Mad Science or Insurance Laboratory

There are so many creative uses for captive insurance initiatives that sometimes its hard to tell whether Mad Science is at work.  In fact, just the use of the word “creative” can give your tax advisers the heeby jeeby’s.

Mad Scientist at Work

Captive Insurance programs can help to solve many risk financing problems for an organization.   In fact, one of the primary reasons to utilize a captive is to provide financing for risk that the traditional insurance marketplace is either unable to provide at a reasonable cost or unwilling to provide at all.  Depending on the circumstances many otherwise traditional risk portfolios have found themselves in this position. Among them medical malpractice, trucker’s auto liability, aviation risk and products liability.  In each situation these risk portfolios have been able to turn to an alternative risk financing mechanism in order to find coverage.

Another area of risk that can find a refuge in a captive insurance initiative is risk that is specific to a company’s operational characteristics.  Known as Enterprise Risk Management (ERM) this school of thought identifies the risks associated with accomplishing the strategic goals of a business, assigns a cost to that risk and then identifies how best to mitigate the risk.  Part of the risk mitigation plan may include transferring a part of that risk to a captive insurance company owned by the parent company.  An example of ERM for a global manufacturing and sales company might be currency fluctuations.  A captive may be able to mitigate that risk for the company and help to smooth out the earnings stream, benefiting the investment stability of the company as well as aiding in planning purposes.

As a final thought, a captive that is successful in helping its parent accomplish its own risk financing goals may be beneficial to that companies upstream and downstream stakeholders.  By that I mean a captive may be able to help its parent company’s vendors and clients by applying the same risk solutions to them as it does for its parent.  By helping to solve their common risk problems the parent gets the benefit of “third party” risk that helps to achieve tax efficiency for the captive as well as benefiting its partners in the distribution chain.

Bermuda has long been know as the “World’s Insurance Laboratory” and for good cause.  It has served as the innovation incubator for many insurance practices that are now common place in the industry.  Fortunately, innovation in the captive insurance market is never ending and will continue to move the entire market forward through the innovation of its “mad scientists”.

As always, please feel free to post your comments here.  If you would like to contact me directly you can reach me by email at dennis.silvia@cedarconsulting.net

Independent Captive Operational Reviews

I was recently interviewed by Michael Moody of Rough Notes Magazine regarding a consulting engagement that I did for Milestone Insurance Company, a Bermuda heterogeneous group captive.  Here is the link to the full article in the on-line version of Rough Notes: http://www.roughnotes.com/rnmagazine/2008/may08/05p072.htm

I am a firm believer that a captive should undergo a periodic review from an independent consultant in order to make sure that they are operating with maximum efficiency and taking advantage of every opportunity that a captive mechanism can provide.  In the case of Milestone, Catherine Duffin and the folks at Artex have done an excellent job in managing the costs of the program and providing a very stable insurance platform for the members of that group.

But what can a review do besides just provide a scorecard for the current service providers?

Lets look at some potential results from a captive program review:

• When there are changes in risk management personnel the folks who championed and understood the captive may be the ones leaving the organization.  The corporate owner of the captive could be faced with owning a sophisticated insurance mechanism that could solve numerous and ongoing strategic risk financing problems but no one that understands it well enough to really use it to its potential.  Sort of like having a Maserati in the garage and no one with a driver’s license.
• Things change in the business and regulatory environment.  Employee benefits in a captive may not have even been available as an option when the captive was formed.  Certainly things have changed in the business world including possible ownership changes, global initiatives and new products.  A review can help to identify what new opportunities might exist for the captive that could support the owner from both a risk financing perspective and as an overall growth strategy.
• Third Party liability options in a single parent captive are often the holy grail of reaching favorable tax treatment for the parent’s premiums in the program.  The problem with third party liabilities is just that, they represent someone else’s risk and if you aren’t careful about it you can get burned.  Captive reviews often turn up third party risk assumption potentials in upstream and downstream stakeholders.  Vendors and clients who share common industry characteristics often have the same risk management issues and you’ve already learned how to do with them in your captive.  It is a natural related, albeit third party, risk.
• Sometimes a captive has just outlived its usefulness and it needs to be shut down.   This is particularly true when the primary motivation for starting the captive was a short term premium savings or some type of tax play.

If you a captive owner or a broker that is responsible for a captive for your client I think there is a lot of value in performing a review of the captive’s operation and its potentials in the current market environment.   If you are interested in discussing this more please email me at dennis.silvia@cedarconsulting.net or call me at 440.264.9992.

