you must properly and quickly make
that moves the needle in a positive direction. In building out the Claims
and Risk departments, there is no more critical decision than choosing
the best new claims and risk professionals to join our team and serve
our customers well.
You spent some time as the Vice President of Operations for
Vanliner, our subsidiary. Can you share how your experience there
prepared you for your position at National Interstate?
I began my insurance career at Vanliner, the leader in moving and
storage insurance, in 1997 and held a variety of positions in various
areas including Claims, Legal, Risk Management, the TransProtection
Insurance Agency and Operations. These varying assignments gave
me a more holistic understanding of how critical it is to have each
major area of the company working together to achieve sustained
success. Vanliner’s unique understanding of and commitment to the
moving and storage industry, strong long-term relationships with its
customers, along with its culture of prompt personalized customer
service, prepared me well for the way National Interstate, as a
specialty carrier, serves all its unique niche product segments.
In what ways have you seen National Interstate change during
your time here?
Since the Vanliner acquisition in 2010, the company’s largest to date,
I’ve seen National Interstate continue to grow responsibly with a
focus on profitable, quality new business. Growth is in the company
DNA. Along the way, our company has maintained its own unique
feel and culture, while blending in the best new ideas, processes, and
opportunities offered from our subsidiary and parent companies.
Can you name a person who has had a tremendous impact on your
career? How did this person impact your life?
Two people. The first is my mother. She was a working mom, who
somehow managed to balance work and family with a tireless work
ethic. She valued education, supported my career aspirations, always
treated others with respect and modeled selfless servant leadership.
The second was an early hockey coach who was both an attorney and
successful businessman. He helped inspire my passion for business
and law, which I first pursued as individual disciplines and roles, and
eventually was able to combine in my career in insurance, claims and
risk management.
What are you most proud of?
Being a good spouse to Kathleen and father to our two daughters.
Raising responsible, independent, empowered young women who will
make their mark on this world pursuing their own chosen passions in
speech pathology and law is something to be proud of.
What motivates you to get out of the bed in the morning?
The joy I get watching my 14-year old mutt wait for me to let her out
and bound down our porch steps like a puppy for the first time, having
coffee with my family and hearing about their plans for the day ahead
before I head off to work and the ever-changing challenges that my
work presents me each day I arrive at National Interstate.
What do you enjoy doing when you are not working?
Spending time with my wife and two adult daughters, watching or
traveling to an occasional St. Louis Blues or St. Louis Cardinals game,
traveling to and exploring new places in the U.S. or abroad, walking to
town and watching action or science fiction movies on the home theater.
What have you been listening to in your car to and from work?
Local news and sports radio; I’m still learning all I can about my new city.
If you could trade places with any other person for a week,
famous or not, living or dead, real or fictional, with whom would
it be?
Han Solo, so that I can travel the galaxy in the Millennium Falcon and
hang with Princess Leia.
What book have your read that you would recommend others to
read and why?
Anything from Stephen R. Covey (start with The 7 Habits) to be
effective in business and life, John O’Leary (On Fire) to be inspired
and Dave Ramsey (start with The Total Money Makeover) for personal
finance and leadership.
10
11

PRODUCT SPOTLIGHT:
WASTECAP ALTERNATIVE
RISK PROGRAM
Ace Disposal opened their state-of-the-art facility to fellow WasteCap members, agents and guests for a tour during the November 2017 Advisory Board Meeting.
When someone mentions a garbage man to you, what are the first
thoughts that come to mind? For me, I likely think of words that are
very different than yours. Innovative. Accountable. Problem Solver.
Entrepreneurial. Progressive. Strong work ethic. Adaptable. Pillar of
their community. Early riser!
I’ll be honest, before I started working in this industry five years ago,
I didn’t give much thought to what happened to my garbage after
I set it on the curb every Monday night. When National Interstate
launched WasteCap, an Alternative Risk Transfer, or ART insurance
program in 2013, it was clear that the insurance industry had
neglected the waste and recycling industry in the same way.
