CORPORATE INSURANCE CONSULTING (INCLUDING ALL FORMATS OF COMMERCIAL AND BUSINESS ENTITIES)

This is the mainstay of Satori's business. While we much prefer to take a holistic and integrated approach to corporate consulting, we can, for illustration purposes, select and break out some common components of our work. We regularly review existing insurance programs for corporate accounts; analyze risk factors and determine methods of risk elimination, reduction, or transference through insurance or other methods; design optimum programs; educate the corporate risk managers in the more unusual coverages when asked to do so; aid in the broker selection process, should a change in broker be indicated; monitor claims and dividends; review lease requirements, and in general act as advisors to management. We are also very familiar with risk finance methodologies that can prove extremely advantageous to sophisticated clients. We do such work for local, regional, national, and even international firms. Since this work is as individualized to each firm as the firms themselves, there is no set formula to be illustrated here. Nevertheless the following material will offer some detail of these various components. 


REVIEW EXISTING INSURANCE PROGRAMS

Most firms that we work with are existing entities, although we have worked with a number of start-ups, or even projected ventures, and therefore the policies and programs are "mature" from the standpoint of inspections, audit histories, claim histories and the like. A restricted review of existing policies might involve checking carrier ratings, matching required underlying coverages and limits for umbrella type coverages, determining the consistency of coinsurance, contribution clauses, and other clauses, endorsements, and edition dates, should there be multiple policies covering and sharing the same risk. We would also check coverage and audit classifications shown on the policies, and in general, look for overlaps and/or gaps between policies. In the more integrated approach we would measure existing coverages against actual exposures, and this would be an integral part of the risk management process. We could list literally hundreds of sub tasks here, but since the scope of each review is different, and tailored to the specific company, we will simply state that a review of existing policies can be quite comprehensive, and that there have been very few situations, if any, that we have not found material (though generally inadvertent) errors.

ANALYZE RISK FACTORS, RISK ELIMINATION, REDUCTION OR TRANSFERENCE

It is absolutely imperative that risk exposures for any given entity be determined and analyzed in depth for likelihood of occurrence , and for potential severity of impact. Too often we see insurance agents and brokers attempting to place coverage for exposures that could be managed in other ways. A number of risk exposures can be eliminated entirely, or significantly reduced, by changes in operations and procedures. Risk transference can be done via contracts, hold harmless agreements, being named as an Additional Insured, utilizing Subrogation Waiver endorsements, and, of course, through the insurance process. Insurance must be measured on a cost, exposure, benefit analysis basis. There are times when risk cannot be eliminated, reduced, or transferred, and in such situations simply knowing the nature and scope of that risk, and planning for dealing with that risk, is of great value.

AID IN THE ANALYSIS OF APPROPRIATE RISK FINANCE METHODS

In certain corporate and business situations there are circumstances in which the degree of risk can be determined to an actuarial certainly. When this is the case, devising an advantageous method of funding for the risks may be a viable alternative to the utilization of conventional insurance. A combination of vertical and horizontal stop loss specialized policies, high deductible upper layers of excess coverage, and the use of offshore funding vehicles can produce significant savings to the very sophisticated client.  We understand such programs and have been instrumental in their establishment.

DESIGN OPTIMUM PROGRAMS

There should be an overall plan and consistent methodology to managing risk, especially insurance. A collection of policies is not a program. Areas of concern such as policy limits, deductibles, formats of coverage, and the like, need to follow a logic, particularized to the corporate or other entity. There is always a balance between costs and benefits here, and an optimum program is one in which the client rightfully perceives that value for the dollar is more important than purely minimizing costs, or overspending to cover relatively trivial exposures. Self-insurance, or even no insurance, may well be part of a program, so long as it is part of the overall design criteria, and is selected with reason, and full knowledge of the potential impact should a loss occur.

EDUCATE CORPORATE RISK MANAGERS

We note that many corporate entities, even those of of substantial size, do not have a designated risk manager. Often a bookkeeper, treasurer,  personnel manager, or other designated employee is de facto the "insurance person" / risk manager. Few of these individuals have any insurance training nor industry experience, but though happenstance and work experience, find themselves in the position of insurance "expert" and buyer. In some instances, "risk management" is equated with insurance, and the agent or broker becomes the party making critical and expensive decisions for the corporation. In our opinion, this is seldom the optimal situation. Agents and brokers have vested interest in selling insurance, and furthermore few really understand many of the other business considerations. An employee as risk manager may appear to be an ideal situation, but unless the firm is quite large, this may not prove to be cost effective. Of course one can hire an outside risk management firm, but even then, there should be at least one person within the firm that fully understands the nature of risk management, and who can either independently make intelligent and informed decisions, or make recommendations to the party in the firm having the ultimate responsibility. To this end, we feel that time spent teaching and educating one or more people in a corporate entity is certainly cost effective. We can teach, lecture, or recommend formal courses in insurance or risk management.