 

Mind the Gap

 

 

Last spring my wife and I travelled to London with our eldest son and his wife.  We absolutely loved the week that we spent exploring the city and did most of our explorations via the Tube.  The Underground is itself a destination I think.  Descending into the deep tunnels reminded me of all those old WWII movies with the population of London huddled safely underground while the city above exploded and burned from air raids.   I laughed the first time I heard the very British recorded message, “Mind the Gap” as we came into the station on our first Underground sortie.

Playing the recorded message began in 1969 when it became obvious that the driver’s warnings were ineffective in preventing accidents involving twisted ankles and broken bones.   The announcement is a cultural icon now and you can find souvenirs with the logo all over London.

There is gap that needs to be minded in captive insurance programs as well. 

Any insurance company must maintain capital in order to conduct its insurance business.  The amount of capital in an insurance company limits the amount of premiums that can be written depending on the insurance company’s domicile, type of business written and business structure.  Generally traditional US insurers are required to maintain Premium to Surplus ratios of 1.5:1 to 2:1.  For these companies that provide general commercial and personal lines insurance, a ratio much beyond 2:1 is highly scrutinized by regulators and review agencies alike. 

When an insurance company reinsures a portion of its risk it is allowed to take a credit for that portion of the premium it reinsures against its Premium to Surplus ratios provided the reinsurance company is authorized by the regulators.  In other words, the reinsured premium doesn’t “use up” any surplus and allows the insurance company to write more business and still maintain acceptable leverage ratios.  When that same company reinsures risk to a captive insurance company, an unauthorized reinsurer, it must get a guarantee from the captive in order to take the surplus ratio credit.  This guarantee is typically in the form of a Letter of Credit or a 114 Trust account roughly equal to the amount of the premium ceded to the captive.  As long as the collateral is in an allowable form the front company can take their credit, write additional business and preserve their leverage ratios.

The front company also assumes a credit risk from the captive reinsurer in that losses may exceed the amount of money available to pay those losses.  Since the front company is responsible for the payment of claims and is reimbursed by the reinsurer after the claim is paid, there is a potential that the front company might not get reimbursed.  In order to control this exposure, the front company may add a reinsurance feature to the program called Aggregate Stop Loss.  This coverage comes into effect when losses in a program reach a predetermined level and results in any additional losses being paid by the front company.  Typically the attachment point is a multiplier of the loss pick and ranges between 165% and 200%.   The difference between what is funded for losses in the premium and the maximum amount of losses that might be paid by the captive is called “the Gap”.  It is essentially the risk that the owner of the captive assumes, above and beyond the premium paid, for losses in the program.

In order to mitigate the “credit risk” that the gap presents to the front company it is not unusual for some portion of the gap to be collateralized.  Typically the front company evaluates the financial ability of the captive and makes a determination of how much collateral is required.  This might vary anywhere from just collateralizing the ceded loss funds all the way up to collateral equal to the aggregate stop loss attachment point.

You must “mind the gap” in the sense that to collateralize this exposure may take as much as another 50% of the original payin premium to secure.  It might be argued that this collateral quantifies the upside risk potential in a captive insurance initiative, but at the same time it represents a significant cash flow event in the face of already having to fund the creation and capitalization of a captive. 

Pro Forma analysis in the initial stages of a captive’s formation should take the need for gap collateral into consideration and can help to mitigate its impact by proper planning.  Aggresive negotiations with the front company’s involved will also help to structure a collateral scheme that benefits all the parties involved. 

Choosing your consulting and management partners carefully when considering a captive insurance program is critical.  If we can be of any assistance in helping you understand the benefits and challenges of a program for your company, let us know.  dennis.silvia@cedarconsulting.net

Captive Insurance- Only for the Hard Market?

I have to offer my apologies if you are a regular visitor to my blog.  I haven’t been able to post in the last few weeks because frankly I have been so busy with my work with clients.  I don’t offer this as an excuse, and it certainly isn’t a complaint, but I think it is interesting to note that in spite of a soft market, captive insurance initiatives continue to be front and center in the minds of commercial insurance buyers.

I think there are two reasons why the soft market hasn’t put a damper on new captive insurance program development.  First, I think there are several very compelling reasons to use captive insurance mechanisms to manage risk financing that are not cost-related.   Second, I think the current generation of risk management professionals remembers what a hard market looked like and they know that insurance is cyclical.  Let’s investigate these two factors separately.

