The Insurance Guy

The Shadow of 9/11: Since her brother’s death, Suzanne McCabe has watched over his children

2011-09-08T15:34:00.000-05:00

The Shadow of 9/11: Since her brother’s death, Suzanne McCabe has watched over his children

Suzanne McCabe was on a commuter ferry when the first plane struck the north tower, where her brother was at work on the 104th floor
Millions of people around the world watched the twin towers fall, but only New Yorkers lived through the full horror. From Staten Island to Ground Zero to Brooklyn, they witnessed an apocalyptic scene. The National Post‘s Kathryn Blaze Carlson has returned with four onlookers to the very place where they watched the buildings collapse. How has their life changed in the past 10 years? Below, she takes a ferry with Suzanne McCabe.

MONMOUTH COUNTY, N.J. — Suzanne McCabe has steamed across these murky waters many, many times before — “10 years multiplied by, well … hundreds of times,” she estimates.

Each and every time, she takes the 15—minute drive from her mother’s home to the Atlantic Highlands marina, pulls into the seaside parking lot, and leaves her car behind. Whenever she is in Rumson visiting her family she does this, walking the planks of the boardwalk, ascending the rickety metal ramp and boarding the SeaStreak ferry.

She sits in the lower cabin, sips her coffee, and looks out the window. Traffic streams along Brooklyn’s Belt Parkway on the starboard side, and the sun disappears only as the vessel crosses under the Verrazano—Narrows Bridge, halfway to her office in Manhattan.

We embarked on this 50-minute commute together last weekend, drawing nearer and nearer to Manhattan as the white wake broke behind us.
On Tuesday, Sept. 11, 2001, Ms. McCabe — then in her early 40s and already grieving the imminent death of her father, who died two months later from brain cancer — boarded the 8:45 a.m. ferry.
One minute and 40 seconds later, the technicolour horizon revealed what looked like a toy plane T—boning into the World Trade Center’s North Tower, miles and miles away.
On this similarly warm, but somewhat smoggier Saturday, Ms. McCabe recalls the ferry captain’s announcement: “As you can see, a plane has just crashed into the World Trade Center.”
Standing in the same spot at the bow of the rocking ship, and feeling the same frigid air-conditioning on her body, Ms. McCabe described the mental gymnastics that ensued after the plane hit.
Her 42-year-old brother, Mike, had just started work at Cantor Fitzgerald, but where, exactly, were the trading firm’s offices?
Mike’s best friend, Tuck, had brought him over to Cantor. Tuck was in the 1993 World Trade Center bombing. Mike was with Tuck. Mike was with Tuck in the North Tower.

And there was nothing she could do. Nowhere she could go. Despite the tragedy, or perhaps because of it, the ferry plowed on, and on and on, bound for Pier 11 in Lower Manhattan.
She dialled Mike’s new cellphone, praying to hear his voice, but he did not answer. She then dialed his wife, Lynn, to find out what floor he worked on, but it rang until the line grew jammed.

She remembers trying to calculate how long Mike and Tuck — both fit men who loved to surf — would need to barrel down the stairs to safety. She knows now they had no chance. That they had worked on the 104th floor.
“Mike was returned to us in pieces,” Ms. McCabe said, her brown hair whipping in the wind as we stood together on the upper deck.
His wife finally asked the morgue to stop calling with news of retrieved body parts, Ms. McCabe said as she placed her hand over her heart as if to comfort it.
Her hand is bare. She does not wear a wedding band and she has no children.
“For the past 10 years, I have been living for another person — I’ve been living for Michael,” the Junior Scholastic magazine editor said. “I’m being there for his children in the way he would’ve wanted me to be there, in the way he would’ve been there for them.”
There are rumours among her brother’s surviving Wall Street friends that Mike and Tuck ran up the stairwell to the roof, only to find the door locked. Ms. McCabe’s brother, Gene, is still trying to determine what actually happened that day.
Neither thinks their brother jumped, she said. “We just don’t.”

Mike was father to Cassidy, then 12, Regan, then eight, and Liam, then seven. And he loved that New York skyline.
It was “pure gold” as far as Mike and his four siblings were concerned. Gene, Nick, Mary Ellen, Mike, and Suzanne had stared across the bay in awe as children, watching as the 110-storey buildings were constructed. They could see the towers from Monmouth beach, where Mike liked to bodysurf when the waves were worthy.
“To look out there now, and not see those towers — to not see that skyline we loved as little kids — that really hurts,” she said. “I’ve spent the past 10 years trying to forget that day.”
When she speaks of that day, her voice is mostly firm, but there are moments of breathlessness. Her hands tremble slightly. Her eyes do not water but they become glazed, and she admits they are tired these days.
The anniversary, which comes three days after Mike’s birthday, is approaching for the 10th time. “It’s always such a stressful time,” she said. “But this year has been particularly hard.”
Mike’s 18—year—old daughter, Regan, graduated from high school in June, and had been tasked with writing a reflective essay. She asked her aunt to tell her everything about the Tuesday her father died — about where he was in the tower, about his funeral. About her dad.
What Ms. McCabe said she remembers most is being focused on one thing: the burning North Tower and its metal casing, unfurling like a giant can of tuna fish.

As the ferry lumbered toward Pier 11, she scanned the shell—shocked survivors for her brother’s face. The captain told passengers to remain aboard, that they were only there for evacuation’s sake.
Part of her wanted desperately to disembark and run into the smouldering melee, to burst into the North Tower, at the time still standing, and rescue Mike. To save Regan from buckled knees and tears. To save Lynn from raising children whose “childhoods were blown up.”

“I really only remember one man next to me on the ferry, a man in his 60s or so, saying, ‘Damn bin Laden,’” she said. “I’m amazed looking back on that moment now.”

For the next 10 years, she could not stand to see photos or footage of the burning towers. She soon became sickened at the sight of Osama bin Laden’s face, too.

So when the mastermind of her brother’s death was captured and killed this year, Ms. McCabe could not escape. Images of the towers and the terrorist bombarded television screens and the ubiquitous Manhattan newsstand.

“Sure, bin Laden’s death brought relief, but there’s still an empty seat at the dinner table,” she said.
Ms. McCabe’s mother, Eleanor, still lives in the same Monmouth County home. Ms. McCabe still lives in her Upper West Side apartment. She still works at the magazine. Little has changed, including her desire for one last embrace.

“I just want to hold his hand, to hug him and say goodbye,” Ms. McCabe said. “I can’t even hear the Bruce Springsteen song Bobby Jean without crying: ‘I miss you baby, good luck, goodbye. I wished I could have talked to you.’ “

The first time she got back on the SeaStreak ferry was one month before her father passed away, about three weeks after the attack. It was the morning of Tuck’s funeral; his body was never found.

She was aboard the ferry hours later, bound for her job in Manhattan, when a crew member approached her and said he saw her at Tuck’s funeral.

“He asked me how I knew Tuck, and I told him he was good friends with my brother, Mike McCabe,” she recalled.

When she told him Mike had also died in the attack, the crew member cried, for he knew her brother and had brought him to and from Manhattan many times before.

http://news.nationalpost.com/2011/09/06/the-shadow-of-911-since-her-brothers-death-suzanne-mccabe-has-watched-over-his-children/

Memo to the Democrats - Welcome to the NFL

2010-01-22T23:51:00.004-05:00

There is a great video clip from NFL Films (you can view it below) that shows Jerry Glanville of the Houston Oilers in 1989, questioning a call from the back judge. When he finds out from the referee that the back judge is a first-year, former college official, he calls him over and says, “This isn’t college… this is the N-F-L, which means ‘not for long’ when you make those [expletive] calls…”

The Democrats would do well to listen to the sage wisdom of Mr. Glanville. With a majority in the House, a bulletproof Senate, and the White House, the Democrats had an opportunity to make some real changes. Unfortunately, the party let their ideology get in the way of their Magical Misery Tour, and it has caught up with them in Massachusetts. Massachusetts?

Arrogant? Absolutely.

Elections have consequences, and the Obama administration has set a course on a far-left agenda, despite the warnings of the people. In one year, this administration has succeeded in doing the unthinkable — it has ticked off the left, the right, and the middle. How did they do it? Ideological myopathy is the key, and Chicago-style politics that don't play well on the national stage.

Inexperienced? Yes.

Inept? You make the call.

President Obama has little experience running anything, much less a really big country, and it shows. Reading terrorists their rights, arresting military because they allegedly punched a terrorist in the stomach. The president makes nice with the folks who want to kill us, and what happens? They try to kill us. Ft. Hood and the underwear bomber are stark reminders that another attack may well be hatching as we speak.

He’s zero for two in Copenhagen. The failed Olympic bid is one thing, but who goes to a global summit to get an agreement, and does not have the details worked out in advance. Politics 101.

When Martha Coakley conceded to Scott Brown this week, she thanked Bill Clinton and Vicki Kennedy for their support. No mention of the president, who flew in on the eve of the special election to campaign for the Democratic candidate. Ouch! Brown won the Commonwealth by 26% of the vote. The Dems are gonna need Teflon to try and explain this away.

Now health care is dead, and it is at the hands of the voters who put Ted Kennedy in the seat for 47 years. Having grown up in New England, I was mildly amused at the platitudes when he died. Teddy was an embarrassment. Chappaquiddick and his nephew’s rape trial showed the true character of the man. These two incidents were 21 years apart. Like Robert Byrd, he became a force in American politics because he outlived all of his colleagues.

Joe Biden? Second string. This is the best gig he will ever have.

Harry Reid? Sorry, I didn’t mean what I said, Mr. President.

That’s okay, Harry. It’s your job not to mean what you say. Just don't mean what you say to not advance the cause and we're cool...

Someone asked Nancy Pelosi about the weather the other day. Her response: “Yellow”. She then retracted her statement, indicating that she actually meant to say "bird seed".