Created from a need to provide both an innovative and stable
insurance product to best-in-class waste haulers and recyclers,
WasteCap is comprised of progressive operators who wanted
a different way to finance risk. These owners grew tired of the
fragmented insurance market.
Over the past six months, there has been more interest than ever
before on how to join this exclusive ART program. It is clear that
industry leaders are looking for a better way to ‘skin the cat’ when
it comes to insuring their assets and managing risk. Elite operators
understand the importance of taking on more risk, managing safety
and being rewarded for their success.
Are you a fit for WasteCap?
We have operators from the east coast to west coast and everywhere
in between. If you currently pay at least $200,000 in insurance
premiums, have a continued focus on safety, maintain a strong balance
sheet and are willing to bear some risk, you should contact me.
One last thing about WasteCap – we work with an appointed agency
distribution as it is critical for us to have partners who understand
both Alternative Risk Transfer and the complex nature of the waste
industry. I can introduce you to one of our select agency partners if
your agent doesn’t represent WasteCap.
For more information on WasteCap, please contact the author
of this article, Lauren Fronczek at 800-929-1500 x1141 or
lauren.fronzcek@natl.com.
➼
➼
➼
WHAT ARE THE PROGRAM BENEFITS OF WASTECAP?
Take Control: Unlike traditional insurance, you pay your
premium into a customized program and, with your favorable
loss experience, you could receive funds back along with
investment income.
Continuously Improve: Enhance your operation with our
superior risk management services, consultants and tools.
Collaborate: Work together and share best practices with other
like-minded, best-in-class members that have the same safetycentered
mindset you have. Our members take full advantage
of this and may call a fellow member for a variety of reasons,
such as when they are vetting new technology to pick their
brain on their experience with that new system. Or, perhaps
a member recently put together a comprehensive Lock Out/
Tag Out procedure and wants to share the experience with
the group.
➼
➼
➼
Personalized Service: Get to know your program team and
senior management at your insurance company at twice-ayear
Advisory Board Meetings.
We Have Your Back: With a dedicated claims handling team
focused specifically on waste transportation operations, we
strive to be your best partner on your worst day.
Stability: Exit the traditional insurance market and the
headaches that come with it.
LAUREN FRONCZEK
Senior Marketing Manager
12
13

Plain
English
INSURANCE IN
In Plain English is an ongoing feature designed to take the mystery out of all the agreements,
exclusions, conditions and definitions found in your insurance policy. We’ll choose topics based
on the questions we hear most often, as well as suggestions we receive directly from you.
14
Since the first recorded contract of insurance nearly 700 years ago,
the insurance industry has continuously evolved to meet the shifting
needs of the market. While we know what insurance is: the payment
of premium to your insurance company in exchange for a promise
that they will be there for you in the event of a loss; that is only
the tip of the insurance iceberg. Beyond the insurance agreement
between you and your insurance company exists a web of other
financial arrangements that support those promises. One important
part of that support system is reinsurance.
Reinsurance provides an avenue for insurance companies to transfer
a portion of their risk exposure in exchange for a fee. Sound familiar?
Simply put, reinsurance is insurance for insurance companies.
Without it, insurance companies would not be able to insure as
many clients or provide the coverage and limits their clients require.
With it, volatility stemming from large, unusual, unpredictable and
catastrophic losses is mitigated, and the financial security of the
insurance company with which you do business is maintained and
even strengthened. This system of spreading risk works so well that
even reinsurance companies purchase reinsurance.
There are two basic types of reinsurance: Treaty and Facultative.
Treaty reinsurance provides coverage for a broader portfolio of risk
and most times is a strategic, corporate-level decision. Treaties
typically cover books of business at a pre-negotiated price or rate.
Facultative reinsurance, commonly referred to as “FAC”, provides
coverage for one specific risk or exposure and is usually a tactical
decision made by the underwriter. Facultative reinsurers underwrite
each exposure individually, develop their own price if they are
interested and are free to decline to quote. National Interstate uses
both forms of reinsurance throughout the organization in order to
maximize the product offering for its customers.