Too often captive insurance mechanisms are marketed on the basis of reducing premium or as a tax play.  OK, sometimes they can do either or both, but those two advantages are typically short-lived.  Cost related advantages are real, but they are not the only, or the best, reasons to use a captive insurance mechanism.  The market swings soft and all of a sudden traditional insurance prices beat captive insurance prices in the short run or the IRS catches up with a tax loop hole and closes it up tighter than spandex on an overweight body.  If an insurance client is purchasing their insurance on a year-to-year tactical basis then they will live and die by the pricing sword.  What most professional insurance buyers have come to realize is that over a ten year horizon they will end up paying for their own frequency layer losses, a share of the severity losses and the expenses associated with policy and claims administration.  The real question for them is how do they want to pay for it.  Alternative risk mechanisms typically offer much more stable pricing over the course of a typical insurance market cycle.  Relationships are personal with reinsurance support so a company is less likely to be subject to being the “baby tossed out with the bath water” if they are in a tough risk segment but are a better than average player.  You know what I mean, the industry knee jerks on trucking companies for instance and all of a sudden decides that they don’t want to write them, any of them, and the pricing jumps for those few insurance companies that continue to write the risk.  Sometimes specific coverage or specialized forms are available nowhere else but in a captive setting (think abuse and molestation for religious or social service organizations).

The cyclical nature of the insurance industry makes for a very compelling strategic reason to be involved in an alternative risk mechanism.  Rather than being subjected to roller coaster pricing, captive participants see a more stable pricing base.  Are the lows as low?  No, but niether are the highs as high.  This makes for a better financial planning environment.   

In my opinion many insurance companies run their businesses by looking in the rear view mirror.  Its not surprising.  They price their current business by watching their historic losses, they invest long into the future for maximum potential return.  The problem is that losses happen in the here and now and insurance companies often get caught holding the dirty end of the stick between historic loss performance and future investment performance being worse than projected.  Once they see themselves heading for the ditch they have to react quickly and this more than often ends up as knee jerk pricing and market service decisions.  At the end of the day the insurance buyer ends up paying the price. 

I think the experience of the risk management community coupled with the availability of captive insurance initiatives to the middle market insurance buyer is driving the current rush to control costs through alternative risk mechanisms.  Knowing that behind every soft market is a looming hard market, risk managers are positioning themselves to avoid the next hard cycle.  Considering that there is a development period of between 6 and 12 months for programs like this, now is the time to consider an alternative to the traditional marketplace, and that is exactly why I am so busy today.

It’s the Tail that Wags the Dog

Some coverages fit a captive program better than others.  There are two revenue streams from a captive program.  Underwriting revenue is earned when the losses and expenses in a program are less than the premium paid.  Investment revenue is earned based on the investment of the loss funding until it is needed to pay losses.

If a captive insurance program attempts to minimize the premium paid by its parent for coverages then eventually any excess premium will be wrung out of the deal and there should only be enough premium to pay costs and losses, in other words underwriting income will become zero.   This makes the potential of investment income an important issue.

In insurance parlance the “liability tail” is the length of time it takes to bring a claim from reporting to paying a claimant.  Some coverages have a very short tail.  For instance, if you experience a kitchen fire in your home you are very interested in getting the repair work done quickly so that you can move back in.  The shorter the time to effect repairs the better.  Property coverages then have a very short tail.  Liability coverages like Workers’ Compensation, Auto, General and Professional all have relatively long tails.

If your captive passes tax muster as a “real” insurer then you are able to recognize reserves for losses as an expense.  Combine this with the fact that you still hold the cash for these expensed losses and that the cash is invested until it is needed to pay the claimant.  The longer you hold that cash the better the investment return, hence the reason why Its the Tail that Wags the Captive Dog!

Now, does this mean that you should never include property coverages in your captive?  No, not at all.  There may be other very good reasons for property to be included that have to do with an overall strategic risk management plan.    I’ll post on that sometime in the future.

Ibi est Vox in Sermo

In conversation there is power. 

I want to thank everyone who visited the weblog in our inaugural week last week.  The emails and comments were very encouraging  and have convinced me that I need to continue posting about the fundamentals of captive insurance programs. 