Look, we know these guys are smart. Unfortunately, they have never done much of anything. They did not lose their way because of ideology. They lost their way because they have treated the American people like they are idiots. When Grandma rose up out of her wheelchair on the farm, we called it a miracle. When she rose up at a town hall meeting, they called her a misguided ass.

It looks like Grandma, and a lot of other people (including 22% of Democrats), got up off their asses, went to the polls in Massachusetts, and sent a message to the country. Coakley’s percentage of the popular vote is right where the president’s approval rating is now. Go figure.

My advice comes from Jerry Glanville, in the same clip: “Is he a college guy? …I hate college guys… Is he a boolah-boolah official?”

Throw out the theoreticians, Mr. President. Let the people who have done this before do it again, without having to answer to a czar or some other political crony who doesn’t have a clue how it’s all put together. Once you get that under control, go back to Congress and talk… to everyone.

Then go to step two… listen.

Listen to the “tea-baggers” and the far left. If you do, you may find that middle ground. And it’s that middle ground where you could find your base.

Mr. Obama, you are my president, and I am rooting for you. I don’t agree with most of your views, but I respect the office. I also respect the political process. In the United States, the people will be heard, and they have articulated wisely in Massachusetts. So heed the warning of this special election. Our safety, security and economy depend on it.

Welcome to the NFL. See you in November.

Volkswagen Risk Manager Named '2009 Risk Innovator'

2009-09-18T21:37:00.005-05:00

RISK INNOVATOR

The Risk Innovator Award recognizes winners across different industries who have demonstrated innovation and excellence in risk management. These key individuals see risk differently and have resolved risk-related problems in a unique or innovative way. They view risk not only as a threat, but also as an opportunity for their organizations.

About Risk and Insurance ® magazine

Risk & Insurance® provides business executives and insurance professionals with the insight, information and strategies they need to mitigate challenging business risks. We keep our readers current on a wide variety of business risks and mitigation strategies — from insurance, employee benefits and alternative risk transfer to emerging risks and the strategies for addressing them.

Risk & Insurance® is published monthly and semi-monthly in April, September and October.

Manufacturing

Richard G. Vassar

General Manager, Risk Management
Volkswagen Group of America Inc.
Herndon, Va.

Laughter and creativity guide Volkswagen's risk manager, who knows how to bring risk management to those around him.

Given the title of a nicely selling book about giving the insurance industry a little comeuppance you might think it was written by Public Citizen, a public advocacy group started by Ralph Nader.

The title of the book, "Hide! Here Comes the Insurance Guy: Understanding Business and Risk Management" in fact, belongs to Richard G. Vassar, general manager, risk management at Herndon, Va.-based Volkswagen Group of America Inc.

The journey of Vassar's book from idea to rolling off the press is a real saga. After Vassar talked to more book publishers than he cares to remember, he decided to take a bold step: enter the world of print-on-demand, wherein he would foot the bill for every book sold, title by title.

It was a good gamble. With some promotional help from RIMS and speaking engagements, as well as a number of favorable reviews, he knew his approach of simplifying substantial insurance concepts with touches of humor here and there was catching on. That was July of 2006.

Within a year or so about 1,200 print-on-demand copies had been sold.

So in November of last year, in addition to the print-on-demand title, Vassar's publisher, iUniverse, launched a traditional title of the same name and has sold about 300 copies since then. The books are available through the publisher and Amazon.com.

Vassar wrote the book principally for midsize and smaller companies at which the risk manager often wears other hats as well.

Said Vassar: "I wrote the book because most organizations lack the basic knowledge of risk management and insurance. Many look at insurance as a 'necessary evil' and do not know how to take a proactive approach to reducing losses, which in turn reduces insurance costs.

"I also recognized that insurance has its own language, and the book was aimed at being a translator for those with business acumen but who find insurance much too technical to warrant its study."

Vassar said the current target reader for "Hide!" is a larger business audience. "What I've learned working in Corporate America is that when you walk into the CFOs office you've got to speak like they do--in numbers. If you go in talking insurance language then you're not going to get buy-in."

--------------------------------------------------------------------------------

BREAKING IT DOWN

Several people who know Vassar well said he is the ideal person for breaking down insurance speak into understandable business terms.

Joe Donnelly, senior vice president at Kansas City-based Lockton Companies LLC, a construction services business manager, said of Vassar: "Rick is a creative risk manager. Many risk managers will sit back and let things run themselves. Rick is more of a mind to take positive action.

"He works very closely with his broker. Then he takes a very aggressive role in dealing with the market. He can be a challenge to work with at times--but for all the right reasons. I enjoy working with him."

Added Donnelly: "Rick is well versed in his field. He knows what he wants, but at the same time he is easy going. In a business/social situation he is very comfortable; he is well spoken and a genuinely nice guy."

"When working with Rick there was never an easy solution," noted Jim Misselwitz, senior account executive and part owner at ECBM, a very large independent broker in the Philadelphia area. "You always had to keep working a project until everybody was fully satisfied but Rick had a way of dissecting a problem that left everybody feeling comfortable."

"Rick is one of those guys who, when bombs are going off all around you, has a way of being calm, of staying focused on the end game. He had a level of knowledge such that he could communicate at any level in the corporation. Rick also knew how to stay on task. If somebody came and said, 'We've got to this and we've got to do it now,' he would put it in a place it belonged and come back to it at the appropriate time. He always served the company first."

Throughout the years, Vassar has consistently realized a 20 percent first-year cost improvement and maintained or improved on those numbers for every corporation where he's worked more than 20 years: 15 years at Thrifty Car Rental, Inc.; five years at Valcourt Building Services and in the past year at Volkswagen Group of America.

--By Steve Yahn

Rick Vassar Named ‘2009 Risk Innovator’ by Risk and Insurance Magazine

2009-09-18T21:31:00.002-05:00

NewswireToday - /newswire/ - Sterling, VA, United States, 09/16/2009 - Risk and Insurance Magazine, an LRP Publication has announced that Richard G. Vassar, General Manager, Risk Management for Volkswagen Group of America, has been named a 2009 Risk Innovator.

The Risk Innovator Award recognizes winners across different industries who have demonstrated innovation and excellence in risk management. These key individuals see risk differently and have resolved risk-related problems in a unique or innovative way. They view risk not only as a threat, but also as an opportunity for their organizations.

Mr. Vassar is recognized as a guiding force in the risk management community. In 2006, he published his book Hide! Here Comes the Insurance Guy. The book provides business insurance and risk management strategies in an easy to read style that simplifies the process.

Says Vassar: "I … recognized that insurance has its own language, and the book was aimed at being a translator for those with business acumen but who find insurance much too technical to warrant its study."

Several people who know Vassar well said he is the ideal person for breaking down insurance speak into understandable business terms.

Joe Donnelly, senior vice president at Kansas City-based Lockton Companies, LLC, a risk services business manager, said of Vassar: "Rick is a creative risk manager. Many risk managers will sit back and let things run themselves. Rick is more of a mind to take positive action.“

When working with Rick there was never an easy solution," noted Jim Misselwitz, senior account executive and part owner at ECBM, a very large independent broker in the Philadelphia area. "You always had to keep working a project until everybody was fully satisfied but Rick had a way of dissecting a problem that left everybody feeling comfortable."

"Rick is one of those guys who, when bombs are going off all around you, has a way of being calm, of staying focused on the end game. He had a level of knowledge such that he could communicate at any level in the corporation.”

Risk & Insurance® (riskandinsurance.com) provides business executives and insurance professionals with the insight, information and strategies they need to mitigate challenging business risks.

How the Bottom Fell Out? Now We Know Why Banks and Insurers Shouldn’t Be Allowed to Play Together

2009-02-06T12:06:00.005-05:00

By Rick Vassar CPCU ARM

Author of the #1 Insurance Liability Book on Amazon.com Hide! Here Comes the Insurance Guy

CHICAGO, Dec 17, 2008 (BUSINESS WIRE) -- Fitch Ratings downgrades XL Capital Ltd (XL) and its property/casualty (re)insurance subsidiaries, including the Issuer Default Rating (IDR) for XL to ’BBB+’ from ’A’, and the Insurer Financial Strength (IFS) rating of its core operating companies to ’A’ from ’A+’. (See the full list below.) The ratings remain on Rating Watch Negative.

The rating action follows XL’s announcement that the company anticipates the estimated mark-to-market decline in its investment portfolio through November 2008 to be largely in line with the $1.1 billion of unrealized losses, other than temporary impairments and realized losses on sales the company incurred in the third quarter of 2008 and the $200 to $220 million in net investment fund affiliate losses from its alternative investment portfolio for the fourth quarter of 2008.

Rick Vassar’s insurance/Financial Interpretation – “Sorry, man, my bad…”

NEW YORK--Dec. 17, 2008--American International Group, Inc. (AIG) has issued the following statement regarding an article published today by Bloomberg:

"AIG reports all its derivatives at fair value in accordance with US GAAP including AIGFP’s credit derivative portfolios. In accordance with US GAAP, in its determination of fair value for its credit derivatives, AIG considers all available information including but not limited to market available data, dealer provided prices, prices used for collateral posting and recent trades including early terminations initiated by counterparties. In evaluating fair value for its Regulatory Capital portfolio, AIG also considers factors relating to the individual underlying portfolios including, but not limited to, asset type and seasoning, default history, loss history and attachment point.

"AIG has clearly described its valuation approach including key assumptions used for AIGFP’s super senior credit default swap portfolio in its Form 10-Q for the quarter ended September 30, 2008."

Rick Vassar’s Insurance/Financial Interpretation:

“Face it. You [screwed] up! You trusted us.”

-Eric ‘Otter’ Stratton from the motion picture Animal House (1978)

I have been asked on numerous occasions in the past few months how this could happen to a big insurance company like AIG.

Why are they investing money in sub-prime mortgages?

How could they not see this coming?

You see, the general public believes that insurance is quite a simple process. You charge premiums, you pay claims, and you keep the money that’s left over.