REINSURANCE 101
How does a reinsurer determine price for the reinsurance coverage
it is providing? Much like the process National Interstate goes
through to develop the appropriate price for the coverage provided
to your company, reinsurance pricing involves consideration of
many aspects of the business and industry. Reinsurers use actuarial
models to analyze historical results and exposures, and supplement
that with a qualitative analysis of company management, risk
appetite, underwriting expertise, etc. Similar to how National
Interstate underwriters evaluate your operation, National Interstate
is evaluated by its reinsurers with a keen eye and from multiple
angles.
Reinsurance pricing is also impacted by industry-wide results that
can favorably or adversely influence year-over-year pricing. National
Interstate works to combat negative industry trends by leveraging
its transportation industry expertise, strong underwriting and claims
reputation and long-established reinsurance relationships to help
optimize the reinsurance agreement.
Effectively using reinsurance allows National Interstate to provide
its insureds with a broad offering of customized insurance solutions
at competitive prices.
MARK ADRIANCE
Senior Reinsurance Specialist
15

The Secret
Sauce to
Increasing
Driver
Retention
Are you a best-in-class company when it comes to getting and
retaining drivers? What is your driver turnover? How much is the cost
of turnover affecting your bottom line?
Most motor carrier CEOs probably don’t know as much as they think
they do about their recruiting and retention regime. It means that
they think they fully understand something that they actually don’t;
however, it’s time they learn the “secret sauce” to shake up the recipe
for recruiting and retention.
For the most part, motor carrier CEOs and their executive team are
constantly talking about the industry driver shortage and retention
problem, as well as their own turnover. See the stats below.
They find it difficult to accept the reality that the problem really can be
managed much better. And, they just don’t know how and don’t have
the talent internally that will lead to improved results.
Experience proves that adding more recruiters and continuing to offer
sign-on bonuses, using technology to increase the speed of mobile
applications being loaded or increasing the number of applications
being generated or completed are not the ways to increase a
company’s capacity or retention. In fact, sign-on bonuses and these
other strategies actually encourage turnover and inhibit retention.
The simple truth is that there are solutions, but too many CEOs think
that they can make a difference doing what they always have done,
just more of it, with the same team of people and the same old school
ideas to get better results.
HIRED (NEW) DRIVERS • FIRST 6 MONTHS
Drivers stay past 6 months
51% 27%
22%
NORRIS BEREN
Chief Executive Advisor, Speaker, Consultant
Risk Reward Consulting, Inc.
The introduction of fresh ideas learned from many other carriers and
the use of “Next Practices” thinking instead of living on old, outdated
and ineffective best practices thinking will improve the driver retention
problem so it becomes less and less of a barrier to getting and keeping
more drivers.
If you think you have the talent internally to fine-tune and retool your
driver hiring and retention processes, then make it happen. If you
don’t, then you have to go outside your company for experienced help.
Where Do You Start?
Are you ready to stop or at least slow down the revolving door?
First, you have to learn why your drivers are REALLY leaving, and to
do this you must conduct an intense assessment of your operations
to eliminate the threats to retention that exist. Are you prepared to do
that? Do you or your team know the questions to ask?
Real change requires a thorough understanding by the CEO and
executive team of the need to look at every touchpoint with every
driver in your company to see how well you are creating a favorable
driver experience, or not.
This requires a complete review of all areas of your business that
affect the driver experience including but not limited to marketing,
advertising, recruiting, hiring, orientation, onboarding, human
resources, training, payroll/settlements, operations, dispatch, safety,
Drivers leave in months 1-3
Drivers leave in months 4-6
50%
72%
43%
are due to unmet expectations
and broken promises
are preventable
would return
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Do you have
a favorite
restaurant?
Why is it your
favorite?
compliance, maintenance and interpersonal skills interactions, as well
as the driver experience with every shipper, receiver and your vendors
(fuel, roadside repairs and others).
