Categories
Risk Management

How to Go from Salesperson to Advisor with Alternative Risk Strategies

How can you become a trusted advisor to your clients providing them more value than you currently are? The answer is offering them alternative risk management strategies.

Won’t offering alternative strategies reduce my commissions? Maybe, but you could go from being a commodity salesperson who could be replaced by anyone with a lower renewal offer to a consultant who receives both commissions and consulting fees.

Hear me out…

Say you write both the Property and Casualty Insurance as well as the Employee Benefits for a manufacturer with 200 employees and $45 million in annual revenue.

Sounds like a solid account!

But in 2020, you had to explain that there’s no payout for the $3 million in business income they lost when their plant was shut down due to Covid-19 because they didn’t have direct damage to the plant.

And then in 2021, their overall renewal is going to cost 25% more due to rate increases.

Suddenly, being the agent on their insurance account doesn’t make you feel quite as secure. Particularly when you find out that their investment advisor has been talking to them about captive insurance companies for a while.

What if you had been the one to bring the captive insurance company option to them?

When the denied claim happened, what if you had taken the opportunity to explain that a captive insurance company could write contingent business income? And would pay out if there wasn’t direct physical damage.

A captive insurance company can even cover extra expenses for a manufacturing business like replacement suppliers. So, when their manufacturer in China couldn’t get parts out due to the pandemic, they would have had coverage.

As the advisor, you should always give options to your client. It will show the client that you are more than just an average advisor. It will prove to them that you are a vital team member and that you have their best interest at heart.

Before your next call, what if you came to your client with a plan to increase deductibles on their commercial insurance policies, then covered those gaps through a captive insurance company? Or with a plan to help them insure a layer of their employee benefits themselves and protect against catastrophe with stop-loss which would allow for no increase at renewal?

Then with these new plans and a newly formed a captive insurance company, you can help them understand the new data available that results from the captive. This will create better loss control and coordinating renewals each year to maximize the benefits of a blended strategy as their risk consultant. Suddenly you’ve become a hero and vital team member instead of just another salesperson.

Become the trusted advisor by partnering with RMC Group to find the best solutions for your client. To schedule a call with a RMC professional, click here.

Categories
Risk Management

Why Your Insurance Keeps Getting More Expensive…

And What You Can Do About It

Why are the policies that you purchased last year to protect your business more expensive this year? Because the insurance market is hardening.

Okay, hardening seems an appropriate word because it is certainly harder for your business to get the insurance that it needs at an affordable cost.  But what does that nice bit of industry jargon actually mean?

It means that insurance companies are becoming more selective about what risks they will take and charging more to insure those risks.

Why is the Market Hardening?

Some reasons why are obvious. Insurance companies have had to pay out significant claims for an above-average number of wildfires, hurricanes, and now Covid-19. (Even though many of these claims were denied, it still costs the insurance company to legally defend their position.)

Other reasons are more subtle. Lower interest rates and a fluctuating stock market have impacted insurance companies’ return on investments and lowered their profitability.  Working from home has increased cyber risks and civil movements have led to claims being filed against companies for their diversity initiatives or lack thereof.

Take on Your Own Risk

However, insurance is still a lucrative industry, as the ubiquitous TV commercials, sports stadium sponsorships and high-rise buildings all attest. Especially if the risk can be well-understood and managed.

So perhaps instead of transferring all your business risk to an insurance company that is not particularly keen to take it, you should retain some of the risk yourself.

If you’re willing to increase the deductibles on your policies or self-insure a layer of your employee medical costs, the premiums an insurance company charges you are likely to go down.

You then have two options: 1) simply hold aside money for these risks or 2) create your own insurance company and formalize your role as an insurer. This is known as a captive insurance company.

Captive Insurance Benefits

Creating a captive insurance company can provide better risk management for the parent company because of increased attention, trackable data, and loss control measures. In addition, your own insurance company could invest the premiums, where normally you would lose those premiums to an insurance company, which invests them and retains the investment gains.

RMC Group can help you establish a captive insurance company.  We will do a complimentary risk review of your business and the insurance policies you currently have. This will help you decide if these options are viable for you. To schedule a call with an insurance professional, click here.

Categories
Risk Management

An Insurance Policy is a Contract

When it comes to insurance, one mistake that many people make is failing to read their policy.  Most insureds believe that they understand what their policy covers simply by the name of the policy.  For example, an auto policy covers everything car-related, and a homeowner’s policy covers everything that can happen to your home.  However, this is a big mistake.

