Welcome to CampusMBA®
LIVE Online Workshop
Self Insurance, Captives and Fronting
part of the Commercial insurance LIVE Online Series
We will begin at 2:00 p.m. EST.
Please chat among each other before we start.
Thank you for your participation!
WELCOME!
Self Insurance, Captives and
Fronting 12.14.11
Faculty:
Bernard (“Bernie”) M. Brown, President, Insurance
Advisors LLC
Helen B. Terry, Associate, Hanover Stone Partners
Marco Flores, Director of Risk Management, Equity
Office Properties
Joseph L. Petrelli, CAS, President and founder of
Demotech, Inc.
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Self Insurance, Captives and Fronting
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About your Faculty
•
Bernie Brown is President of Insurance Advisors LLC,
Stamford, CT., America’s leading provider of insurance
consulting and outsourcing services to the commercial real
estate finance industry.
•
Helen Terry was formerly of AXA/Equitable Group
responsible for all insurance management for real estate
owned and commercial lending, including serving as
President of its wholly owned Vermont captive insurer.
. . . continued
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Self Insurance, Captives and Fronting
Copyright © 2009 Mortgage Bankers Association
About your Faculty
•
Marco Flores is Director of Risk Management, Equity
Office Properties and, formerly, Global Risk Manager,
Jones Lang LaSalle
•
Joe Petrelli, CAS, is President and founder of Demotech,
Inc., a financial analysis company based in Columbus, OH.
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Self Insurance, Captives and Fronting
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About Insurance Advisors LLC
INSURANCE ADVISORS LLC – SERVICES
(est. 1996)
1.
New loan insurance reviews
2.
Annual monitoring of borrower insurance (Ask about 1/2hr webinar)
3.
“On call” retainer service
4.
In-house and web based training
5.
Monthly Client Bulletin
6.
Audits for insurance compliance
7.
Project Consulting – Expert Witness Services
For more information contact:
Bernie Brown – bbrown@ins-adv.com
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Self Insurance, Captives and Fronting
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Panelists
Helen B. Terry
hbterry@verizon.net
Marco Flores
Marco_Flores@equityoffice.com
Joe Petrelli
JPetrelli@demotech.com
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Self Insurance, Captives and Fronting
Copyright © 2009 Mortgage Bankers Association
Outline of Today’s Session
1.
Typical lender requirements for deductibles, self insurance and captives
2.
Describe types of self insurance, including:
- deductibles
- formal self insurance
- captives, captive ratings and reinsurance of captives
- fronted programs
- risk retention groups
3.
Special types of borrowers
- big box stores
- seniors and nursing homes
4.
Questions and wrap up
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Self Insurance, Captives and Fronting
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Poll Question
Do your lender (s) insurance requirements allow
for self insurance?
Yes ____
No ____
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Self Insurance, Captives and Fronting
Copyright © 2009 Mortgage Bankers Association
Lender Insurance Requirements
Standard Lender Requirements
Insurance carriers – “Admitted” versus “non Admitted
Insurer ratings – Best A III or better?
- S&P/Moodys/Fitch on securitized deals
Deductible size - $25,000 pretty standard
5% for flood, EQ and Wind
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Self Insurance, Captives and Fronting
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Types of Self Insurance
Deductibles (simplest form of self insurance)
-
lender problem with high deductibles
SPE?
-
how policyholders select deductible levels
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Self Insurance, Captives and Fronting
Copyright © 2009 Mortgage Bankers Association
Types of Self Insurance, continued
Formal Self Insurance Programs
-
Workers Compensation and Commercial General
Liability
-
Claims handling function
-
Excess catastrophe insurance
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Self Insurance, Captives and Fronting
Copyright © 2009 Mortgage Bankers Association
Poll Question
What is a “captive”?
____ wholly owned insurance company that
insures the risk of the parent (s)?
____ someone you have captured for
ransom?
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Self Insurance, Captives and Fronting
Copyright © 2009 Mortgage Bankers Association
Types of Self Insurance, continued
Captive Insurance Companies
- define captive insurance companies (single
parent and group)
-
history and development
-
“rent a captives”
-
perils insured (property, liability, terrorism, etc.)
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Self Insurance, Captives and Fronting
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Types of Self Insurance, continued
Captive Insurance Companies, con’t
-
Captive insurer ratings
-
Reinsurance of captives
-
Aggregate loss exposure concerns
-
Additional documentation required to evaluate
captive programs
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Self Insurance, Captives and Fronting
Copyright © 2009 Mortgage Bankers Association
Types of Self Insurance, continued
Fronted Insurance Programs – How They Work
-
Fronting company is rated
-
Cash claims account
-
Limited exposure of fronting company
-
No way to determine if the program is fronted
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Self Insurance, Captives and Fronting
Copyright © 2009 Mortgage Bankers Association
Types of Self Insurance, continued
Risk Retention Groups
-
History – mid 1980’s liability crises
-
Similar insureds
-
Liability only – companion property programs
-
Risk Purchasing Groups – similar but not a
separate entity
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Self Insurance, Captives and Fronting
Copyright © 2009 Mortgage Bankers Association
Special Types of Borrowers
Big Box Stores
Heavy use of self insurance
-
high deductibles
-
total self insurance
-
minimum net worth representation
Nursing/senior
-
captives and RRG’s – often rated
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Self Insurance, Captives and Fronting
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Conclusion
Questions and Discussion
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Self Insurance, Captives and Fronting
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Thank You on Behalf of CampusMBA
Next Insurance LIVE Online Workshop
February 8, 2012
Terrorism Insurance Update
For a full list of Commercial Programs, visit
www.campusmba.org
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Self Insurance, Captives and Fronting
Copyright © 2009 Mortgage Bankers Association