Asking dozens of questions about every interaction with your driver will
reveal the real threats to retention and will allow for the development
of the necessary fine tuning and retraining required to improve the
driver experience. Fix that and you will see more drivers staying and
the evolution of a new culture that will become an attractor factor
to create a pipeline of drivers that want to come and work for your
company. You will no longer be a “me too” company, but instead be a
unique and great place to work.
An Analogy – Get and Keep Drivers
Let’s prove the point just made.
Do you have a favorite restaurant? Why is it your favorite?
Probably, at every touchpoint, from the moment you arrive and
throughout the entire time you are there, you are treated like a VIP
with loads of respect, enormous attention to detail, an impeccable
meal and wonderful, polite, high-level service. Correct?
If just a couple of these touchpoints were a disappointment, not up
to expectations, would you come back, much less be a raving fan?
Probably not.
How did you learn about the restaurant — an ad or were you referred by a
friend or colleague?
Circling back to your organization, what is the first touchpoint that a
new driver will experience with your company — an ad, a sign or one
of your branded trailers? Another employee or driver? What do any of
these first impressions say about your company? Come work for us,
it’s all about money?
How were you greeted by the host or valet at the restaurant on your first
visit?
Suppose Billy Driver calls the phone number given on the ad, sign or
referral from one of your drivers. How is the phone answered? Is the
driver put on hold or is the call sent to voicemail? What is the driver’s
expectation? How will this phone call impress the driver among the
five or eight or ten other companies he or she also calling?
Did the first experience at your favorite restaurant live up to your
expectations?
Are you building a relationship with the driver so that there is a
feeling that finally she or he is coming to a company that matches
expectations with representations? Is what the driver was told by
the recruiter about your company regarding lanes, miles, home time,
equipment, etc. actually being followed through on?
What makes this restaurant your favorite? Why is it different? Why do you
continue to return?
Are you a “me too” company? Do you make the same promises as
others to attract applicants — sign-on bonus, great home time, pay,
insurance and guaranteed miles? How do you differentiate yourself?
An intelligent driver retention system starts with the fundamentals —
from the first impression the driver experiences with your company
and continues at every single touchpoint along the way.
I know. You are thinking to yourself, “We are already doing all of this.”
Well, here is a fact: 9.9 out of 10 CEOs don’t know what’s REALLY
going on with driver retention and recruiting in their company. And,
that’s why turnover is almost 100%. While driver treatment is critically
important, it is not so much about the culture of your company but
more about the driver experience. From the first contact to every day
working, a driver needs to feel that he or she is an important and
contributing member of the company.
Do you know about the driver experience in your company?
You need to assess your operations and eliminate the threats to
retention that exist in your company by becoming a more curious
organization - knowing, thinking, measuring, monitoring and making
changes that will create a WOW driver experience at every touchpoint.
Just like the restaurant experience, everything has to be real in an
organic sense, friendly, high-quality and not designed only to fill seats.
Those seats will be empty once again if the touchpoints are not done
properly and designed for building a long-term relationship.
Just like your favorite restaurant, drivers need a favorite trucking
company to come back to every day for a long time and become the
main source of new drivers.
Your favorite restaurant has a ‘Secret Sauce’; they provide an
experience that is superior to others. The same concept that applies to
attracting and keeping restaurant customers applies to attracting and
keeping quality drivers.
What if you had access to a secret sauce - a strategy that will help
you find out what you don’t know and narrow down what needs to be
fine-tuned and how to do it?
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19

The “Secret Sauce” to Creating an Intelligent Driver Retention System
How You Can Move the Needle – This Is How Successful Companies Do It
If you want to know how to increase your driver retention, then let’s
learn the recipe for the “Secret Sauce” to attract and keep more drivers.
By using the “recipe” correctly, over time you will move the needle to
reduce turnover significantly.