It’s sort of like that, except that there’s one component left out. The insurance companies charge premium, put some of it aside to pay claims, and invest the rest. The insurance industry as a whole loses money on the spread of premium to losses, but makes it up handsomely on the investment returns. The industry has been doing this for hundreds of years.

So what’s the problem, Rick?

The problem was outlined in my book Hide! Here Comes the Insurance Guy in early 2006:

“I believe there was a watershed decision made in 1999 that should have put the debate of the hard market to rest. In that year, Congress passed the Financial Services Modernization (Gramm-Leach-Bliley) Act. This act allowed, for the first time, banks to offer insurance products and for insurers to offer banking services through holding companies. This created a synergy between the two industries which allowed both to tap into their customer bases and mine business from the other industry. Banks and insurance companies could offer their clients a one-stop alternative for both insurance and banking.

The result was an increase in competition in the marketplace, which led to consolidation of companies that were too weak to compete in the more dynamic market. The increased competition increased supply for a fairly stable demand, reducing the prices in the marketplace. The increased competition also caused some weaker insurers to lower their qualifications for coverage, which weakened their overall book of business and made them susceptible to the vagaries of the free market. At the same time, it provided a need for coverage in the secondary market that was not being fulfilled at a reasonable price.”

In other words, instead of insurers going to the bank to invest their money, they became the bank. Insurers found that by going to themselves to invest their money to be much easier and much more profitable.

I mean, who is going to ask questions of you if you are borrowing from you.

Sarbanes-Oxley only expanded the problem, because the transactions were being reported. No one understood the investments, but they were being reported. And don’t worry, it’s mostly our money.

Then, the bottom falls out, and the bank turns back into an insurance company and tells us that they don’t know what these swaps and stuff are all about, because this isn’t our core area of expertise.

Exactly.

One needs to look only at the insurance industry’s combined ratio, which is the percentage of each premium dollar a property/casualty insurer spends on claims and expenses. The industry average has been hovering around 102%, which means for every $100 collected in premium, $102 is paid out in claims and expenses.

The combined ratio is conservatively estimated to be around 104% in 2008, with some experts saying that it could be as high as 108%.

So, what has this taught us?

Insurers began to rely on investment income to offset poor premium pricing and underwriting decisions in reaction to increased competition brought about after Gramm-Leach-Bliley. Insurers lowered qualifications to bring in more income to invest. Once claims cost began to rise due to poor underwriting, there was more pressure on the investment side to make up the difference.
The pressure for increased investment income led to lower standards in the underwriting of investments. The greater the risk, the greater the return, unless the bottom falls out
If there is transparency in financial transactions that no one understands, are they really transparent? SarBox gives the impression of accountability without accountability, which is okay, unless the bottom falls out.

It makes me chuckle to hear insurers tell me that the insurers are actually in good shape. My question is: How good would they be if that $100 billion or so didn’t come to the rescue? The insurance subsidiaries are being kept alive to sell off from the banks – I mean holding companies.

Let’s go back to banks being banks and insurers selling insurance. When they’re apart, they work pretty well. When they got together, it was real good for awhile. Premiums came down, insurance was available, investments were plentiful. When the bottom fell out, the fall was swift and severe, and there was no place to go.

Too good to be true is all well and good, unless the bottom falls out.

Finance and Insurance: How a Change in Focus Led to an Economic Crisis

2008-12-09T22:00:00.006-05:00

By Rick Vassar CPCU ARM

We’ve all heard the children’s story about the emperor and his new suit. The emperor ordered some clothes from some con men that had passed themselves off as weavers. These grifters convinced the king and his court that the clothes were “made of material that possessed the wonderful quality of being invisible to any man who was unfit for his office or unpardonably stupid.”

So, they pretend to dress the emperor, and as he stands there naked, all of his advisors and associates begin to comment on the beauty of the suit, since each feared that not being able to see this beauty would validate his unworthiness for his high position.

As each of the emperor’s confidantes spoke glowingly about the clothes, the emperor began to believe that he could be seen as unfit for his high place because he could not see the suit. As he stands there naked, he makes a really bad decision:

Hey — let’s have a parade so I can show off these wonderfully beautiful clothes!

So he parades through the street, and all marvel at the exquisite suit of clothes, until a small child calls out, “But he has nothing on.…” The crowd begins to chant this as well, while the emperor lifts his head higher and the chamberlains proudly hold higher the emperor’s nonexistent train.

What does this tale have to do with risk management and the current financial crisis? Read on.

The Rise of Enterprise Risk Management

The enterprise risk management (ERM) movement began to take hold of the risk management and financial community following two significant events shortly after the turn of the century. These events set the stage for the risk management community to step forward and make itself known to the business community as a vital element of the financial system, necessary to protect the assets of the organization.

The Attacks of September 11, 2001

In 2001, the attacks of September 11 forced businesses, governmental entities, and the general public to take a serious look at the risks they faced on a daily basis. On any given day, the walls could literally fall down, and life as we know it can be changed forever. After September 11, all of the securities we took for granted needed to be reevaluated. Our personal, financial, and infrastructural security all took a hit that day, and businesses were forced to look at risk as an important factor affecting the continuity of business activities as well as factors that could result in the actual demise of the entire organization.

Survivors Faced a Hardening Insurance Market

Some businesses failed. Ones that survived faced a hardening insurance market, a market in which insurers used the events of September 11 to divest themselves of risks they had taken on after the Gramm-Leach-Bliley Act of 1999 opened up the insurance markets to financial institutions that flooded the market with an increased supply of insurance choices while demand stayed fairly stable.

When the United States was attacked, the financial chaos that ensued gave the insurance industry the opportunity to tighten its underwriting requirements. The policies that were written for less favorable risks from 1999–2002 were summarily dropped, and those businesses that did not lose their coverage faced renewal increases as high as 150 percent.

Sarbanes-Oxley Act of 2002

In the early 2000s, the increase in defined contribution retirement plans and 401(k) plans flooded Wall Street with funds from smaller investors, and it became apparent to some that publicly traded companies needed to be more accountable to protect these small investors who were completely detached from the management of the organization.

On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act, after it was overwhelmingly approved by both the U.S. Senate and the House of Representatives. Sarbanes-Oxley set up strict financial and accountability standards for publicly traded companies. Coming on the heels of corporate accounting scandals at large companies such as Enron and Adelphia, the Act set a uniform standard for financial accountability to ensure that the assets of an organization and, therefore, the interests of stockholders would be protected.

The accounting standards, along with the civil and criminal penalties for noncompliance, set the stage for a codified infrastructure not only for publicly traded companies, but also for those companies that aspire to evolve from private ownership. To do so, these private firms would need to prove that they could withstand the scrutiny imposed by Sarbanes-Oxley before “going public."

An Opportunity Lost

The risk management community had success all laid out for them, and it cannot be denied that risk management is much more visible today than when I started in the discipline over twenty 20 years ago. Instead of being able to grasp the opportunity presented, the ERM profession is mired in uncertainty that stems from an inability to define itself in the business community. In fact, if you polled 100 risk managers and asked them the difference between traditional risk management and enterprise risk management, you would come up with at least 90 different answers, if not more.

The culmination of this lack of clarity was the publication by the Risk and Insurance Management Society (RIMS) of Enterprise Risk Management for Dummies, in an attempt to explain ERM to its own members. In fact, the book was given free to all members of RIMS in 2007 and is given to all new members who have enrolled since April 2007.

And Here Is Where the Emperor and His New Suit Come In:

Why is it so difficult to distinguish the difference between traditional risk management and enterprise risk management? Because they’re the same thing! The emperor has no new suit.

Why the ERM Initiative Will Not Work

Enterprise risk management collapses under the weight of its own expectations and the expectations of the risk management community. I cannot see ERM as anything other than a repackaging of traditional risk management practices. It is an attempt to market risk management to the business community, and the business community sees right through it.

Here’s why enterprise risk management will not work in its present state.

1. The inability to adequately define ERM — There is very little to distinguish ERM from traditional practices. Why, then, do we choose to call it something else?

2. Loss of focus — Sarbanes-Oxley defines a process for financial accountability. If there is one major difference between ERM and traditional risk management, it is ERM’s focus on risk financing as the primary vehicle for success. Any good businessperson will tell you that only when you control your losses can you control your bottom line.

3. The risk manager’s accountability standard — An organization’s appetite for risk should not be a green light for a risk manager to try a risk financing option that may not be in the overall best interest of the company. Most companies, once they become comfortable that their risk management staff knows what they are doing, will lean heavily on the expertise on that staff, and the risk manager needs to fight the power and ego that go along with that level of comfort.

4. Credibility in the insurance community — Like it or not, the major role of the contemporary risk management department is the purchase of insurance. Yet, ERM, with all of its emphasis on the risk financing aspect of risk management, downplays the need for insurance expertise. This is foolish. A risk manager who leans on a broker for insurance expertise instead of leaning on him or her to teach the manager about the insurance process will not serve the organization well. A risk manager needs to need to know what he or she is buying, and more importantly, what the insurance industry is selling.

5. Where risk management resides in the organizational chart — In smaller companies, risk management has to fight to be considered a full-time job. In larger entities, the challenge is to elevate risk management to a board position (chief risk officer [CRO]). Risk management is neither a parttime job nor a board level position, and any attempt to sell it as more than an executive-level position diminishes credibility in the business community.

How ERM Can Work

The ERM concept is not a total loss. Here are some suggestions to make it work.

1. Return to risk management roots — Get back to the basics. The traditional model of identifying, analyzing, examining, selecting, implementing, and monitoring has worked really well in many ways; this process should remain the core of any risk management program. Completely changing the focus, the approach, and the model without fully defining the plan is — well — poor risk management.

