Tag Archives: insurance

RIMS 2018: What Did I Learn?

I’ve lost count of the number of national RIMS (Risk & Insurance Management Society) conferences I have attended over the years, but I’m guessing it is around 20 or so. I always come away from the conference feeling a bit melancholy as I am reminded of how important the relationship aspect of this industry truly is and how much I enjoy hanging out with my friends in this crazy and wonderful industry. Here are a few key takeaways from my recent 2018 RIMS experience:

  1. Be well-read. I had the honor of joining Chubb CEO Evan Greenberg for lunch after he spoke at Chubb’s annual leadership luncheon. I am always impressed at his worldliness as he speaks on world affairs, American politics, challenges in business, and Chubb’s strategies. Given the plethora of misinformation out there these days, I asked him, “What do you read?” He responded that he reads three newspapers daily: The Wall Street Journal, New York Times, and Financial Times. He also reads The Economist each week. I have been pondering this ever since, as this is an area in which I can improve.
  2. Relationships are important. In this industry, people prefer to do business with people they know and trust. The purchase of insurance for a large publicly traded organization is an important two-way transaction: While I need to rely on my trading partners to be there if the crud hits the fan, they need to rely on me and my team to manage our risks the way we say we do to mitigate that potential. There is much at stake for both of us. Part of my process is to personally meet every underwriter in my portfolio, and to get to know well those who take on the most significant risk transfer. RIMS offers me an annual opportunity to nurture these relationships, and this is one of the aspects of my role that I enjoy the most.
  3. If you need something, ask. I had a need in my claims program that had not been addressed to my satisfaction. At RIMS I had the opportunity to state my case to senior management of an important trading partner, and within a few days my need was met. One important reason was the foundational relationship between our two organizations and us personally. See number 2 above.
  4. You own your program. We risk managers rely heavily on our brokers for coverage placement and addressing any issues or concerns that may arise. They are an incredibly important leg on this three-legged stool (broker, insurer, client), and I value their experience and expertise. Sometimes, however, we must take ownership of solving a problem, not because our partners are deficient, but because it is my problem; I have the greatest stake in seeing it addressed. See number 3 above.
  5. Never stop learning. I recently joined the Board of Houston’s RIMS chapter. Along with four other Board members, I attended a Sunday morning Chapter Leadership forum led by national RIMS. There was much discussion of the RIMS CRMP (Certified Risk Management Professional) designation. I had heard of it, but never explored it. You see, I am fairly seasoned in my career, I have a graduate degree, and I earned my ARM designation many years ago. “What’s the point,” has been my response to earning CRMP. The point is, retirement is several years out (God willing). I have much work yet to do and my organization deserves the most well-rounded professional I can be. And learning is fun. So I’m going for it.
  6. RIMS is worth supporting. The Chapter Leadership Forum offered the opportunity to learn from many very successful chapters from around the US and Canada. We have great people in Houston and we have a great Chapter but we can be better. I have gained much from my RIMS membership over the years and now it’s time to give back. I’m looking forward to working with my fellow Board members on several takeaways we gained in this session.
  7. Work hard, play hard. OK, it’s not really a takeaway. Those who know me well know how much I enjoy the social aspects of what we do for a living. Yes, it’s fun. But it is also very important. In these social settings, we get to know one another personally. We learn about each other’s families. We talk about life’s struggles. We celebrate life’s successes. We build bonds of trust that are personally gratifying, but also business beneficial. Many who I consider my closest and dearest friends are friends through this industry, and for their friendship I am truly grateful.

I suppose these are not really “learnings” per se. They are reinforcements of things I know to be true and sources of inspiration from which I plan to drive my future success and professional development. Thank you, industry friends and partners, and thank you RIMS for being a very important part of my life. I am blessed.

Avoiding the Pitfalls of “Cheap” Insurance

I read a post on LinkedIn the other day that purported to offer tips on how to buy “cheap” business insurance. Ever since reading it, that post has really stuck in my craw. The phrase “cheap insurance” is like fingers on a chalkboard to me and it should be to you, too. Why? Because I’ve seen what can go wrong when price is king.

Photo credit: insurancejobs.com

Photo credit: insurancejobs.com

Why do businesses purchase insurance anyway? Because they have assets – people, property, profits – at risk of loss due to something accidentally going wrong. Furthermore, business owners and their employees are sometimes unjustly accused of wrongdoing, and in those situations, the cost of defending the claim often exceeds the value of the claim itself. The financial cost of defending claims, repairing, replacing or rebuilding damaged business property, and indemnifying claimants may exceed the business’s ability to pay for the loss on its own. Insurance is really a source of funds to cover the costs resulting from accidental loss; costs which the business cannot otherwise afford to absorb.

Truth is, insurance companies and the insurance policies they sell are not created equal. If the insurance buyer isn’t careful, that “cheap” policy may not respond as anticipated when a loss occurs. Perhaps the policy was cheap because the insurer’s financials are not real strong. Will the insurance company be around to pay the loss when it comes due? That day of reckoning often comes years after the temporary satisfaction derived from getting that cheap premium has worn off. Perhaps the policy was cheap because the underwriter excluded some key elements of coverage or reduced coverage limits on some aspects of the policy in return for cheapening the cost of his product. Such adjustments are sometimes the very thing that jumps up to bite the business in the behind when the claim is presented and declined by the insurer, leaving the business owners with nothing more than a three-ring binder full of paper that just might be worthy of campfire starter fuel. If you are the business owner or the owner’s designated manager of her risk management and insurance strategy, you do not want to place yourself or your business in this precarious position.