Here are just a few of the fundamental ingredients of the “Secret
Sauce”. Remember, you hire your turnover. Change the way you hire
drivers and you will improve retention.
pounds of training and retraining for the people who are doing
5 the recruiting, so that they will WOW prospective driver leads into
knowing how different your company is
pounds of creating a curiosity that will attract the prospect and
2 turn him away from “shopping” for his next driving job
pounds of asking a lot of questions about the person, not so
10 much about home time, lanes, money, experience, the driver
wants, etc. But, instead asking about what their “I won’t do’s” are so
you can manage expectations. Also, try asking what they like to do.
gallon of creating two-way value with the driver and
1 the company
pounds of creating a desire to work for your company. Truthful but
3 believable.
There are more ingredients to this “recipe,” but starting with these five
can put you on the path to success.
Here are some additional fundamental principles of the “secret sauce”
that will further enhance retention:
➼ Every new driver should meet and be introduced to the people
that he or she will interact with the most. If necessary, you can
do the introductions online, but it is important to put a name and
face together, so it becomes part of the driver support team.
➼ Match expectations – have alignment with what drivers are told
by recruiters, at orientation and by all personnel they interact
with. This concept is well known but not well understood as to
its importance, nor is it enforced vigorously.
➼ You may need to make staff realignments; employees who are
not nice to drivers need to be reassigned, retrained or removed.
➼ Based on the overall assessment, you will need to develop, train
and enforce new procedures to impact the driver experience
positively. Failure to do this will be a failure to retain drivers.
➼ Create an early warning system to identify at risk of leaving
drivers. Everyone who interacts with drivers needs to say
something if they hear something or know something.
➼ Monitor and measure results frequently. Remember, happy
drivers STAY.
HAPPINESS
The best-in-class companies know exactly what the root cause of
their unhappy drivers is and don’t assume that they know why. They
understand that their retention is directly proportional to their favorable
driver experience at all points of interaction. These companies create
“raving fans” of their drivers and other employees.
You too can move the needle from high turnover and lots of unhappy
drivers with one simple principle.
Assess the impact on your drivers at every touchpoint.
Here are my Top 12 Action Steps to begin to set the stage for ‘driverfriendly’
policies, procedures and behavior execution:
1. Select top management officials to conduct one-to-one on-site
chats with each driver over a period of a few weeks. Learn what
you don’t know.
2. Reduce the silos between departments: train on interdepartmental
communications, collaboration and cooperation
with drivers. Bring in an outside trainer who is an expert in these
matters.
3. Empower fleet managers/dispatchers to be advocates for drivers.
4. Train your dispatchers and fleet managers how to listen to,
honor and respect drivers. As your ‘front line,’ they should also
be aware of how to be sensitive to unspoken problems and
obstacles drivers face on the job and know when to report issues
that need attention. Teach them to provide personal, one-on-one
contact and attention to drivers; call them by name, not their
truck number, know their spouse/significant other’s name, etc.
5. Do retention seminars for all employees and include
communication skills and sensitivity training.
6. Begin the process of building your company brand by developing
the attractor factors that draw and retain drivers. This will become
your competitive advantage.
7. Conduct live interviews with existing drivers continuously and in
a structured format when possible. You will be surprised about
what you will learn. You will need to create a sample interview
survey script for this to work properly.
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21

Ask not what
your drivers
can do for you,
ask what you
should do for
your drivers.
8. Send out regular questionnaires to drivers and ask them to ’rate’
your customers and your key staff from their point of view. Then,
take action on problems or explain why no action is warranted -
but stay connected and be responsive. You will have to separate
legitimate comments with merit from comments that are selfserving.
Create a perception survey.
9. Introduce a high-level executive to all new drivers at orientation,
in person or electronically when there are multiple locations.
10. Avoid the usual practice of classroom orientations that go on too
long by reviewing policy after policy on PowerPoint presentations.
11. Let drivers know the CEO is committed and open to hearing
their questions and concerns, and invite them to have open and
honest conversations with management. The development of a
culture where “Drivers Are Really Everything” must begin at the
highest level of management, and that must be the CEO/Owner.
12. Create a driver advisory council to find out what is really going on
with your drivers, not what you think is going on.