An insurance policy is a contract between the insured and the insurance company, and, like any contract, its effect depends upon the language of the contract.  In addition, since contract interpretation is a matter of state law, the state where your policy is issued is a huge factor.  The same language in one state can have a completely different meaning in a different state.

A Business Interruption Policy Doesn’t Cover All Interruptions of Business

The need to read your policy has never been more clearly illustrated than during the Covid-19 pandemic, which has affected businesses from the hospitality sector to the travel industry to medical practices.  Whether as a result of government orders or the fear of customers to leave their homes, businesses of all types have either had to shut down completely or reduce their capacity.  As a result, businesses have lost significant revenue during this time.  Fortunately, many of these businesses have business interruption insurance policies and have asserted claims under their policies.  Unfortunately, without exception, the insurance companies issuing those policies have denied coverage.  Why?

The quick and cynical answer is that the insurance companies do not want to pay these claims.  The full extent of business loss in the American economy is not yet clear.  However, one estimate is that businesses have been losing close to $40 billion a month.  Yet, the entire property and casualty insurance industry has collected approximately $6 billion in premiums.  Clearly, the premiums will not cover the losses.  However, another reason may be that the insurance companies are simply reading the language of the policies and enforcing the policies as written.

The typical business interruption policy contains language that protects a business against the inability to operate due to loss or damage to property.  In most states, the courts have interpreted this language to require actual physical damage to a business’ building.  Without demonstrated physical damage to property, there is no coverage.

Claims Have Turned to Lawsuits

The result has been that, since the pandemic began, over 5,000 lawsuits have been filed against insurance companies.  While none has been fully adjudicated yet, we are beginning to see some results.  In most cases, an insurance company will respond to a lawsuit by filing a motion to dismiss.  A motion to dismiss challenges the sufficiency of a complaint, and, by a large margin, insurance companies are prevailing on their motions to dismiss.

In order to overcome a motion to dismiss, a business must allege that its business property was damaged in the same way that it would have been damaged by fire or flood.  This is a difficult bar to eclipse.  Most business closures have been caused by government shut-down orders, rather than actual physical damage to busines property, which prevents its use.  Some plaintiffs have tried to get around this problem by claiming that their property has been damaged by the presence of the Covid-19 virus on the premises.  This has worked but only in a small number of cases.

The reason that this claim has not been more successful is that many business interruption insurance policies contain a virus exclusion.  This virus exclusion was generally added to business interruption policies in 2006.  However, there are some business interruption insurance policies that do not contain a virus exclusion.  In those cases, the plaintiffs have been able to defeat the insurance company’s motion to dismiss.

Governmental Action

Another way in which businesses are trying to get around the “physical loss or damage” requirement is by claiming that their business interruption was caused by governmental action.  Therefore, whether their physical location was damaged is irrelevant.  The government order caused the loss of their ability to use their premises.

Again, this approach has been only marginally successful.  In a very small number of states, the courts have said that the policy’s use of the phrase “loss or damage to property” must be read to mean that “loss” and “damage” are not synonymous.  Otherwise, if they meant the same, one would be what courts call “surplusage”.  In other words, either loss or damage would be excess language without adding any real meaning to the phrase.  Courts tend to avoid surplusage.  However, this argument has worked in only a few states.  In most states, the courts have said that the typical business interruption insurance policy does not cover governmental orders, as would a regulatory change policy.

What’s an Insured To Do?

The obvious answer is – READ YOUR POLICY!  However, this is not a very satisfactory answer for a couple of reasons.  The first is that insurance policies are not pictures of clarity.  They are often ambiguous and contain confusing endorsements and exclusions.  Even a highly educated businessperson may have difficulty understanding a policy if he or she is not experienced at reading policies.  The second is that, by the time you’ve read your policy, it is often too late.

The best answer is that you should work with an experienced and knowledgeable insurance professional, like RMC, before you buy your policy.  After all, you wouldn’t sign a contract without first consulting an attorney, and an insurance policy is a contract.  Not only can your insurance advisor explain your policy’s provisions before you have a claim, a professional advisor will have access to the policies of multiple companies and can find the policy that best suits your needs.  In addition, an insurance professional can negotiate with an insurance company to obtain coverage that is not part of the standard form policy.