Let me invite you to offer your own opinions, questions and additional thoughts to the postings.  I think the current insurance market is reaching rock bottom and now is the time to begin thinking strategically about how captive insurance initiatives can be utilized to the advantage of good risks in a developing hard market environment.  It is this type of collaborative effort that I want to strive for on this blog.

You can reach me by email at dennis.silvia@cedarconsulting.net Our web-page is www.cedarconsulting.net and our Bermuda captive management sister company, Cedar Management Limited, has a website at www.cedarmanagement.bm

I look forward to your continued interest. 

Supply and Demand- It’s Impact on Insurance Pricing

 

 Insurance is a supply and demand type of product.  In order to provide insurance coverage the insurance company has to pledge assets to support the losses on that insurance.  Depending on where the insurance company is domiciled there are different standards for how much surplus has to be leveraged to support insurance premiums.  Most US traditional insurers leverage their surplus between 1:1 and 2:1, premiums to surplus.  The limiting factor for overall insurance capacity then is how much surplus is available.  Surplus is contributed to insurance companies by investors, for the large part shareholders of the publicly traded stock insurers.  Shareholders are drawn to a particular investment because there is a good chance of earning a significant return from the investment.  Insurance companies connect these dots and then make decisions on which insurance segments they will deploy their surplus into in order to get the best return on investment.

All this works well for market segments that exhibit stable and profitable results overall.  But what if you are a good player in an otherwise iffy market segment?  In a soft market the differences between good and iffy are not as distinguishable, but in a hard market, where premiums are rising as a result of external pressures, insurers have to start making tough capital deployment decisions.  Remember they can only write insurance premium in an acceptable ratio to their surplus.  Markets that are iffy get the short end of the allocation stick and as a result the reduced capacity for that market makes the prices jump dramatically for that segment.  Think trucking, medical malpractice, tough workers compensation exposures, residential home-builders, product’s liability, coastal property, etc….Remember that we are not talking about all risk in these industries.  Let’s face it some accounts deserve the pricing they get, but there are accounts that represent excellent risk characteristics in every market, regardless of what that market’s averages are, and these are the prime targets for captive insurance involvement.

A captive insurance arrangement in essence creates capacity for its owner-insureds and it often does so in a regulatory environment that supports premium to surplus ratios that far exceed that of traditional insurance companies.  These leverage ratios can be as high as 5:1, making for a very efficient use of corporate capital to support risk transfer needs.

By further connecting underlying captive insurance capacity with reinsurance placements a significant amount of capacity can be created in a market segment that might not have had any reasonably priced capacity available at all.  The best accounts in a market segment can leverage their own investment in loss control and risk management in order to take control of their risk financing costs even in the hardest part of the insurance market cycle.

Riding the Roller Coaster

So, how is insurance like a roller coaster?

Coming back to the office from a visit with a client today I drove by Geauga Lake Amusement Park.  Living and working in close proximity of a noisy venue like this one has had its ups and downs (no pun intended).  The park is full of history.  In 1887 it was a popular picnic and fishing spot accessible by trolley from Cleveland.  The old rail station stood on Depot Road around the corner from the office until just a few years ago when it was demolished.  In 1925 the park boasted the largest wooden roller coaster in the world.  In 1927 Johnny Weissmuller (Tarzan) broke the 220 yd world freestyle swimming record in the newly opened Olympic swimming pool.  In the 30’s a dance hall was added where big bands like Guy Lombardo regularly entertained pre-war crowds.  The park closed at the end of last summer and the rides are being sold off and the grounds and the lake are on the auction block.  Not a very glamorous end for an historic landmark.

So what does all this have to do with captives?  The traditional insurance market is subject to pricing cycles.  We are currently experiencing the bottom of the soft market, but any insurance professional who has been around longer than 10 years knows that the hard market is coming.  Insurance buyers might say that the soft markets are good and hard markets are bad, but I would like to suggest that any deviation from the average makes for a difficult environment to plan strategically and manage a business.

Market pricing swings are like the roller coasters at amusement parks (I told you I would make a connection!).  Exciting for some, bearable for others, and if you’re like me they are enough to lose your lunch over.  Who needs that kind of excitement when it comes to running a business? 

Traditional insurance cycles are deep because for the most part insurance companies don’t learn from the past.  They chase market prices down hoping to accumulate market share efficiencies and offset undewriting loss with investment income.  The investment market goes south and all of a sudden they are bleeding cash.  These conditions are sometimes compounded by some type of catastrophic loss scenario that really catches them by surprise.  (911, Katrina/Rita/Wilma)  The reaction is to knee jerk prices and we start the upward trend of hard market pricing.