Make these necessary fine-tuning adjustments and then watch
the needle move toward more retention and more qualified drivers
applying. Execute these action steps and you could see a 10%
or greater increase in retention in the first 90 days. CEOs who are
committed to making changes along these lines have been successful
in fine-tuning their recruiting and retention significantly and getting
higher-quality drivers to apply and sign on with their companies.
They have cut the number of recruiters needed because they are having
fewer drivers shop their company in spite of their higher standards.
You will increase your conversion rate from applications to hire well
beyond the 3-5% that is common today.
Successful companies have cut their turnover because of improvement
in unsuccessful procedures and in the driver experience at all
touchpoints. The vision of the leadership is now shared with everyone
and is in alignment with all departments, their employees and their
performance.
To paraphrase a ‘famous’ line in American politics:
Ask not what your drivers can do for you, ask what you should do
for your drivers.
The most important takeaway you should have from this article is that
every touchpoint in your company needs to show drivers that they are
valued – that drivers are first.
From the first contact they encounter and every day working, a driver
needs to feel that he or she is going to be an important, contributing
member of your company.
After all, without drivers, nothing happens! Drivers don’t stay with you
because of what you do, but why you do it… and this is how you can
stop the revolving door of drivers at your organization.
Norris Beren is Risk Reward Consulting’s Chief Executive Advisor
who provides guidance to trucking CEOs. He is author of the book
How to Create an Intelligent Driver Retention System and of strategic
resources such as The Driver Turnover Assessment and The Secret Sauce
to Get and Keep Drivers.
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23

INDUSTRY&
ECONOMIC
OUTLOOK
QUITE SIMPLY, the motor carrier industry is in what is likely to be one of the BEST,
if not the best, periods in the post-deregulation era. MANY factors have come together to boost
demand while supply is constrained, putting motor carriers in the driver’s seat.
Starting with demand, the economy is accelerating, which is unusual
for being so late in an economic expansion. Already, this is the third
longest expansion in history, and will become the second longest
this spring. Even before the new tax law, which is an economic shot
in the arm, general economic growth was accelerating, including
two quarters in 2017 with over 3% gross domestic product growth.
Expect GDP to increase 2.8% this year (a half of a percent faster
than in 2017 overall), with 0.3 percentage points of that due to the
new tax law. The economy is now increasing fast enough that it
will generate higher wages for workers and slightly more inflation.
Those, in turn, will push the Federal Reserve to increase interest
rates a total of four times this year resulting in a 1% increase in the
federal funds interest rate, which is the rate with which the Fed sets
monetary policy. That means banks and other financial institutions
will raise interest rates as well. This, though, will likely lead to more
lending by banks as their margins rise.
More importantly, the three large buckets of truck freight, including
consumption, construction and factory output, are all simultaneously
doing well, a first in this cycle. Consumer spending picked up in
2017, culminating in the best holiday spending season since
2005. In addition, housing construction is increasing nicely and
factory output has snapped back. But perhaps the most important
development for fleets on the economic front is the improvement in
inventories throughout the supply chain. That means that stocks,
which are back in the normal range, are no longer a drag on freight
volumes. Add it all up, and freight levels are solid.
The improvement of freight has absorbed the excess capacity that
plagued the industry from 2015 through the first quarter in 2017.
And, although you would expect fleets to boost truck counts due to
the better volumes, they haven’t because of the difficulty of finding
qualified drivers. In fact, large TL carriers reduced tractor counts by
5% in 2017, while smaller fleets saw a 0.2% reduction over 2016.
LTL carriers also reduced truck counts in 2017, by 2.4%. Add in the
new electronic logging device rule and we have some of the tightest
capacity the industry has seen in several years. This environment
will lead to continued driver pay increases this year.
So, the only question that remains is, how long will the tight
capacity market remain? For it to end, one of two things has
to change. One would be that the industry suddenly finds
significantly more new drivers, which is unlikely. The more likely
ending of the party will come from a drop in freight volumes,
which is what happened in 2015 after a stellar 2014. While the
economy will grow nicely this year, one of the best years of this
economic expansion, keep an eye on inventory levels (relative to
sales). If this key metric rises consistently over a quarter or so, it
would likely reduce demand and result in a softer market. But, we
project that you won’t need to worry too much about this for at
least six months or more, at this point.