Photo credit: sorryaboutyourweight.com

Photo credit: sorryaboutyourweight.com

So what is a business owner to do? How can she be most assured that the insurance she purchases today will truly be there for her business later when it’s needed? Let me answer this way. I consider myself to be a pretty decent handyman. I’ll tackle basic repairs to many items in my home, but there are three items I will not touch: electricity, natural gas, and plumbing. If I mess with those systems and make a mistake, the result could be catastrophic. So when those systems need work, I call a pro. Business insurance falls into that category as well. The business owner is very skilled in her chosen field but probably does not have the expertise or the relationships to self-source the best possible insurance policy for her business at the best possible price. That’s where the insurance broker steps in.

A quality insurance broker will be familiar with the business owner’s industry and the insurers most qualified to cover it. A quality broker will interview the business owner or her designee to glean as clear an understanding as possible of the potential causes of accidental loss the business might face while counseling her on practical strategies that just might help prevent the loss from occurring in the first place. In transacting an insurance purchase, the broker’s job is to gather required underwriting data, prepare marketing materials for presentation to qualified potential insurers, receive quotes, and negotiate policy terms, conditions and price. The broker then presents quality options with pros and cons of each to the business owner or her designated insurance buyer so she is equipped make an informed purchase.

Photo credit: dearmediacare.com

Photo credit: dearmediacare.com

Managing the insurance transaction in this manner benefits the business owner in at least two ways: (1) The business owner is free to focus on her business while letting the insurance pro work the marketplace in her behalf, and (2) The business owner is now in the best possible position to achieve the optimal balance between coverage quality and coverage price. Even better is the fact that insurance brokers are typically compensated by the insurers via commissions; thus, the business owner should not incur additional cost for accessing the services of a quality insurance broker. (Note that there are other methods of broker compensation, but that is a topic for another post).

If you are a business owner with the objective of buying “cheap” business insurance, I hope you will rethink that strategy. Don’t put your business at risk to save a few bucks on your insurance premiums. Call a pro who will manage the insurance marketplace in your behalf to help you achieve a quality purchase at a reasonable price. That, indeed, is the wise business decision.

Note to the Reader: The information offered herein is derived from my personal experience as a risk management professional. The thoughts and opinions expressed are my own. This information should not be considered as a substitute for legal, tax and/or actuarial advice. Please contact the appropriate professional counsel for such matters.

Risk Manager in Residence

 

IMG_0833The letter from the Spencer Educational Foundation informed me I had been selected by the Katie School of Insurance & Financial Services at Illinois State University to spend two days with their students as Risk Manager in Residence. I was thrilled! Then, as the reality of this commitment settled into my brain, I was humbled.

My ISU "home" for two days: The State Farm Hall of Business.

My ISU “home” for two days: The State Farm Hall of Business.

I have enjoyed a very fulfilling career, and the opportunity to share some of my experiences and wisdom with my industry’s future was quite an honor. Over two days I was to lecture in three courses, two sessions apiece. Tuesday evening I would deliver a presentation to which all students of the Katie School were invited. I wanted the content to be meaningful to the students, and the Katie School faculty was extremely helpful in sharing information on class size, majors represented, and course content thus far in the term.

I began preparing my material a few weeks before departure. My aspirations were grand: I wanted to teach, encourage and inspire these students. As I began preparing my first course outline, my brain froze. “Who am I to stand before these students,” I began to ask myself. “What if my content is too basic? Or too advanced? What if I’m boring? What if we don’t connect? What if…”

I hate self-doubt. Self-doubt is one of the greatest barriers to success that we place before ourselves. Looking back in hindsight, however, I realize this wasn’t really a case of self-doubt. It was more an acknowledgement of how important this program is to the schools and students who participate. I would tailor a message with content specific to each class I would address. And I would deliver a presentation Tuesday evening that would be informative, entertaining, and inspiring. I prayed to God that He would give me the words to say, and He did.

As I write this, I am sitting in the Central Illinois Regional Airport awaiting my flight home. I’ve received lots of positive feedback from the Katie School. I’m pleased that my offerings were well received and added value. Over my two days at the Katie School, I was given a glimpse into my industry’s future. The students I met were bright, engaging, articulate, and excited for their futures. They asked many insightful questions. They each have much to offer. The future for my industry is very bright, indeed!

As I think back over the last two days, I’m betting that, in many respects, I gained more from this experience than the students did. I leave Illinois State inspired and refreshed. I have a renewed vigor for my career, and I have a new set of young friends to keep me on my toes. I thank God for this experience, and I will continue to seek to honor Him with my work.

If you are a risk management professional, I strongly encourage you to consider volunteering your time and expertise to the Risk Manager in Residence program. Trust me: you will be blessed.

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