bud curtis crichton group

Creating Alternative Risk Solutions for Clients

The Crichton Group is a privately-held insurance brokerage firm headquartered in Nashville, Tennessee. Launched in 1979, Crichton is Middle Tennessee’s largest independent insurance agency, and is an Assurex Global partner. The Crichton Group creates all lines of coverage for clients, from personal to commercial and specializes in developing client-focused custom insurance solutions.

Crichton GroupBud Curtis is the director of alternative risk solutions at Crichton. “I’ve been in the alternative risk space since about 1980,” says Curtis, who has been putting risk plans together ever since. “I’ve worked with self-insurance funds, a Bermuda-based captive, and I’ve even been part of a group that owns a captive,” he says, adding, “I’ve worked with captives most of my professional life.”

Risk solutions

The Crichton Group specializes in alternative risk solutions, and offers enterprise risk captives, as well as group, property and casualty, and benefit captives.

“Our typical client or prospect is a financially sound privately-held company with revenue in the range of $60 – 500 million, and at least 150 employees,” says Curtis. “Of course, there are exceptions to the rule depending on what kind of coverage a client needs, but typically the costs involved with an enterprise risk captive require a baseline of revenue in order to make sense for the client.”

Curtis stresses to his clients that captives are first and foremost a risk management tool used to protect the corporate treasury. “Captives are designed to provide coverages for clients who either can’t purchase the insurance they need in the market, or where purchasing insurance on the market is too costly to the client to make sense.”

Insuring your business

Recently, Curtis worked with one client to self-insure against physical damage to their fleet of tractor-trailers. The client ultimately elected to put that coverage under their captive. “Another client with whom we worked wanted to cover earthquake exposure they have in eastern Tennessee, and wind exposure for their presence in the Gulf Coast,” says Curtis. “We were able to roll those coverages into their captive, and the company’s CFO and CEO said, ‘Wow, we can now provide coverage where there wasn’t any before.’ When I get that kind of reaction, I know we’re offering value to our clients.”

As Crichton continues to work with captives, Curtis finds himself talking to his colleagues and clients more often about captives as an effective risk management tool for business owners. “This is such a good tool for companies that use it correctly” says Curtis.

Doing it right the first time

As an industry veteran, Curtis scrutinizes potential partners carefully, and found Intuitive to be a solid partner for his firm. “Intuitive has a high degree of integrity. I’ve vetted several providers for enterprise risk captives, and Intuitive has the best model,” says Curtis. “Intuitive doesn’t control the money – the captive owner does – and their reinsurance model (C-REX) is strong.” Curtis feels that the service Intuitive provides to captive members is excellent. “Intuitive is very transparent with their business, and they manage their captives with a heavy emphasis on underwriting to provide better coverage and ensure profitability and sustainability.”

Setting captives up properly and managing them well is a key factor for Curtis. “I’ve done this a long time,” he says, “when I put an insurance program together, I want to make sure that it’s structured properly on the front end so we don’t have to go back and make excuses. I like to do it right the first time.”

Pete Picetti

Captives – A Strong Option for the Right Client

Heffernan Insurance Brokers, headquartered in Walnut Creek, California, is one of the nation’s largest independent insurance brokerage firms in the U.S., and is also an employee-owned agency that wins awards for being a great place to work. Providing comprehensive insurance, employee benefits, and financial services to a wide range of businesses and individuals nationwide, Heffernan operates offices in San Francisco, Petaluma, Menlo Park, Los Angeles, and Orange County in California. They also have offices in Portland, Oregon, St. Louis, Missouri, and New York City.

Peter Picetti, a senior vice president at Heffernan, has been working in the insurance and risk management business for 27 years – 17 of them at Heffernan managing the firm’s food practice. Recently, Picetti has seen interest in captives growing.

Captives are picking up steam

Heffernan Insurance Logo

Find Heffernan Insurance in Northern California.

“Over the past four or five years, captives have really become a hot button,” says Picetti. Always glad to find new ways to help clients manage uninsured risk, the growing popularity of enterprise risk captives has come as good news. “Clients like to hear that there are options for managing risk – they also like to hear that they can set money aside and create a profit center. Hearing that it may also provide them with some tax benefits is even better here in California, where taxes can sometimes seem unrealistic to clients. Overall, captives are a very strong option for the right client.”

“We are spreading the message about captives to our clients,” says Picetti, noting that captives aren’t for all clients. “Just because a business pays a lot in premiums doesn’t mean it is right for a captive,” says Picetti. “There’s many factors that go into considering if a client is appropriate for a captive. I have a book of more than sixty clients, and probably fewer than 10 percent of them are captive-ready. It’s a delicate dance, but when it’s right for a client, it’s a very good option.”