*Written February 7, 2018
As the economy picks up, truck freight volumes have risen
significantly. Truck loads increased 2.9% in 2017, the best annual
gain since 2011. But during the second half of the year, volumes
were up 5% from the same period in 2016. LTL tonnage increased
1.5% last year, the largest annual increase since 2014, but during the
final quarter tonnage jumped 4% from the fourth quarter in 2016.
BOB COSTELLO
Chief Economist, American Trucking Associations
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25

-vehicle technology has been an integral part of our business
In since 2006, supporting the utilization of automatic event
recorder systems (AERs) in over 30,000 vehicles to date. The use
of AERs has played an important role in protecting our customers,
streamlining claims processes, mitigating costs and even alerting
driver’s to health concerns before they became life-altering. It is
safe to say in-vehicle videos have changed the playing field for
commercial vehicles and continues to improve our ability to build
on safety and operational efficiency. However, we aren’t just talking
about video anymore. The industry has changed over the last 12
years – new companies, new products and an overall access to
more efficient technologies has evolved this space into something
of a tech jungle of new solutions.
Traditionally, we have encouraged new technology users to consider
the following important factors to determine the best fit for their fleet:
Recording Type (Event vs. Continuous), Download Style (Manual,
Wireless or Cellular) and Management Platform (Managed Services
or Self-Managed). While these are still important considerations,
with the rise of new and improved technology, they are becoming
increasingly more difficult to identify. New algorithms, merging
technology companies and Silicon Valley start-ups are changing the
game and the classifications previously used aren’t quite so distinct
anymore.
There has been a shift from self-managed to managed services
among new customers investing in fleet systems. The overall theme
is a need for efficiency and quick, actionable tasks delivered to an
online platform instead of burdening company personnel to keep up
with video downloads and constant reviews. However, this doesn’t
mean the solutions traditionally thought of as ‘self-managed’ are
taking a step back or exiting the market. One way these companies
are simplifying the management process for their customers is
merging with other leading technology products in other spaces
such as telematics. Users of both systems can filter triggered videos
through their telematics platform as their single source of managing
their fleet data and videos. These partnerships are happening across
the technology world – ELD’s adding camera solutions and AERs
adding lane departure or forward collision warning for example.
New competitors entering each space will ultimately benefit end
users by creating more comprehensive single unit solutions at more
competitive pricing.
Another new player to the “AER space”, although I use this term
loosely here, are those companies classifying themselves as Vision
versus Video. These emerging companies deliver real-time reporting
based on driver performance, following distance and even driver
status such as eating or becoming fatigued, using triggered videos
as more of a secondary value. Additionally, they provide more
specific, near real-time feedback to the end-user through improved
algorithms, instead of third-party reviewers. These companies are
landing in the middle of managed services and self-managed,
forging their way into the market by hoping to deliver the best of
both worlds – more detailed, immediate knowledge of your fleet
without the additional price tag of a live reviewer. This market is still
young and in need of testing and growth to establish its footprint,
but one to keep an eye on.
Whether you’re looking for a new camera solution or hoping to
improve operational efficiency through telematics, the world of
transportation technology is moving fast and adapting to industry
needs. New solutions and expanding options bring exciting
opportunities to managing your fleet, but two factors still remain
when considering your options that are just as important as they
were 12 years ago – the right fit and your management plan. First,
take the time to evaluate how these products can fit into your
operation and deliver to your unique needs – there is not one best
choice that applies to everyone. Second, understand the information
that will be coming into your company and how you plan to manage
it. No matter what technology company you choose, the data is
only as valuable as the action you take on it. The same solution
provides varying levels of ROI to different companies based on how
effectively they are able to manage the information it delivers.
For more information, please contact the author of this article, Kate
Mitchell at 800-929-1500 x1405 or kate.mitchell@natl.com.
KATE MITCHELL
Risk Management Team Lead
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27

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