A second reason to work with a professional is that the professional can introduce you to innovative concepts, like a captive insurance company that may better suit your needs.  A captive insurance company is an insurance company formed by a business to insure the risks of the business.  It can work in concert with your commercial insurance, replace some or all of your commercial insurance or insure risks that are not insurable or are prohibitively expensive on the commercial market.  Because you own your captive insurance company, you control the risks that it can assume.  As a result, you can tailor its policies to cover your specific needs.  While it is too late to form a captive to insure against the Coved-19 pandemic, now is the time to plan for the next unexpected risk.

Categories
Press Release

Ryan Mitchell Wins Award for Emerging Talent

The annual UK & European Captive Review award ceremony was held in London on Wednesday, October 23, 2019, to celebrate the achievements and successes of the captive insurance and risk management industry.

Ryan Mitchell, President of RMC’s European Operations, received the award for Emerging Talent – Service Provider at the awards ceremony.

Mitchell commented, “This award does not belong to me alone. It also recognizes my colleagues for their tireless work and sweat. They have encouraged, inspired, and tolerated me. I am honored to have the privilege to call them my coworkers and to share this award with them.”

The Emerging Talent – Service Provider category recognizes a professional working in the captive industry as a service provider, who has made a strong impression within their own company or impressed in their work and interaction with clients.

For more information on Ryan’s award CLICK HERE or visit www.captivereview.com.

Categories
Press Release

Mitchell Makes Shortlist for UK & European Captive Awards 2019

Ryan Mitchell, President of RMC’s European Operations, has made the shortlist for the UK & European Captive Review Awards 2019. The UK & European Captive Awards recognize and celebrate captive insurance in Europe by highlighting captive owners and service provider’s excellence and innovation.

Ryan has been nominated for Emerging Talent – Service Provider. This category recognizes a professional working in the captive industry as a service provider. The nominees have made a strong impression within their own company or impressed in their work and interaction with clients. The winner will have demonstrated a passion for captive insurance and the ambition to make a lasting impact on the alternative risk industry.

The winners will be announced at the awards ceremony on October 23, 2019, at Banking Hall in London.

For more information on this event, CLICK HERE.

Categories
Press Release

Finalist for 2019 U.S. Captive Review Awards

RMC Group is pleased to announce that it has been nominated for the 2019 US Captive Review Award in the category of Captive Manager of the Year.

The category in which RMC has been nominated is for captive managers with less than $1 billion of gross written premium in the last 12 months.  The award is based on a nominee’s growth by revenue, client numbers, service offerings and client satisfaction.  The committee will also consider a nominee’s implementation of technology, accessibility for clients, and initiatives developed.

The winners will be announced at the awards ceremony on August 5, 2019, at the Hilton Burlington Lake Champlain in Burlington, Vermont.

For more information on this event, CLICK HERE.

Categories
Press Release

Elwell Promoted to Executive VP of Risk

RMC Group is pleased to announce to the promotion of Mark Elwell to Executive Vice President of Risk.

Mark joined the RMC Group in 2014 and has held several positions with the company. Mark manages the RMC Group’s Captive Insurance Operation and Property & Casualty Agency and is a frequent speaker at industry seminars, symposiums and conferences. Mark holds the following professional designations:  Associate in Captive Insurance, Project Management Professional, Certified Risk Manager and Certified Professional Insurance Agent.

Mark commented, “I am excited for the opportunity to tackle the new challenges of today and help our clients do the same. I am looking forward to growing the RMC Group while providing new and alternative risk management and business solutions.”

Categories
Captive Insurance

Getting to Know Your Client

The job of a risk manager is to know your client. Only by understanding your clients’ needs and desires can you identify the risks they face in their business and family life and find the best solutions.  Meticulous attention to detail is required if you want to become a valued advisor to your clients.

If you are an advisor, nothing is more important than protecting what your client has worked so hard to achieve.  If you do not have the experience or ability to identify all of your client’s risks or to develop a comprehensive risk management plan, you need to partner with a company that does.

If you are a business owner, you need a risk management advisor, who is willing to spend the time to get to know the unique circumstances of your business.  No two businesses are the same, and every business has different risk management needs.  You have the right to demand that your advisor conduct a detailed analysis of your business and the right to expect your advisor to fully grasp the totality of your business.  Your advisor must have the experience, contacts and ability to explore all potential options.  Only then can you be certain that your advisor will have come up with the most comprehensive and cost-effective risk management plan.  How can you be sure that you have the right advisor?