It takes a village

Part of the value equation for Picetti is the expertise that Intuitive brings to the table. “The feasibility study that Intuitive conducts prior to launching a captive is very valuable in helping to make the proposition clear to clients.” Additionally, Picetti feels that the risk pool operated by Intuitive (The Colorado Reinsurance Exchange) helps to add legitimacy and safety to the mix.

“We really believe that our organizations are matched well,” says Picetti of Heffernan and Intuitive. “We have similar cultures. It’s a village of people that help to get the job done every day.”

Creating Opportunities with Captives

J Smith Lanier LogoJ. Smith Lanier & Co., founded in 1868, is the oldest privately held insurance brokerage in the Southeastern United States and one of the 25 largest of public and privately held insurance brokerages in the country. With 19 offices in five Southeastern states and nearly 600 associates, Lanier serves a wide variety of industries and clients including domestic, international, private, public, for-profit, non-profit, and governmental entities.

“We started working with Intuitive Captive Solutions in 2010,” says Steve Norton, Senior Vice President of Alternative Risk Financing at J. Smith Lanier & Co. “We wanted to offer leading edge and innovative enterprise risk captive products to our clients. Since that time, we have established several captives with Intuitive and have several others in the pipeline.”

Norton feels that offering captives helps to reinforce the firm’s relationships with existing clients and also helps to establish new client relationships. “We researched enterprise risk captives very thoroughly, and we scrutinized the risk pool models that are out there,” says Norton. “We found Intuitive’s model to be just that – ‘Intuitive’. It has the measures and controls in place we felt were necessary to protect our valued clients and their investments while offering real value to the captive owner.”

Keeping an eye on the captive market

Norton sees quite a bit of growth ahead for captives. As his firm continues to develop more business, clients are starting to ask more questions about captives. Norton believes there are firms out there promoting very questionable pooling facilities that are begging for a challenge by the IRS and their scrutiny is only going to increase. Intuitive’s facility has been tested and is closely monitored by their actuary and tax counsel.

“The team at Intuitive and their deliverables are very professional, thorough and well designed,” says Norton. “Intuitive is a great partner for J. Smith Lanier & Co. and we look forward to helping more of our clients achieve their financial goals with their assistance.”

Image of Duke Niedringhaus

Captives – A Natural Progression for Entrepreneurial Companies

Based in St. Louis, Missouri, J.W. Terrill is a brokerage firm with just under 200 employees that offers a broad range of commercial insurance products, risk management consulting, surety bonds, and employee benefits. JW Terrill is ranked one of the 100 largest brokers of U.S. business, by Business Insurance magazine.

J.W. Terrill recently added enterprise risk captives to their offering. “We’ve been working with group captives for 15 years,” notes Duke Niedringhaus, Senior Vice President of J.W. Terrill’s captive practice. “We are looking to grow in the area of enterprise risk captives.”

Funding uninsured risk

JW Terrill logoEnterprise risk captives are ideal for the mid-market space that many of J.W. Terrill’s clients occupy. “An enterprise risk captive is a natural progression for an entrepreneur who owns a company, particularly if they already use a group captive to fund some of their uninsured business risk,” notes Niedringhaus.

J.W. Terrill works extensively with casualty group captives, employee benefits captives, and property captives, and finds that clients who launch one captive alternative are often ideal candidates for developing a combination of captive options, including enterprise risk captives.

Niedringhaus works with a wide variety of clients on captive strategies. “We work with businesses as diverse as convenience stores, security and manufacturing facilities on captives,” says Niedringhaus. “The common denominator for the companies that are optimal for captives is that they are usually the best in their class and really understand the value of protecting their uninsured risk.”

Keeping an eye on captive trends

As a board member of the Self Insurance Institute of America (SIIA), Niedringhaus maintains a keen interest in industry and market trends.  SIIA is the leading national association representing captives.  “Intuitive is a very professional firm and well respected within SIIA”, notes Niedringhaus. “The company leaders at Intuitive come from an insurance background, so they understand how to go about underwriting and pricing various coverages.” Niedringhaus also appreciates Intuitive’s high level of disclosure and transparency on the Colorado Reinsurance Exchange, or C-Rex, that it manages.

“Intuitive is a conservative company,” says Niedringhaus, “so they’re not out there pushing the envelope or trying to make captives fit for companies that aren’t right for them.”

Niedringhaus believes that the enterprise risk captive market will grow in the coming years, and so will group captives. “Working with Intuitive helps J.W. Terrill deliver a solid option to clients,” says Niederinghaus, adding, “The major issue with captives is being able to hold them up to scrutiny.  I can feel confident that all the documentation is in order, the reinsurance pools are structured properly, and the client will be set if they ever need to undergo an audit.”