2. Adjust the focus — Enterprise risk management focuses primarily on risk financing as the core tool to risk management success. Yet, if you have been in this line of work for a period of time, you know that the best way to reduce costs is to reduce the frequency and severity of losses through solid risk control techniques. If your organization will commit resources to safety initiatives, employee screening, and customer qualification, you will create an environment for business success AND save money on insurance costs. You can’t get creative with risk financing unless you have proper risk control techniques to mitigate the losses you are self-insuring. Risk control always comes before creative risk financing, and Sarbanes-Oxley does not change that.

3. Define the profession — In the minds of many in the business community, risk management is not a full-time job. This perception must change. It is not a part-time job, nor is it a board position. Increase the responsibilities of the risk manager, perhaps to include an expanded role into benefits management. In a smaller organization, this would sell the position as a true management position; if you hire a risk manager, you get a benefits expert as well. In a larger company, the risk manager would take on a more strategic role, and the position can be elevated to an executive level position.

The risk management community should focus on promoting the risk manager position as being, at the very least, a management position, and at the most, an executive-level position. This will allow the business community to better define the role and to make better use of risk managers when they are hired. I believe the risk management profession loses the most talent within the first six months of new risk managers’ careers — not because risk management is a bad job or profession, but because most new risk managers don’t know what to do when they get the job, and the companies who hired them don’t know what to do with them once they’re there.

4. Learn the insurance business — Regardless of any evidence presented to the contrary, risk management's primary responsibility is to purchase and maintain insurance. Why do I say this? When a major loss occurs in any organization I have been involved in, the bosses do not come around and ask if we did all we can do to mitigate this loss using solid risk control and risk financing techniques. No, it’s always the same three words: “Are we covered?” You can save all the money in the world on premium and creative financing, but you always want to make sure that when a loss occurs, the organization is aware ahead of time of the ramifications of such a loss. To do so, you need to learn about what you are purchasing. It is only then that you can determine if what you are buying is really what you need.

5. Get more involved in the insurance purchasing process — Did you know that the insured that uses a broker is not even considered a party in the insurance purchasing process? In this process, the underwriter is the seller and the broker is the buyer. The insured is merely the financing source, and the underwriting process is a financial capacity evaluation in which the underwriter determines the insured’s capacity to pay and the amounts the insurer will potentially pay out to settle and administer losses. If you as risk manager fail to interject yourself into the process, you will find that the lack of communication will lead to higher costs. To get involved, though, you need to understand the language, the process, and the goals of each of the players.

6. It’s all about the business — The number one piece of advice I can give risk managers is to learn how business works. Then learn how your business works, and adapt your program to that business. It is the job of others within the organization to make the ultimate business decisions. It is the risk manager’s responsibility to make sure that those making the decisions have all of the information they need from your area of responsibility to make those decisions. If the decisions made are not what you would have done, bite down hard and ensure that the organization is protected. If you provide the best information, and the company decides to go down a slippery slope anyway, management will not come back and tell you that you were right. The question will be “Are we covered?”

Conclusion

I firmly believe that enterprise risk management can be saved, but only if there is a commitment to return to the traditional roots of risk management. The emperor continued to believe in spite of overwhelming evidence to the contrary. When the small child yelled out that the emperor had on no clothes, the emperor and his men stood taller, as if the ignorance of the crowd outweighed any and all common sense.

It’s the same with risk management. ERM can work, but not until it can be defined. In the meantime, let’s step back and see if we can marry the two approaches: traditional risk management with its risk control focus, and ERM with its risk financing core. This will advance the discipline and bring the profession the respect it desires and deserves.

Until then, remember:

Listen to the child — the child is right.

Revved for Risk Management

2008-06-01T08:56:00.005-05:00

Vassar Joins Volkswagen Group of America

BY MATTHEW BRODSKY
Risk and Insurance Magazine
May 14, 2008
Reprinted with permission

Rick Vassar was watching Hootie & the Blowfish jam at this year's RIMS conference, and what captured his attention was not the band resurrecting its hits from the '90s.

It was how the floor in the San Diego Convention Center undulated with the carefree dancing, stomping and stumbling of the hundreds of revelers at the show.

"How much would they get sued," Vassar remembers wondering, should the floor collapse.

Chances are, considering their astute, wry nature, many other risk managers in the hopped-up Hootie audience that night had a similar thought.

But this observation is not why we're writing about Vassar. In April, he started work as risk manager for Volkswagen Group of America Inc. That's why.

"I couldn't have scripted it any better," he said about his new gig. He now works a mere 10 miles from his home in the Washington, D.C, area. It's a chance to do good things at a big company. And it gets him back to working in the automotive business, where Vassar got his start.

Turning 50 this June, Vassar first found himself in risk management back in 1986--in car rental claims at Thrifty. Three years later, he would become risk manager for the company.

It was fast success, an indication of things to come. Yet at the time, Vassar admitted, even though he knew he was good at risk management, he wasn't digging it.

Not until he found his passion for it, in education.

Then, he said, his profession became "more than just an opportunity, more than just a paycheck--a passion to try to impact the way people think about risk management."

His goal has been to try to humanize risk management to corporate, to communicate to the C-suite what risk managers should be tasked to do. He said that most people in business see risk management as a mystery that doesn't fit into their organizational charts.

"It's become a goal of mine to educate and enlighten companies that you can save money, lots of money," he said, through smart insurance buying, loss control, safety and everything else that a risk manager can provide.

Gone should be the day that bosses single out a victim in finance or legal and damn them to become the company "risk manager" ... without training ... a week before renewals.

Of course, Vassar also has set out to educate the other side of the equation: risk managers themselves.

"It's up to the risk manager to determine their place in the organization," he said, adding that it can be a difficult and tense transition. Risk managers are not the "rainmakers" in any organization, after all. They typically do not generate revenue. Risk managers can save, and that's their way of making money for their organizations, he said.

Of course, much of Vassar's sentiment is also shared by other risk managers. Besides "Only Want to Be With You" and "Hold My Hand," risk managers at RIMS also heard a very similar message from their leaders and session speakers: Risk managers should recognize, and act upon, their importance to their corporation.

But Vassar feels so strongly about the subject that he wrote the book on it--literally--a paperback titled Hide! Here Comes the Insurance Guy. Originally self-published in 2006, the title has been picked up by book printer.

Which brings us back to his new job.

The subject of his book happened to come up during the interview with VW, and he just happened to have a copy in his briefcase.

"The book lent credibility to my experience and education," Vassar said. "They were looking for someone who could come in and roll their sleeves up and get started."

Vassar might have to roll up his sleeves, loosen his tie and eat his Wheaties for his new job. He has decades of experience--he worked with Thrifty through 2002, then became head of risk management for 200-employee Valcourt Building Services--but Volkswagon of America is a higher gear. VW is the fourth largest automaker on the planet with more than 325,000 employees worldwide and 1,400 in the States. It has a global risk management department with input over the U.S. program, as well as a global insurance program with which certain U.S. coverages must be integrated. Meanwhile, the company is in the process of relocating its headquarters, placing a new plant somewhere stateside and gearing up for a big push into the U.S. market that will see it sell 1 million vehicles by 2018.

When asked about longer hours and more stress, Vassar grins. "It's going to be a challenge."

One that he's confident he can tackle and pin to the ground. He cited his experience working in auto fleet and in claims at Thrifty, which was only broadened with his work at Valcourt. At the building management company, he had to be ahead of the game. A lot of the company's projects involved men hanging off buildings--think window-washing--so when a claim drifted his way, it was bad. The goal was to prevent them, not deal with their aftermath.

With his experience and VW's expectations, his hiring is a "good marriage," Vassar said.

"They have made a commitment to risk management," he said. "They do view risk management from an enterprise standpoint."

Not to mention the automaker's dynamic and employee-oriented environment.

"I think they're a moving force in the United States. It's my goal to make a lifelong commitment to VW," he said. "I would love to finish my career with VW."

MATTHEW BRODSKY is senior editor/Web editor at Risk & Insurance®.

May 14, 2008

Copyright 2008© LRP Publications

Hide! Here Comes the Insurance Guy the #1 and #2 Insurance Liability book on Amazon.com

2008-02-13T13:57:00.008-05:00

Hide! Here Comes the Insurance Guy takes a radically different approach to explaining risk management and business insurance. Hide! explains the insurance process, indentifies the players are and simplifies the terminology, using humor to make a mostly unpalatable subject easier to digest.

Today, the book is both the number one (paperback) and the number two (hardcover) bestsellers on the Amazon.com insurance liability book list. The paperback is also #2 on Amazon.com in the risk management category.

"It's exciting", says Vassar, "even those who are insurance novices learn a lot, and I'm amazed at how many folks find the book to be a joy to read.

"I mean, think about it; a funny yet authoritative book on insurance and risk management, two disciplines not known for their senses of humor. And the fact that these strategies can save them so much money once they crack the code is incredible."

Rick Vassar CPCU, ARM, AIS, ARM-P is the principal in The Vassar Group, LLC and Vice President of Risk Management for Valcourt Building Services.

The Vassar Group specializes in rent-a-risk manager services for emerging companies, and Mr. Vassar also conducts workshops on the risk management and insurance process. These workshops are eligible for up to eight insurance CE credits

Both books are available through the RIMS (Risk and Insurance Management Society) bookstore www.rims.org

How Do You Survive a 47 Story Fall? You Don't

2008-01-31T12:25:00.000-05:00

You’ve seen those guys. They’re the ones who are hanging from the side of a building washing windows. You probably pay them very little mind, unless they have cordoned off the area below you where you usually go down and grab a smoke.

More often than not, you probably look up and wonder how anyone can wake up each morning and hang off buildings like that. I know I do. I am responsible for risk management and insurance for the largest commercial window cleaning company in the United States.

Each day, our company faces the fear that one of our guys will get severely injured. And while you perhaps think of these guys as an inconvenience, they are fathers, mothers, sons, daughters, brothers and sisters.