AID IN THE BROKER SELECTION PROCESS

A common task to which we are assigned deals with broker review or replacement. Some corporate entities establish a relationship with a broker, or brokerage house, that lasts for many decades, while others choose to regularly place a number of brokerages in completion for their business - sometimes each year. While we feel that an unwavering annual broker competition leaves much to be desired, there are good reasons to periodically review and evaluate a brokerage's performance. Certainly there are situations in which the client entity desires to either replace their existing broker, or to at least consider that possibility, through some form of broker interview or competition. Sometimes the client simply wants to make certain that their long term broker still is working as effectively as possible towards the client's interest, or in some circumstances to be able to prove "due diligence" for governmentally funded programs. Once again this process is particularized to a given entity, but to be effective, an outside consultant, knowledgeable about the insurance industry, and just as importantly, about the corporate client itself, can play a most valuable role. Satori Associates, Inc. has performed this task on a large number of occasions, and for a variety of types of companies. We can provide a Request For Proposal to a number of brokers, review the responses for compliance with the parameters of the request, conduct interviews, compare premium quotations on a number of levels, and make recommendations - both positive and negative, as to the competing brokers. Of course, the actual selection is made by the clients, but we normally are retained to continue to monitor the actual placement of coverages, and make certain that the ultimate policy issuance matches that which was presented during the broker competition.


MONITOR CLAIMS AND DIVIDENDS

 We have already noted that few corporate entities formally designate or employ a risk manager, but claims and dividend monitoring should be part of that person's duties. In the absence of an in-house risk manager, it is unusual that anyone in the firm effectively monitors claims - especially workers compensation or third party claims that are covered by insurance. Agents and brokers will sometimes attempt to keep the Insured informed by sending out "Closing Statements", or upon request, loss summaries (loss runs), but we come across very few individuals in the corporate business world who can understand them, or what really counts, their effect upon future insurance rates. There are many ways in which an Insured can minimize the costs of a claim, and while this is not the forum for such a presentation, we can state that we have been extremely effective in reducing overall insurance costs though various processes that we utilize as a result of monitoring claims. Dividends, or Retrospective credits and debits, generally only found in workers compensation policies, should also be monitored closely. We like to work closely with the brokerage and carrier representatives to make certain that claim reserves are as low as can be negotiated, and that as many claims as possible be "closed", in order to maximize potential dividends, and to lower Experience Modifications.

REVIEW LEASE REQUIREMENTS

There is no substitute for competent legal advise in negotiating leases. One should always consult with the corporate attorney prior to signing leases for real or business personal property, but in the real world we seldom find that this is the case. Usually, the insurance broker is just told that the entity has just leased a new building, computer, etc., and that a Certificate of Insurance or Evidence of Property Insurance is to be sent to some lending and/or leasing company. Little attention is paid to the actual wording of the lease, especially the hold harmless clauses and the indemnity clauses, until some loss occurs. Much grief and expense can be eliminated if the insurance were to match the lease requirements, if the lease terms could be negotiated to eliminate much of the risk being transferred onto the lessee, or if at least plans were made in advance as to how an uninsured loss would be dealt with. While we certainly would never offer any form of legal advise - that is the sole realm of attorneys, we are familiar with many forms of leases, and can offer commentary concerning the potential applicability of insurance to the situation. In reviewing leases for larger multi-location corporate entities, we find little consistency in the leases, but rather a "one size fits all" insurance "solution". We can identify many of these differentials between leases, and we can recommend courses of action to deal with the problem.

ACT AS ADVISORS TO MANAGEMENT

We are ongoing insurance and risk management consultants to a number of corporate entities. They contact us on all matters related to insurance before they call their brokers to report new claims, add locations, equipment, or vehicles, and in general act a liaison to the brokers, adjusters, and auditors. In fact, because we know so much about the operations of the firms with which we work, we sometimes are considered as though we were an informal non-designated board member - at least in relationship to any operation or plan involving material risks. We are a valuable resource to our long term clients as we aid in controlling costs and risks, while we educate their staffs in the nuances of insurance.

There are, of course, many other areas in which we regularly act as a consultant to our corporate clients. While our automation consulting is specialized to insurance agent and broker automation consulting, there is a great deal of overlap with other industries, and upon occasion we make use of our automation skills to aid in solving a wide variety of computer related problems. In several instances we have be asked to design web sites for our clients, and while this is not our major endeavor, we do have the necessary skills to create and maintain an effective internet presence.

Our fees can be based on an hourly rate basis, monthly or annual retainer fees, fixed fees, maximum and minimum fee schedules, or combinations of all or any of these. We would be glad to discuss fee determination methods upon request.

Revision Date: November 25, 2009