 

 

Lyons Companies and Captives: Education is Key

Lyons Companies is a risk management firm serving middle-market businesses on the east coast. Founded in Wilmington, Delaware, in 1984, Lyons has more than 55 employees. The company’s philosophy is centered on relationship building, creating proactive solutions to reduce costs and improve profits through smart risk management.

Joe Valerio, an executive vice president with Lyons, has been in the business for 17 years. At Lyons, Valerio works with clients in the non-profit and social services sector, construction, private schools and education, financial services firms, banks, and manufacturing.

Taming risk = taking control

“Risk and insurance is more than just paying premiums and getting coverage,” says Valerio, “For companies, it’s more about taking control of a situation and being able to take more risks in order to move forward.”

Lyons Companies insurance

Lyons Companies

Valerio is passionate about helping clients. “You hate to see a client leave money on the table when they can control their environment more effectively through good claims management, safety, culture, and changing the way they think,” he says, adding, “if you can get your clients to embrace that kind of thinking, you’re differentiating yourself.”

Captives are a natural for Valerio. “I’ve always gravitated toward alternative financing mechanisms,” he says, noting, “Some clients think that they’re too small for something like a captive, but it’s more of an education process, and once you show them that even if they’re smaller, they can still take advantage of an enterprise risk captive and gain more control over risk, even at their size, they’re really interested.”

“Insurance and risk management is a relationship business,” says Valerio. “At the end of the day, there are very few deliverables – you’re delivering on promises that if something bad happens, you are going to be there to make them whole again.”

Education through conversation

Valerio admits that the sales cycle on captives takes longer. “There is a lot of education involved. Most of our clients don’t necessarily think about captives because they haven’t hit that critical mass yet, he says. But when the time is right, he is glad to start the conversation, and often turns to Intuitive for help with specifics.

“There’s a lot of trust in this business, and you have to trust the people you’re working with. That’s why we like working with Intuitive,” says Valerio. “We have that feeling of trust with Intuitive, so we have no problem connecting them with our customers.”

Captives offer Insurance Broker an Updated Approach to Risk Management

Sullivan Curtis Monroe Insurance Services, LLC, (SCM), is an insurance and risk management broker in Southern California. With several hundred employees, and three offices, SCM is a regional firm offering a just-right approach to companies that feel they are too big for a local broker, but still want personalized attention that they couldn’t get from a mega-broker. SCM has practice groups that service clients in real estate, construction, auto dealerships, the food and beverage industry, environmental chemical and engineering, manufacturing, and distribution.

Steve Paulin is a senior vice president at SCM who has been in the business for 35 years as a risk management and insurance expert. Paulin had been familiar with captives, but when he saw that they had been restructured to be more cost-effective for middle-market clients – the base he currently works with at SCM – he decided to learn more about them.

Discovering the benefits of enterprise risk captives

SCM Insurance “I was introduced about four years ago to the enterprise risk captive concept. I saw it was a wonderful opportunity for me to bring additional value to my clients, and differentiate myself from the competition. This led me to learn more about captives and gain the necessary knowledge and competency to introduce and educate my clients and prospects.”

Paulin spent a year vetting and understanding how captives could benefit his clients. “I went to conferences, clinics, and attended webinars. I had some introductory conversations with clients and the positive response was gratifying.” He spent additional time studying and having deeper conversations, which developed opportunities for feasibility studies and captive formations.

Timing was on Paulin’s side.  As he’s been learning more and more about captives, his clients have been climbing out of the recession – now, as clients are making more profits, Paulin is ready with answers about captives.

“The captives we’ve put together so far have been primarily for manufacturing clients,” says Paulin, who is planning to expand the captive offering to more practice areas in his firm shortly.

Working with clients on captives

Paulin finds that his competition hasn’t really caught on to the benefits of enterprise risk captives yet, so he is generally the first one to introduce this topic to his clients. “Being the first to do this, along with periodic follow-ups has positioned me to get the call for further discussion. I walk clients through a short presentation that incorporates many of the points I’ve gleaned from working with Intuitive,” he says. “I talk with the client about captive benefits that are relevant to their operation, such as the ability to cover risks that are excluded or they decided not to buy. Then, I tie in the tax advantages and wealth management benefits through creating a captive.”

“I explain to clients that the work I do involves assessing and evaluating their programs, which has been a core competency of mine, and that we partner with Intuitive who handles the management aspects of the captive.” This usually leads to a more detailed presentation by Intuitive.

A new way for clients to look at risk management

Paulin credits captives with enhancing his practice. It offers the opportunity to have a different conversation with business owners about how they can better manage risks and gain profit in the process. “Captives have helped me feel very confident that I’m offering new alternatives to help structure effective risk management programs for my clients,” he says.