Window cleaners are much like firefighters and policemen: a fraternity of the few, who know what they do is dangerous yet essential. Window cleaning is not only aesthetic; it also helps to extend the physical life of the building by cleaning off the elements that accumulate on surfaces, especially in urban areas.

As I sit here watching a window cleaner hanging just outside my eleventh floor office window, I am thinking about the window cleaner in New York who fell 47 stories from a swing scaffold and survived. His brother was killed, but somehow, Alcides Moreno lived. It is not exactly clear what happened that day in December, 2007, but after that swing scaffold hit the ground from 500 feet above, Alcides Moreno had survived and his brother Edgar had not, and one thing is absolutely clear: the survival and bright prognosis for recovery for Alcides Moreno is nothing short of a miracle.

Early indications are that it was human error, mechanical failure, structural failure, or a combination of all three. The reports indicate that the Morenos were not hooked up to a safety line, which would have saved them. There were new cables on the scaffold that may or may not have been properly installed. And it’s also possible that the scaffold was not properly anchored to the building.

It is also believed that this suspended scaffold’s design required that the occupant’s safety lines be attached to the scaffold instead of an independent safety line. Most suspended platform protocols call for safety lines to be hooked up to an independent line attached to the building.

Many buildings, especially the older ones, are not properly equipped to safely secure weight off the side of the roof. Oftentimes, window cleaners have to find innovative ways to secure their lines to their chairs or scaffolds to perform the work safely.

Sometimes, these anchor points are not structurally sound enough to hold the weight of the platform and its occupants.

What most people don’t know is that most buildings can be retrofitted with anchors that protect the structural integrity of the building while safely allowing work in areas that can only be accessed from above. Many property owners look at retrofitting as cost-prohibitive, but insurance cost savings over a relatively short period of time will more than cover the costs of anchor installation.

In 2004, I attended a safety training session for our company in Atlanta. Each crew not only practices safety techniques, but also trains on rescue scenarios. If something goes wrong 20, 30, or 40 stories up, crew members can only rely on each other, and these guys are the best.

When I joined this company, I had consistently stated that I would like to try a drop. But when the day came, even two stories seemed awfully high, so I decided not to ask to rappel down the side of the building.

One of the managers called my bluff. So I climbed up a very long ladder to the top of the two-story warehouse, and started to have second thoughts:

I’m an office guy. I don’t need to do this…

Then I looked down at the ladder and decided it would be a lot less stressful to go down by rope than to go back down that ladder.

So I went down by rope. I would prefer never to have to do that again. I probably will, though, because from 30 minutes of preparation, and the three to five minutes it took to slide down two stories, I came away with an incredible degree of respect and admiration for the people who do this every day, from heights much higher than I experienced.

They put their lives on the line for the noblest of causes – supporting their families. So, if their work interrupts your smoke break, remember this: if everyone does his or her job right, your smoking is a much riskier activity than window cleaning. While the survival of Alcides Moreno is a miracle, the death of Edgar Moreno is a reality that all window cleaners live with every day.

So, if you are a window cleaner, be careful out there. If you are a commercial property owner or manager, check to make sure your building is safe to work on.

Someone’s life might depend upon it.

Quinley Calls Vassar Book 'Top Risk Management Book of the Year'

2007-12-21T14:48:00.000-05:00

The Envelope, please … the Top Risk Management Book of the Year …

By Kevin M. Quinley CPCU, ARM AIC, AIM, ARe

"Olly olly oxen free! Come out, come out, wherever you are!"
Reviewed by Kevin Quinley

Hide! Here Comes the Insurance Guy by Rick Vassar, iUniverse, 2006, 196 pp., $17.95

Somebody once said that a New York accent was the most effective form of birth control known to man. Others might nominate as an effective contraceptive any tendency to talk about insurance… or risk management, for that matter.

Author, risk manager and consultant Rick Vassar has penned an illuminating primer on insurance and risk management in his book, "Hide! Here Comes the Insurance Guy." The title is a take-off on the notion that, for most people, meeting with an insurance person or discussing coverage is as much fun as a root canal or proctological exam. The author – a CPCU and an ARM -- lives a dual existence. By day, he is a mild-mannered risk manager for a company in the Washington D.C. area. In his spare time, he writes and consults on risk management topics (check out http://www.vassargroup.com ). Vassar tries (successfully) to cushion the blow and counter the stereotype by presenting insurance and risk management principles in a straightforward way that can profit any business professional.

Part of his theme is that most companies have risks that are overseen by someone whose title is not "Risk Manager." Most companies do not have risk managers; you need to have a pretty big insurance budget to justify that as a full-time position. No company vies to be paying so much in insurance premium that they spotlight the problem by having a full-time individual to tend to it. Nevertheless, all companies have risks and need to manage it. For these risk managers without title or formal portfolio, Vassar's book – perhaps the best risk management book of the year even without that phrase in the title -- is an indispensable primer and guide. Reading and heeding his advice will save businesses much money, frustration and Excedrin-consumption.

Vassar divides his book into three main sections. Part I discusses business strategies to even the playing field between policyholders and insurance companies. Part II walks through the major basic forms of insurance coverage for most any business. Part III rounds out with a useful; glossary and index.

Vassar's target audience is likely not the Fortune 500 or Fortune 1000 risk pro who attends the annual RIMS Conference. There is no highfalutin discussion of enterprise risk management or views from 50,000 feet above ground level. If you are seeking information on Sarbanes-Oxley compliance or the risk management implications of global warming, look elsewhere. The storefront risk manager, though, will find a wellspring of effective tips and tricks between these covers.

Vassar's focus is practical and hands-on, leavened with a self-deprecating sense of humor. Did I say "humor"? Yes, though few comedy clubs are likely to feature an Open Mike night for insurance reps, Vassar takes the human antipathy toward insurance and turns it into a source of mirth and amusement. (Some end-of-chapter checklists would have been a nice addition to the text, but this is a minor quibble.)

So run -- but don't hide - and get your copy of "Hide! Here Comes the Insurance Guy." Get out from under the desk. Leave the closet and face your fears. Insurance and risk management may not be fun (though they are occasionally funny), but Rick Vassar has come as close to anyone in blending sharp wit with moneysaving risk management insights.

Kevin Quinley CPCU ARM is the author of over 500 published articles and nine books. His articles have appeared in publications including Business Insurance, The National Underwriter, Risk Management, Occupational Safety & Health, Best's Review, CPCU Journal, Insurance Settlement Journal, The Risk Report and For the Defense. He is the author of Time Management for Claim Professionals, Claim Management, The Quality Plan, Litigation Management and Winning Strategies for Negotiating Claims and Managing Product Liability Risks. His seventh book, Bulletproofing Your Medical Practice: Risk Management Strategies that Work, was published in October of 2000. His eighth book, Well-Adjusted: 185 Career Tips for Adjuster Success was published in mid-2001. The ninth book – coauthored with Don Schmidt -- Business at Risk: Risk Managing the Terrorist Threat was published in 2002.

Use The Holiday Season to Elevate your "Claims Game"!

2007-12-14T16:17:00.000-05:00

Reprinted with permission from The Claims Coach Blog December 10, 2007

Use The Holiday Season to Elevate your "Claims Game"!

by Kevin M. Quinley CPCU, ARM AIC, AIM, ARE
Kevin has written over nene books and over 500 articles on various subjects including claims management, risk management and the insurance industry. He is known throughout the insurance industry as an expert in claims analysis and administration.

Christmas time is one time of year when I’m glad to be a claims person and not an underwriter. With so many insurance renewal dates at 12/31 or 1/1 on the calendar, the underwriters are at peak workload at this time of year, scrambling to address new and renewal business. Underwriters are besieged by the need for insurance quotes or brokers who want to cut deals. In fact, it is downright hard for underwriters to take much time off during the holiday season.

Not so for the claim folks...

If anything, our volume drops this time of year. There are likely many reasons for this. One may relate to the fact that we only handle product liability claims. If we were dealing with personal lines losses – autos or homeowners for example – December might be a busier time. In the world our claims department occupies, though – commercial liability – the folks at insured companies who report claims are often out on vacation themselves. Attorneys who generate much of the paper and activity on litigated cases are in a wind-down mode. Judges do not seem too keen to schedule mediations or trials during the Christmas season, though I have been in a couple of nail-biters during yuletide, worried that the jury was going to turn into a gaggle of twelve Santa Clauses.

For some claim departments, the holiday season marks a ramp-down of the pace of business. Less incoming mail arrives. The phone is quieter. Fewer emails and faxes intrude. (Your mileage may vary, again either due to the types of insurance you write or if you work for a TPA that gets overflow assignments.)

This can be an excellent time for the claim staff to invest time in activities that will boost their productivity and get them off to a running start the next year. For example:
• Purging old materials (both hard copy and files on hard drives) that are no longer needed
• Organizing one’s desk, drawers and reference material
• Writing out professional goals for the next year and embedding ticklers or reminders on the calendar to revisit progress on these periodically through the year
• Networking with other professionals that you had a hard time finding time for earlier in the year

Use any “lull” presented at the end of year to catch your breath, gather yourself, get organized and get focused on what you want to accomplish as a claim professional in 2008!

The Claims Coach may slide down the chimney and appear again before the end of the year but, in any event, he wishes all a happy and fun holiday season!!

FOR SMALL BUSINESSES, IMPLEMENTING RISK MANAGEMENT SYSTEMS IS WORTH THE COST

2007-11-02T14:26:00.000-05:00

BY MATTHEW BRODSKY

Reprinted from GO! Magazine - Inflight Magazine of Air Tran Airways, November 2007

Risk management is a hot topic with the nation’s biggest companies. Its practitioners are prime-time players on the ladder, reporting to CEOs and boards. Listen up, small businesses: You could stand to emulate the big boys and implement a risk management system of your own.