The answer for both advisors and clients is the RMC Group.  The RMC Group is a full-service risk management provider.  We have over 45 years’ experience working with businesses of all sizes.  We understand the hard work that goes into a successful business, the pride that comes with that success and the desire to preserve and protect what a business owner has built.  Our philosophy is to empower business owners by providing them with the knowledge and options that they need in order to make the best choices.

One of the services that we provide is a no-cost analysis of a client’s current insurance portfolio.  We will produce a detailed analysis of existing coverages, as well determine whether the client has additional exposures not currently insured.  We may also find unnecessary coverages that can be eliminated to provide cost-savings. Once we have completed our analysis, we will offer alternative solutions to a client’s needs.  We may be able to find better and more comprehensive coverage at lower cost.  We may also be able to recommend an alternative risk management plan.

An alternative risk management program that RMC can help a client implement is a captive insurance company.  A captive is an insurance company established by a business to cover the insurance risks of the business and any related entity.  A captive gives the business the greatest control over its insurance needs.  Policies can be tailored to meet the unique needs of the business.  A captive can provide insurance that is unavailable or prohibitively expensive in the traditional commercial market.  In addition, a captive can become a profit center for the business.  To the extent that premiums exceed claims, the profits remain in the captive instead of being lost to a third-party commercial insurance company.

RMC Group can help you or your client set up a captive insurance company.  We can also provide management services to your captive.  To learn more about captive insurance companies and other risk management programs, or for a free risk review, contact RMC today at 239-298-8210 or [email protected]

Categories
Captive Insurance

Why Form a Captive Insurance Company?

RMC Group is a leader in risk management.  One strategy, which we offer, is the management of captive insurance companies. We have helped many businesses form a captive insurance company and have helped them achieve significant benefits.  A captive insurance company is an excellent risk management tool.  In addition, it can be a profitable business and can offer significant benefits to the owner(s) and insured(s). Below are some of the benefits a business might realize by including a captive insurance company in its risk management strategy.

Coverage Control – A captive insurance company enables a business to better manage insurance risk.  By forming a captive, the business establishes underwriting guidelines, determines premiums, writes the insurance contracts and controls the settlement of claims.  In addition, the business is able to tailor coverage to the insurance risks that are specific to the business.  The business is not limited to coverages that a commercial insurer is willing to offer.

Uninsurable Risks – A captive insurance company can provide coverage for insurance risks that are unavailable or prohibitively expensive in the commercial market.

Cost Reduction – A captive insurance company can reduce insurance expenses by eliminating such commercial insurance company costs as commissions, overhead expenses and profits.

Underwriting Profits – A captive insurance company can be a source of profit.  Premiums paid to the captive in excess of the claims paid by the captive are retained by the captive as net profit, instead of going to an unrelated commercial insurance company.

Rate Control – A captive insurance company provides greater control over a business’s insurance costs.  Premiums paid to a captive are based on the claims experience of the associated business.  In contrast, premiums paid to a commercial insurance company are based on the aggregated claims experience of unrelated businesses, some of which may have poor claims experience.  In other words, when a business pays insurance premiums to a commercial insurance company, it is often subsidizing the insurance costs of unrelated businesses.

Reinsurance Access – A captive insurance company can provide access to the reinsurance market, which may result in better coverage at a lower cost, when compared to the commercial insurance market.

Investment Income – By forming a captive insurance company, a business can control the investment of unearned premiums and reserves, instead of paying these amounts to an unrelated commercial insurance company.

Claims Control – By forming a captive insurance company, a business gains control over the claims adjudication and payment process, which can result in a more efficient and expeditious process.

For more information on how to get a captive started or other risk management strategies, contact RMC Group at 239.298.8210 or [email protected].

Categories
Press Release

Don’t Miss Out on 4th Quarter Opportunities

The fourth quarter provides a unique opportunity for you to help your clients.  While risk management tools, including captives, pensions and other employee benefit plans can and should be offered throughout the year, many business owners are more focused at the end of the year.  They often have a better idea in December whether they can afford to implement one of these business solutions.

RMC will help you leverage the year-end deadline to pursue these 4th quarter opportunities with your clients. Contact RMC today at 239.298.8210 if you have any questions about our offerings or want to discuss the specific needs of your clients.

For more information on our business solutions or other news and updates, visit our website at rmcgp.com or follow RMC Group on social media.