Future growth

Even after four years, Paulin finds it’s more of a pull than a push. “There isn’t a lot of awareness yet about captives,” says Paulin. “There are business owners who have a perception of a captive for certain types of coverage, like workers’ compensation, but they don’t have a working knowledge or a deep understanding of it. It’s an opportunity to educate business owners.”

Paulin has spent so much time reading and learning about captives, he’s accumulated an archive, and has written a whitepaper. “I find I get to a plateau and I think I know all the info about captives,” he muses, “But then I’ll read an article and I’ll think, ‘Oh, here’s something I haven’t thought of about a particular use of the captive.’ There’s a need for ongoing education, and this is an opportunity to structure a program in a new way.”

To handle the interest in captives, SCM recently hired a marketing specialist to build a program around captives. “We plan to formalize a marketing program using Salesforce, and Benchmark emails distribute white papers, Executive Briefings and other information including webinar invitations. The ability to touch a lot of people with relevant information once a month will help increase awareness,” he says.

Gary Warrn, Valley Forge Captive Advisors, photo

A Risk Management Solution to Believe In

Valley Forge Captive Advisors is a subsidiary of McConkey Insurance & Benefits. Specializing in group domestic captive products, Valley Forge is focused on group captives for mid-to large-sized businesses.  Gary W. Warren, CPCU, ARM, is the President and Principal at Valley Forge Captive Advisors.

valley-forge-captive-advisorsWarren is a proponent of domestic captives as a risk management tool for businesses. “One of the nice things about a captive is that it can offer coverage that clients cannot buy in the regular market – or have chosen not to buy in the market,” says Warren. “We have clients that have risk management needs that regular insurance can’t meet. Rather than having to turn them down, I can work with them to create a captive.”

It’s not just about the tax advantage

Warren finds that captives are a new idea to some clients. “When people first hear about captives, they sometimes focus on the tax advantages,” says Warren, “But it’s important that they understand that captives provide coverage and a solution for risk.”

While he’s been working with enterprise risk management captives for the last few years, it’s only recently that his clients have been able to take advantage of them. “People were interested, but couldn’t take advantage of captives because their businesses weren’t profitable enough these last few years. But now that the economy has improved, businesses are starting to have the kind of profits it takes to create a captive.”

Enterprise risk captives are such a specific market, Warren believes that there are only a few really good sources for education on them. “A captive manager like Intuitive provides excellent education,” he notes, adding with a laugh, “You had better learn about them – if you don’t, someone else will sell one to your clients.”

New lines of business

Warren enjoys having another inroad for new business. “Working with Intuitive has helped me to see that there are a lot of different captive models. I like the way Intuitive does it – they have enough risk sharing to really make sure that, if the client is ever audited, Intuitive has done a good job of demonstrating that they’re a risk transfer mechanism, not just a way to avoid taxes.”

“There are still a lot of companies out there that don’t know enough about captives. It’s a great differentiator for a firm like ours. When you come to the table with a product like a captive, it’s a financial mechanism to reduce costs – it’s something I definitely enjoy explaining to clients. I’ve been doing this for almost 20 years, and it’s definitely a way of handling insurance that I believe in.”

james gleaves wortham hinsurance head shot

Adding Value for Clients

Wortham Insurance is one of the top 10 privately held insurance brokers in the U.S., and the largest broker headquartered in Texas. Wortham clientele represent a cross-section of business in Texas and beyond.

The Wortham philosophy is to bring value-added ideas to clients. As managing director of Wortham, James L Gleaves is tasked with making sure the Wortham philosophy is carried out in all areas of the firm’s practice.

Creating captives that work for clients

“We represent a number of clients whose insurable risks can be very effectively managed through a captive insurance company,” says Gleaves. “The captive insurance company structure developed by Intuitive fits well with many of our client’s overall risk management needs. We believe that the captive structure and reinsurance arrangement developed by Intuitive is very beneficial to a client who fits the necessary parameters.”

Experience counts

wortham risk management logoWortham began their partnership with Intuitive due in large part to the experience that Intuitive professionals have in risk management, overall insurance coverage, and captive insurance company structuring. “We felt that the very careful approach to underwriting captive risks was crucial to our clients,” says Gleaves. “We were also very comfortable with the overall approach to managing captives demonstrated by Intuitive.”

Since the partnership between Wortham and Gleaves began, there has been a great deal of growth in captives. “The growth in captives that select the enterprise risk captive treatment is a testament to the potential economics of such an arrangement, but it takes the expertise of a manager such as Intuitive to make these arrangements successful in the long term.”