Who would have thought that just a simple repositioning could have such a dramatic effect! The client mixes chemicals - no carrier wants to touch this! When I looked more closely and their process - it's a lot like food processing. This just happened to be food to kill rats. Why not? Let's try it! So I positioned this risk as a food processor..."Why Yes! We love food processors!", says the underwriter. Enough said...here's the story about simple repositioning:
The Challenges
- Purchased by the current owner 10 years ago.
- Property written between 3 carriers on a loss limit policy.
- No markets because considered high hazard and inadequate sprinkler protection
- Client had been n the Work Comp pool for 10 years due to classification – chemical mixing / blending operation
- Finding a market to write this class of business
The Opportunity
- Simplify property program into one policy. This eliminates restricted coverage’s, joint loss issues between carriers, and provides a policy that protects 100% of the values.
- Pull workers compensation out of the pool and save 10% with the application of premium discount
- Analyze and understand the operation to see if I could reposition risk.
- Figure out how to reposition the risk from chemical mixing and blending to a food processing operation.
- Chemical mixing and blending is considered high hazard due to the potential of exothermic reactions. Once I understood that the client's operations did not include reactions, it was just mixing of ingredients to make a food product. I started calling the operation a food processor / mixing and blending operation. I used these terms with underwriter. The underwriters were willing to listen to this potential opportunity as they write food operations.
- A 4 wall manufacture of food product that includes mixing / blending and some baking. The food product is specialized in that it is made to kill rodents, snails, slugs.
- Conducted multiple walkthroughs with the buyer and also the risk control engineers.
The Benefits
- Conglomerated the coverage into one policy for the property.
- Standard markets
- Full limit policies
- Workers compensation with a carrier that pulls it out of the pool
Results
- Contacted over 20 markets to find a carrier to do the workers compensation
- Contacted over 20 markets to find a carrier that would consider the property. Sprinklers are inadequate due to inadequate sprinklers in the warehouse.
- Participated in all risk control inspections.
- Issues identified by the carriers were immediately discussed / alternatives analyzed at the time of inspection. This discussion was coordinated by me while the risk control engineer and inspection contact / buyer were present. We were able to identify cost effective solutions during the inspection. In some cases, issues were discussed between the engineer / underwriter after the inspection and follow-up conversation held prior to quoting with written agreements obtained.
- In the end we found a market to simplify the property program and saved over 10% of the premium. And if sprinklers were upgraded, an additional $30k annual premium savings could be obtained. This equated to a 2 year cost / benefit payback period and well within the time value of money for the customer.
- Workers compensation found a home with a company that writes 4 wall manufacturing operations. While outside their normal appetite, we were able to demonstrate a best-in-class operation which enabled the underwriter to present to senior management at the carrier and obtained buy in to quote.
The Godfather connection: "I want you to see what he's got under his fingernails". Let's really look at the risk holistically. What is it really? Can we call it something else? Can we reposition the risk to be more favorable for the underwriting world? Yes! To the Mattresses!
If you've got a tough to place risk, a business that no carrier seems to want, I'll handle it! I've got the knowledge with an engineering background, and the connections to find the right solution at competitive prices. "If there's a stone in your shoe...remove it!" Contact the Godfather of Risk Management - Scott Brookes.