Why is a captive a different situation?  The largest single component for insurance pricing, about 60% of the total depending on retention, is the loss funding element.  The loss funding is determined by considering the account’s specific loss history for the past five years or so and applying standard trending and development factors.  The remaining costs are for administrative services and there is little variability in them other than for wage inflation.  Notice that we haven’t said anything about competitive market pressures yet!  If you read yesterday’s post you know that above average risks are best suited for a captive mechanism.  Their loss history already affords a “discount” price so without compromising loss funding we have a competitive product that is prepared to pay losses at the historic levels.  Thus we end up with a very stable pricing platform that may have dips and curves but more like the ones in kiddy land than the ones on the Big Dipper.  If the account happens to have a bad year it’s impact is mitigated by the other 4 years in the loss analysis.

Wait a minute you say!  Doesn’t a captive have to buy reinsurance, and isn’t reinsurance subject to the wild gyrations of the rest of the insurance market?  Well, yes.  But lets look at the math.  Let’s assume a $1M liability limit and the captive retains the first $250K per occurrence.  Depending on the line of business the reinsurance cost for $750 XS $250 might be 15% of premium.  A 50% increase in a 15% line item only changes the overall pricing by a factor of 7.5%.   Even a 50% increase is pretty unrealistic since this is a reinsurer that you have a longstanding relationship with and who has probably done very well on your risk.

While the market lows may not be as low as the traditional market, the highs won’t be either.  The pricing swings are modulated and through a captive you can offer your clients a much more predictable environment to run their business in.

 

Do That Voodoo That You Do So Well

There are many reasons why an insured might consider being involved in a captive insurance program.  Over the next few days I’ll try to unpack those reasons in a way that makes sense.  Today I want to address the potential premium advantages of a captive.

I think one of the most frustrating things about captive insurance is that it is so misunderstood.  There is a sense of smoke and mirror magic about how a captive might solve the risk financing ills of an insured and often captives come out of the agent’s bag of tricks as a means of reducing premium for loss-distressed clients.  Let’s try to debunk some of the mystery around who should be involved in these kinds of insurance programs in today’s post.

In any insurance product offering, captive or traditional, there are several elements to cost that are standard.  There is a cost associated with paying claimants for loss and the costs associated with adjusting those claims.  There is a cost to the administrative work associated with the underwriting and issuance of policies and to the maintenance of compliance and regulatory issues associated with licensing in the various states.  There are premium taxes, boards, bureaus and assigned risk charges levied on the policy’s premiums.  While the litany of frictional costs on an insurance program are standard, the percentage that each of these items consume is relative. 

Assuming that a traditional insurer has made his frictional cost as efficient as possible the one cost that has a sense of uncertainty is the costs associated with the payment to claimants for damages they sustain through the fault of insureds.  Actuarial work is either Voodoo or science depending on who you talk to, but it is an insurer’s best method for determining the correct price to charge for the loss cost element of a policy.  Actuaries pour over loss data and determine statistically, based on a specific set of circumstances, what the correct costs per exposure unit should be for risk in a particular market.  The “Theory of Large Numbers” is the basis of actuarial accuracy.  It says that the more data you pour into the analysis the more accurate the results will be for the insurance company taking risk on those results.  Herein lies the good news for captive insurance!

The Dart Board Theory

If insurance companies price their products based on pooling a large database of losses in a particular industry then their pricing is an “average” for that industry.  If you are an average risk then you are paying the right amount of premium based on the risk you present.  If you are below average then you are getting a deal and if you are above average, you are paying more than you should be.  Obviously insurance companies mitigate this inequity by offering credits and debits off of the standard price for accounts with certain attributes.  These adjustments are most prevalent when there is a lot of competitive pressure either because of a soft insurance market or a lot of demand on the part of insurance companies for the type of risk being considered.    If your client is in a market segment that is not highly sought after by insurance companies they can often be left behind in the pricing rush. 

Back to our dartboard.  Imagine a horizontal line across the center of the board.  Any darts above the line are above average and any darts below the line below average.  The problem here is that the pricing for all the darts is essentially the same within +/- 20%.  The over-pricing for the really good accounts is being used to offset the under-pricing for the not-so-good accounts.  From the insurance company’s perspective the result is good, on average just what they expected, and the actuarial staff will probably get a great bonus.  The insured’s perspective depends on where they fall on the dartboard.  Poor risk management is rewarded and good risk management is punished.