According to Rick Vassar, risk consultant and author of Hide Here Comes the Insurance Guy, a risk manager’s work permeates all levels of the organization. Put simply, risk management is knowing what obstacles could derail your business goals, and planning ways to avoid, minimize or just plain survive them. It’s as important for small companies as big ones, says Joy Gänder, owner of an eponymous consulting firm—yet small businesses often don’t give the practice the attention it deserves...

Instead, small businesses tend to relegate the task down into their organization, Gänder says. Or the very top person—the owner—gets stuck with it. The reason? They simply see risk management as insurance, a boring, confusing commodity that’s not worth the cost. “The average business owner can’t stand dealing with property/casualty insurance,” Gänder says.

Keith Pizer, co-owner of a New Jersey-based graphic design firm named 1 Trick Pony, got stuck with the job of buying insurance. He laughs about it now. “You don’t realize how many people you know in insurance until you need it,” he says.

Pizer’s broker helped him to get coverage that matches that of other companies of his size and in his industry. Gänder recommends this sort of comparison shopping for her clients.

She also can take it one step further by factoring in an owner’s risk appetite and balance sheet. If a client has good cash flow and can stomach having more on the line, Gänder might recommend raising deductibles for, say, auto coverage from $100 to $1,000. This increase means a decrease in premium.

But risk management is about more than just insurance. “Risk management is an ongoing process… and it involves a lot of common sense,” Gänder says.

Risk control is all about identifying dangers— called “exposures” in industry parlance—that can threaten business success. Th ink floods, tornadoes, fires. Think lawsuits from disgruntled clients or employees. Think employee injuries. You know your business. What can get in its way?

Figure out ways to eliminate, mitigate and/or finance these exposures. Then implement. Insurance is just one way. Risk control is another. Have a disaster preparedness plan. Review your employee handbook. Back up your servers off -site.

This all might sound complicated and costly, but it’s not. “The biggest misconception is that a risk management program is too expensive,” Vassar says.

Perry Ballard, proprietor of Ballard Safety Consulting, came to his risk-control methods, such as contract disclaimers, in part through his peers and from learning from others’ mistakes. He hasn’t had a disastrous lawsuit or other claim to date. Ballard also got advise from Vassar on how to set up his liability insurance. “You need someone to come in from the outside and look at your exposure,” Ballard says.

Of course, small companies might not be up for hiring a risk consultant. They can trust in their agents to steer them right, or tap into the wealth of risk resources on the internet, including the National Association of Insurance Commissioners, FEMA, the Insurance Information Institute and the Small Business Association.

In the end, all successful small companies get to the point where they have to do something about risk. “As they grow, most small businesses realize that they need to manage their insurance program,”

Vassar says. “Those who make that commitment continue to grow; those who don’t usually remain small or don’t survive at all.”

RISK MANAGEMENT PRACTICES TO REMEMBER

• Take it seriously. Hand the responsibility to an important go-getter. “It’s helpful to elevate risk management and give it more visibility,” consultant Joy Gänder says.

• Know your insurance policy. Compare yours with similar companies. Ensure your coverage is based on replacement costs for damaged items, not book values. Consider coverage for exposures particular to you—i.e. flood coverage near the coast or business interruption for lost income.

• Let your insurer know you. Perry Ballard, a West Virginia business owner, says he shares all his loss-control techniques with insurers. They like that.

• Claims happen, and when they do, deal with them. Consultant Rick Vassar says companies fail to report claims on time or give insurers enough information, which increases insurers’ costs—and they don’t like that.

This entry was posted on Thursday, November 1st, 2007 at 6:00 pm and is filed under Business. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

Blog Praises Hide Here Comes the Insurance Guy!

2007-08-31T15:15:00.000-05:00

Posted on August 30, 2007

Blogcritics.org reviewer MaryAnna Clemons gave high marks to Rick Vassar's Hide! Here Comes the Insurance Guy "I would not be surprised to find this book as required reading in future business courses in colleges throughout the U.S...I tend to shy away from self-published work - I'm glad I did not in this case...Hide! Here Comes The Insurance Guy: A Practical Guide to Understanding Business Insurance and Risk Management

By Rick Vassar CPCU ARM

This valuable and practical resource will help risk managers and businesses alike improve and control insurance costs, potentially saving your company millions of dollars.

Bulk Discounts Now Available - Quick Turnaround...contact us @ info@vassargroup.com

Hide Here Comes the Insurance Guy "is a job well done"

2007-08-26T14:21:00.000-05:00

"Part two of the book is worth the cover price alone..."

by MaryAnna Clemons

Rick Vassar has found a niche subject (business risk insurance) that was lacking in coverage, so he wrote the book on it. And he did a great job doing it. The book, Hide, Here Comes the Insurance Guy; A Practical Guide to Understanding Business Insurance and Risk Management, is a job well done...

We all have to buy insurance for our cars, our homes, even our lives. But business insurance is a totally different animal. If you run a business, you have to have insurance. It's that simple.

Rick spells out what that insurance is, why you need it and why you'll be sorry if you don't have it. He has demystified more than a few insurance terms, opened up the world of risk (and the risk is all yours without insurance) and given compelling case scenarios to show what can happen without insurance.

If I had to pick on something to critique, I'd say that some of his headlines don't seem to match his later words, for example "Why people hate insurance" is the headline and then the anecdote that follows is about algebra. I would argue that people hate insurance because they pay and pay and pay and pay, and then finally, they submit a claim and they get hassled and hassled and hassled, until they finally settle for less than they should be getting from an insurance company. To me, that's why people hate insurance.

I think, though, that Rick was tying Algebra — the subject everyone thinks they'll never need --- into insurance, because at some point in life you'll need both. That is a pretty picky critique on my part, because nothing is perfect.

Back to the good stuff, I really like the way Rick has broken it down for you on the ins and outs of the insurance game. For one, he tells you to get more than one quote - at first that seems like common sense, but when was the last time you got a quote?

I had to think about it and for my car insurance, it's been at least four years. How would I know if I'm getting the best rate if I haven't bothered to shop around in four years? Nice reminder to me.

The same applies for business insurance and going through a broker. The broker is in business for himself or his company, not you. You are the payee and if you aren't paying, they don't make money, which is just part of the reason your insurance rates tend to go up every year, instead of down.

The book breaks down the claims process, defines your risk criteria, gives you the difference between self-insurance and no-insurance (personal alternative risk financing), brokers, lawyers and more.
When you are done reading this book you are going to understand:
The language of insurance
The insurance players who want your money
How to develop a sound insurance strategy
How to invest your time and efforts regarding insurance
And whether you are properly insured or not

Part two of the book is worth the cover price alone: Insurance 101. In this section Rick breaks down the different insurance policies, from cars to homes to worker's compensation: what is covered, what isn't, what you can expect from your insurance, time periods, and more.

Worker's Compensation 101: worker's compensation is mandatory in all states, but Rick explains that small businesses, based on the number of employees, can file for exemptions. He then goes on to explain why you may not want to do that. After all, even if you have two employees, if both of those employees get hurt, you aren't covered (let the lawsuits begin). Even if you think that your cousin Fred would never sue you, or that he won't get hurt because he's super-athletic, think again. Accidents (and fraud) do happen, even with friends and family.

Rick's enduring message through the whole book (174 pages, including Index) is to protect yourself and your business with insurance, while protecting your pocketbook from the insurance man. It's a great book and I'm glad I have it on my business reference shelf.

Since the book is published by iUniverse, I'll take moment to point out that it's very well edited. The book has a great binding that I've been bending, pulling and adjusting on and it's stuck together wonderfully. I would not be surprised to find this book as required reading in future business courses in colleges throughout the U.S. and for new insurance agents to give to their clients (smart marketing in action: educate the customer). The layout is professional and easy on the eyes.

As an avid book reader and buyer, I tend to shy away from self-published work - I'm glad I did not in this case. It's a well done book that hands you information to make your life easier.

http://blogcritics.org/archives/2007/08/22/185635.php

MaryAnna Clemons is a freelance journalist based out of Colorado Springs, Colo., with three children, five horses, five cats, five dogs and one husband. Writing about removing chemicals from our daily lives, the dangers of aspartame and vaccines, as well as book reviews, she is continually trying to cram as much writing into her day as she can. More information can be found @ www.maryannaclemons.com.

Hide! Here Comes Rick Vassar! Finally, An Insurance Primer for Small Business

2007-08-10T08:18:00.000-05:00

Hide! Here Comes the Insurance Guy

(Sterling, VA) Rick Vassar is not your ordinary run-of-the-mill insurance person. Rick Vassar does not sell insurance. He buys insurance. He is a risk manager. He’s refreshing and totally committed to making people trust him in spite of his chosen profession!

His new book, Hide! Here Comes the Insurance Guy, educates and entertains with energy and enthusiasm, and it’s a must-read for anyone who owns or operates a business.

This is a truly unique concept – an authoritative explanation of business insurance and practical cost-saving risk management strategies from the business perspective.

With a no holds barred and no prisoners taken approach, he takes the mystery out of the most mind-numbing insurance questions that plague everyone who’s ever sat down with an insurance policy and tried to make sense out of the minefield of questions that have to be answered.

“We all need insurance,” he says “but let’s face it – most of us can’t understand a single word insurance people are saying.”

With humor and a bit of spunk, you can go to Vassar for the answers!

In any organization, not managing your insurance program can cost a company thousands, if not millions, of dollars.

Hide! Here Comes the Insurance Guy is a guide to business insurance written by a businessman.

Hide! Here Comes the Insurance Guy also provides valuable strategies for interacting with the insurance industry from an insurance professional who has operated on the business-buyer end of the process. Here are some of the most effective tactics you’ll ever find in the areas of business insurance and risk management demystified by a businessman who has actually achieved real cost savings for himself and his clients.

Hide! Here Comes the Insurance Guy provides insight into an aspect of business life that few people readily understand. This wonderful little book can show you how to protect your company from losses and save lots of money in the process.

Now available in the Risk and Insurance Management Society (RIMS) bookstore!!

