welcome to campusmba® live online workshop we will begin at 2:00 p.m. est. please chat among each...

Welcome to CampusMBA® LIVE Online Workshop

We will begin at 2:00 p.m. EST.

Please chat among each other before we start.

Thank you for your participation!

Self Insurance, Captives and Fronting

part of the Commercial insurance LIVE Online Series

22

Copyright © 2009 Mortgage Bankers Association


WELCOME!

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.

Self Insurance, Captives and Fronting 12.14.11


Self Insurance, Captives and Fronting3

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



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.



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 – [email protected]



Panelists

Helen B. Terry

[email protected]

Marco Flores

[email protected]

Joe Petrelli

[email protected]



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

88



Poll Question

Do your lender (s) insurance requirements allow for self insurance?

Yes ____

No ____



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



Types of Self Insurance

Deductibles (simplest form of self insurance)

- lender problem with high deductibles

SPE?

- how policyholders select deductible levels



Types of Self Insurance, continued

Formal Self Insurance Programs

- Workers Compensation and Commercial

General Liability

- Claims handling function

- Excess catastrophe insurance

1212



Poll Question

What is a “captive”?

____ wholly owned insurance company that insures the risk of the parent (s)?

____ someone you have captured for ransom?




Captive Insurance Companies

- define captive insurance companies (single

parent and group)

- history and development

- “rent a captives”

- perils insured (property, liability, terrorism,

etc.)




Captive Insurance Companies, con’t

- Captive insurer ratings

- Reinsurance of captives

- Aggregate loss exposure concerns

- Additional documentation required to evaluate captive programs




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




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



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



Conclusion

Questions and Discussion

1919



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

welcome to campusmba® live online workshop we will begin at 2:00 p.m. est. please chat among each...

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