So, what have learned about the best clients for a captive program?  They are the ones that are consistently good performers, above average from a risk management perspective and typically involved in activity that the insurance market does not actively compete for.  Think trucking, medical malpractice, residential construction etc…. Now, here is where agents get it wrong.  Not ALL companies in these industries should be involved in alternative risk structures, only those who have earned their chops from a risk management perspective.  Certainly no client with a history of poor loss control and risk management results should consider an alternative risk structure until they have fixed their problems and seen positive result trends.

By assuming risk where there is a relatively high frequency of low severity loss potential a good risk is able to leverage their investment in risk management and loss control to reduce the cost of risk financing by a factor equal to the amount that they are better than the industry average price.

The Battle of Frog Pond

When I was in grade school my father was transferred to eastern Connecticut from Texas.  Besides all the normal “new kid” on the block stuff, I also had to deal with my Texas y’all standing out against the background of “pawkin the caw”.  I had heard some pretty tall tales while living in Texas, but I was quickly indoctrinated to Yankee humor when I was told the story of the Battle of Frog Pond.  Bear with me, this actually has an insurance lesson in the story…….

The summer leading up to the fateful night in June of 1754 had been filled with terrifying stories of the French and Indian War.  Stories of atrocities committed by both sides in the battle and then reprisals by the other spread like a disease carried by the travelers on the Boston Post Road that passed through Windham Center.  The settlements in eastern Connecticut were pretty spread out and essentially stood alone from a defense perspective.   A local attorney, Col. Eliphalet Dyer, had just raised a militia to join General Putnam in fighting the French and Indians at Crown Point, leaving Windham Center defended mostly by old farmers and shopkeepers.

In the early hours on that fateful day in June the townsfolk were awakened by a unholy noise coming from just over the eastern ridge of the town.  Some literally ran into the streets naked and fell to the faces in the town square praying for forgiveness because they thought it was surely the end of the world.  Others gathered muskets and powder and made their way in the moonless night to the ridge east of the square, ready to defend the town against the onslaught of whatever the dawn would reveal.  Lining the ridge the makeshift militia prepared for battle in the pitch blackness of the early morning.  In town lanterns burned while women tore strips of cloth for bandages and boiled water for wound dressing, all along praying that if the end came for them and their children at the hands of savages that it would come quickly.

As the morning sun began to rise over the Connecticut foothills to the east all attention was focused to the sloping ground that led to Col Dyers farm, but instead of seeing hordes of savages ready to attack, the defenders of Windham Center witnessed instead the carnage of thousands of bullfrogs.  Their carcasses lied belly up in the mud that surrounded the place where the pond and stream had been at the bottom of the hill.  As it turns out, a draught had been effecting the area for some weeks, but with the flurry of activity surrounding the militia muster and the absence of Dye from his farm, no one noticed that the pond was slowly drying up.  On that night something snapped in the frog community as they battled for the last bit of water and that was the sound that the townsfolk heard.  Not ones to be cheated from a good victory, the locals decided to call it the Battle of Frog Pond and to this day a monument stands at the side of Rt 14 as it passes by Frog Pond commemorating the battle.  In fact the Windham County symbol is the frog and the sheriff’s patrol cars are adorned with a giant bullfrog symbol.  The picture above shows one of the frog statues that guard the entrance to the bridge over the river that passes through the county’s seat of Willimantic.

Now, where is the insurance lesson in all this?  You can take pride in your preparation to fight the battle even though you may not be called on to fire your musket.  Understanding about captive insurance initiatives and their proper application to particular insurance needs may be more than half the battle won when trying to protect your book of business from being poached by the big global agencies.   The water is drying up in the insurance pond and agencies, like the frogs in our story, are fighting over the remaining client base.  Agency education is key to anticipating the need for a sophisticated captive insurance program and offering that option to your clients long before someone rides in and offers that service to your client first.

Cedar can help you evaluate your clients potential for alternative risk financing.  When we work with agents we never try to replace the agent in his relationship with the client.  We consider ourselves to be adjuncts and work to serve the client on your behalf.  Let me suggest that you check out our website for more information or send us an email if you would like to discuss a particular client’s situation.

You can reach me at dennis.silvia@cedarconsulting.net