Hide! Here Come the Insurance Guy – A Practical Guide to Understanding Business Insurance and Risk Management

Helping Management Understand and Appreciate the Value of Risk Management

2007-06-08T13:11:00.000-05:00

Excerpted from the June 14, 2007 RIMS New York RIMS Seminar - Helping Management Understand and Appreciate the Value of Risk Management...

First off, before I explain to you who I am, I want to tell you what I am not:

1. I am not the insurance ‘answer man’. I do not profess to know all things about insurance, so I will not be fielding questions about retrocessionaire reinsurance contracts or loss to premium ratios. Although I do know of such things, it is not my area of expertise.

2. I am not the insurance industry. Although I have worked alongside the insurance industry for over 20 years, I have never held a position in nor received any compensation from the insurance industry or related industry

I AM A RISK MANAGER.

I work on the business side of the table, and although I am associated by, well, the entire world as an insurance guy, I do not sell insurance.

Currently, I am the Vice President of Risk Management for Valcourt Building Services in Arlington, VA and I also have a risk management consulting firm – The Vassar Group, LLC located in Sterling, VA.

How many risk managers do we have here today?

Any brokers?

Brokers, for some reason, love me. Whenever a broker finds out I’m a risk manager, they seem to a person to hang on every word I say. Brokers like to take me out to ballgames, dinner, and for some reason, brokers seem to think I am the greatest thing to come along in years.

Okay, of all the risk managers here, did any of you when you were a kid dream of growing up and becoming anything other than a risk manager?

You remember- You’re sitting at your desk in kindergarten and the teacher asks you what you want to be when you grow up. One kid says doctor, the next astronaut, the next a mommy… and then it’s your turn and you say “risk manager”.

Never mind that no companies had risk managers back in 1963 when I was in kindergarten. I would get the same reaction in 2007 that I would have in 1963-

“What does a risk manager do?”

After about 30 seconds into the explanation, their eyes start to glaze over as I explain probability versus possibility, activities versus results, risk financing, etc. It really doesn’t matter what you tell them, they always come away with the same conclusion:

Rick sells insurance.

These days, I just tell people that I buy insurance and leave it at that. If they ask any follow up questions, they do so at their own peril.

I have a brother-in-law, and for the past 20 plus years, I have explained to him what I do for a living. He has read the book, the articles and he is a pretty intelligent guy.

Every time I see him, he introduces me as Rick Vassar – he sells insurance.

Is there anyone here who chose another career both other than risk management?

I think I can safely say that for most risk managers, they do not choose risk management as a profession – it chooses them.

I am going to make a bold statement right here and now. Although risk management seems to be a thankless ill-defined profession at times, to me it is one of the greatest jobs in the world.

If I forget to tell you why, remind me at the end.

For me, it happened way back in 1986. No cell phones, no Internet. MY company had a fax machine but no one else did, so there was no one to fax stuff to.

I was working for a small local car rental company running an even smaller suburban rental location. I had just come off a bad experience at one of the national car rental chains, and I was pretty burnt out.

In November of that year, my boss took me out to lunch and offered me a position of district manager. I would continue as office manager and oversee the operations at another three branches. The promotion included a $50 per week raise that about doubled my salary.

There a catch, he said. You also have to handle the claims for the company as well.

No way, I told him. I hate claims. I hate insurance. I will never do that job.

He offered me another $25 per week as well as a percentage of the subrogation claims I collected on.

When do I start?...

Less than a week later, I got a call from one of the branch managers that an employee had tapped a little old lady in a parking lot, and there was damage to her bumper. I got the report, called the lady. She sent me three estimates, the lower being $221.23. I put in a check request, typed up a release that I found in a file cabinet (using a typewriter and those little white-out strips). It was pretty ugly, but I figured it would do the trick.

A few days later, accounting called and told me the check was ready. I drove over to the accounting department, walked into the controller’s office. She lit up a cigarette, reached back in an accordion folder, and pulled out an envelope.

After she took another pull off of her cigarette (because we didn’t have cell phones, computers or fax machines back then, they let us smoke in the office), she uttered those seven words that would forever change my professional life:

‘You know we have insurance to cover this?’

“Really”

Yup, just turn it over to the insurance company and they will handle it.

“Really”

And that, ladies and gentlemen completed my training as a risk manager for almost ten years.

In the next three years, the company grew from an 800 car fleet and eight offices to a company with a fleet of over 2,000 vehicles and 25 offices. In April of 1989, I was named Director of Risk Management for the largest independently owned car rental franchise in the world.

Although I held this lofty title, I did little more than handle the claims side of the business, and my boss handled the renewals and policy end. In May of 1992, 30 days prior to renewal of the insurance program, it was announced that my boss was leaving the company, and that I would be assuming his duties on the policy end.

NOW I had a problem…

As long as I was just doing claims, I only had to know a little more than everyone else in the company.

It reminds me of the time Diane and I were cutting through Central Park one day a few years back.

It was a beautiful spring day, when out of nowhere, a big black bear came out of the woods and started to chase us. It turns out the bear had escaped from the Bronx Zoo and had hooked over to the Cross Bronx Expressway to West Street, unseen by anyone until it saw us.

Diane and I started to run as fast as we could when I looked over at her and said,

“Hey, Diane, we can’t outrun a black bear.”

“I don’t have to outrun the bear” she said; “I just have to outrun you.”

Well, that’s the way the past six years had gone – I knew a little more than anyone else in my organization, but now it was a whole different ballgame.

I was dealing with insurance industry folks and they figured out that I knew almost nothing about insurance and risk management in about… oh 30 seconds.

I got through the renewal and a friend sent me a little book called Insurance in a Nutshell. Unfortunately, it was written in a language I did not understand- the language of insurance, and I was incapable at that time of cracking the code.

So I continued along, learning what I could when I could, trying to stay one step ahead of everyone else.

In 1996, I took the ARM courses, completing all three and receiving my Associate in Risk Management designation in December. By this time the company had grown to a fleet of over 4,500 vehicles and 40 locations in a 250 mile radius around Washington, DC.

The ARM helped to fill in the blanks and gray areas of the insurance and risk management process.

In 2001, after 15 years with one this one company, which grew to a fleet of over 6,000 vehicles and 45 locations, the company filed for Chapter 11 reorganization due to the hit we took from the 911 attacks. Although it was a reorganization attempt, it was fairly obvious that the company would not survive.

In 2003, after a year and a half of unemployment and a series of other non-risk management jobs, I hooked up with Valcourt Building Services, where I am today.

This brings me to 2007 and the subject of Enterprise Risk Management.

There has been an increased emphasis these days on Enterprise Risk Management, which attempts to systematize risk management at all levels of an organization.

It is my feeling that, for risk management to be effective there has to be a top down commitment to risk management that flows through and incorporates the efforts of all levels of the company to be effective. ERM is another way of saying the same thing in a more formalized manner.

Now, I have been blessed to work in organizations that put a pretty high priority on safety and the prevention of accidents, injuries and illness. Still, in the business world, production is king, and often times, operations, sales and other interests in your organization can work against your best efforts to reduce your overall cost of risk.

As a risk manager, I hold no direct authority over anyone in my company, yet I am still tasked with the responsibility of lowering insurance costs and keeping them down.

If a risk manager is to be successful, he or she must be able to communicate with all levels of the organization in language they understand.

I call this speaking well in the boardroom and talking good in the backroom.

For example, if you are talking to the board or a group of executives, this is the time to wheel out all the bells and whistles, charts and graphs, five year plans, financial models, etc, etc, etc…

Most risk managers, though, answer to the CFO or Treasury officer, and it is most important to speak in their language if you want your message to be heard.

The language of the CFO is numbers.

Plain and simple.

I have found that it less important what the numbers are and more important that the numbers add up. If the numbers do not add up, there is no point in going on.

Stay away from conceptuals when dealing with the CFO unless you have numbers to back it up.

One time I told him that the problem that he thought horizontally and I thought vertically, since my spreadsheets went top to bottom and his went left to right.

You should’ve seen the look I got.

How about operations?

Well, if you try to give operations numbers and use insurance-speak to communicate, you will get shut down every time.

First of all, operations does not want to hear about strategies that they perceive will slow down the production process. Second, the only numbers that count in their world are production numbers. Your numbers are meaningless to them.

I try to communicate with operations management by speaking in terms of net versus gross, meaning not the amount of money they bring in, but the amount of money that stays once all the bills are paid.

When dealing with on line employees, it is important to emphasize safety and the need to keep the employee safe.

But don’t leave it with the greater good scenario. Employees know this is a business, so it is the risk manager’s job to convince employees that not only does safety make good economic sense, it also serves to protect the employee, and that can only be a good thing.

What about sales?

Most sale people I know and work know why our contracts call for certain amounts of coverage and contract language. They just don’t understand why THEIR customers need that coverage?

If you the risk manager are able to communicate the need to your sales team, they will in turn be able to communicate these needs to the customer, so there won’t be confusion or misunderstandings later, after the contract is signed.

And finally, the customer…

I used to umpire baseball at the high school and college level. If I was able to get through the whole game and not be noticed, I knew I did a good job.

It’s the same with you the risk manager. The company I work for does a lot of property management work in occupied buildings, and most companies have unique limit requirements and certificate language.

Some language is for lack of a better word, funky. If you call the customer, the person requesting the language is working off a checklist, and they have no idea why the requirements are what they are.

If you try to kick it upstairs, you will find that the supervisor doesn’t know why either.

The point is, it’s difficult to argue for limits or language with people who have no idea what the language means. It’s best to try to see if you can overcome the objective language or limits from your end.

If you can’t, see if you can determine what your organization can live with.

For example, the big coverage du jour a few years ago was waiver of subrogation. Someone put out an article in a trade magazine that property managers had to have this included in all their contracts. So it became a requirement.

In 2003, our company had waiver of subrogation added by endorsement on work comp on an as requested basis. The problem was that the insurance company did not know how to charge for it.

At renewal for 2004, we asked that waiver of subrogation be added on a blanket basis, thus giving it to everyone on an as needed basis.

Total cost $6,000 or less than 5 tenths of one percent of all premium; a small price to pay to make a big problem go away.

Bottom line, though, is that you need to know what you are talking about before you are able to communicate it well.

On January 12, 2005, my company gave me permission to pursue the CPCU designation.

At that time, I really didn’t know what CPCU stood for, although I knew that anyone worth their salt in the insurance industry has or is working towards a CPCU.

On February 28, 2005, I passed the first CPCU test.

On August 22, 2005, or 176 days later, I passed the eighth and final test.

I received my designee letter on September 6, 2005.

When I was in the middle of this whirlwind, I found out a bunch of things. First, less than 2% of CPCUs are risk managers and less than 1% work outside the insurance industry. Being a risk manager who has never worked in the insurance industry made me that much more unique.

I also went to find that book that I had looked for back in 1989 that explained business insurance and risk management in plain language, and I still couldn’t find it.

So I wrote it. Hide! Here Comes the Insurance Guy is a humorous plain speaking text for folks like me who had to learn on the fly. This book would have been invaluable to me if it were available back then.

It also serves as a great communication tool for risk management departments to show their organizations what they do in an approachable way.

Risk management written by a career risk manager. What a concept!!

I am a risk manager. I am one of you. I’m not a genius. People ask me how I could earn the CPCU designation so quickly.

I don’t know. The only explanation is – it’s what I do.

Have faith in what you know.

Continue to learn.

And learn to communicate what you know in a way that everyone can understand.

One day, instead of hearing ‘What does a risk manager do?’ you are going to hear,
“Wow, you’re a risk manager, that’s pretty cool’

And it is…

Rain or shine, they aid business climate

2007-06-06T07:05:00.000-05:00

Are you willing to bet the farm on weather reports you get on the Internet?

Weatherbill.com lets you hedge your business risk when you are affected by the weather. Is it a good deal? You bet-literally

Rain or shine, they aid business climate

Startup offers financial hedge against weather

by Ilana DeBare, San Francisco Chronicle Staff Writer
This article appeared on page C - 1 of the San Francisco Chronicle
Wednesday, June 6, 2007

A San Francisco startup is touting a new kind of financial hedge aimed at helping small businesses weather the weather.

WeatherBill, a venture capital-backed firm started by two former Google employees, sells what are called weather derivatives -- contracts that pay out in cash if the weather hits a selected level of heat, cold, rain or drought.

Weather derivatives have mostly been available to very large companies such as electric utilities for a decade. But WeatherBill is making them available over the Internet to smaller companies that are affected by the weather, such as golf courses, restaurants and even hair salons.

So, for instance, a San Francisco golf course trying to compensate for slow business on rainy autumn days could buy a contract that would pay $500 for each day with more than half an inch of rain between Oct. 1 and Nov. 30. WeatherBill quotes a price of $1,451.74 for such a contract.

"We can sell a weather contract for $1 or $100 million," said Chief Executive Officer David Friedberg, who founded the company with Chief Technology Officer Siraj Khaliq. "We've used technology to let us address the needs of businesses of any size."

In reality, WeatherBill's services will initially be limited to businesses with a net worth of $1 million or more. That rules out very small mom-and-pop firms.

And some observers caution that weather derivatives are too complicated and risky for most small businesses. They note that weather derivatives were pioneered by Enron as a tiny part of its business during the go-go days before its collapse.

"It's basically placing a bet, and you might as well go to the Preakness," said Rick Vassar, a Virginia risk management consultant and author of the book, "Hide! Here Comes the Insurance Guy."

WeatherBill isn't the first company selling tools for businesses to protect themselves from bad weather. Insurance companies have traditionally offered policies covering catastrophic weather or major crop failures. They've also offered policies covering cancellation of special events due to weather.

But WeatherBill's contracts go beyond catastrophes like hurricanes, to address more-modest weather challenges such as a somewhat rainy spring or cool summer.

And unlike insurance, WeatherBill doesn't require businesses to show proof of actual losses to get a payout.

Spencer Malay Hair, an Atlanta salon and day spa that opened less than a year ago, is a WeatherBill client and an example of how weather derivatives can work for a small business.

The salon's owners rely on walk-in customers from a nearby movie theater as a way to build a client base. But they found their walk-ins dropped dramatically on sunny days when people stayed away from the movies.

Searching on the Web for weather forecast information, co-owner Ray Luciano stumbled upon WeatherBill. He and partner Spencer Malay decided to spend $2,000 for a contract that would pay them $10,000 if the weather were completely dry over a particular two-day weekend.

The skies did indeed stay dry, and the salon reaped $10,000. Luciano and Malay bought a similar contract for another weekend and reaped another $10,000.

They plan to continue buying a weather contract every few months until their salon is busy enough that they no longer need walk-in clients.

"If it had rained, we would have lost $2,000 but we would have more than made up for it with the new clients we would have gotten," Luciano said. "This helps us protect ourselves if the weather doesn't go the way we want it to."

Not all of WeatherBill's clients, of course, receive the dramatic payoff that Spencer Malay Hair did.

The challenge for weather contract buyers is weighing the likelihood of bad weather against the cost of protection.

"You need to be really, really informed," Vassar said. "A lot of small-businesspeople don't have the time or expertise to do this kind of financial modeling."

WeatherBill faces its own set of challenges. To turn a profit, the company must rely on databases of historical weather information and complex mathematical formulas aimed at calculating the likelihood that a given time period will be wet, dry, cold or hot. And it's got to do this at a time when global warming is calling much historical weather data into question.

The company also must find enough customers to balance its own risk -- offsetting payments to some clients with revenues from others who didn't win a payout.

"Their challenge is to build a diversified book, so their risk is spread across different kinds of weather conditions, different geographical areas and different time periods," said Scott Mathews, president of WeatherEX LLC, a commodity trading advisory firm. "If they have that, they won't be inundated by rain people or drought people."

WeatherBill has some deep-pocketed help. It has venture capital investment from New Enterprise Associates and Index Ventures. Nephila Capital, a $3 billion reinsurance company, also owns a minority stake in WeatherBill and provides reinsurance for the firm.

Friedberg said he got the idea for WeatherBill about two years ago when he was still working in Google's corporate acquisitions division and Khaliq was an engineer there. Friedberg lived across the street from a bicycle shop and noticed that its business plummeted on rainy days. "I thought it would be cool to do something to help protect these businesses whose revenues were so dependent on the weather," he said.

At that point, Friedberg had never heard of weather derivatives. But derivatives had been around since the late 1990s.

Electric deregulation, which spread across the country in the 1990s, meant that utilities were no longer able to pass all their costs on to consumers. They began looking for ways to control expenses such as unexpected spikes in the cost of energy due to weather. Enron started selling weather derivatives and soon a mini-industry developed.

More than 730,000 weather contracts worth about $20 billion in potential payouts were traded during the past year through the Chicago Mercantile Exchange and over the counter, according to the Weather Risk Management Association. But nearly all of these contracts were written for large entities such as utilities.

WeatherBill aims to reach smaller businesses by using the Internet to streamline the process, making it as simple to price a weather contract as it is to buy something on eBay.

"It's a very interesting concept and might have broad appeal because it's not insurance -- no applications or assumed claims hassles, (and) easy online contracts," said Charles Wilson, a risk management consultant with RiskSmart Solutions in El Cerrito.

The Reluctant Coach

2007-06-01T12:32:00.000-05:00

It happens each spring. The emails about spring girls’ softball begin to trickle in. My youngest is still really excited about playing. For my 13 year old, though, the interest has begun to wane. This happens a lot at this age. As kids get older, they begin to focus on activities they are most interested in, and although she has some natural ability, she’s beginning to lose interest.

Each year, it happens the same way. I get an email from the league representative asking if I am interested in coaching. I say no. In the next couple of weeks, I get more emails asking if I’m sure. Then comes the guilt-filled tome that says that we really need you, there are 52 players signed up and only three coaches.

Last year, I said no. Too many activities; I have a job, I’m trying to start a business, publish a book, business travel; coaching 10-13 year olds is like herding cats. This year I agreed to coach, but only at the last minute when there was no one else. I carried the equipment, made up the lineup, patched up bruised arms and egos, and I had a blast.

We live in a pretty competitive environment where I come from, but having played, coached, and umpired on a number of levels for too many years, I had decided to coach from a perspective based on these three premises:

1. Have fun
2. Help each player to improve, regardless of their skill level
3. Teach the players to work together as a team to achieve a common goal

Now, I like to win as much as the next guy, but I won’t do it at the expense of any player, and many of the players and their parents have varying degrees of emphasis on the three points mentioned above.

I’m okay with that. I explain my philosophy to all the parents prior to the season, and I endeavor to stay true to this myself, fighting the competitive streak in me.

And it’s hard.

Last year, we came in eighth out of nine teams. We won the play-in game and took the first place team to the bottom of the last inning before losing with two outs and two strikes on the batter. I was in tears then, not because we lost, but because we had come together as a team and my players left it all out there on the field. Thirteen girls, six who had never played softball before, and they played the game of their lives. You can’t buy that feeling.

This year, though, I had absolutely, positively said I would not, could not coach, for all the same reasons and a few more. My daughter comes up to me and tells me that her best friend said she would play in the spring, but only if I was the coach.

Sorry. No can do. No way. I won’t change my mind.

Then comes the email from the league: We need you, we want you. If you don’t coach, there will be 37 players on each team. We got equipment bags with wheels.

Nope, sorry, I can’t.

My wife and I share our email. She sees the email from the league and she tells me, in front of the kids, that I should coach; one returning player (mine) and an entirely new team.

And lo and behold, we win our first two games, and I begin to think I’m on to something. I tweak things a little, and we get smoked in our next game.

I was really feeling bad when I got an email:

Hi, coach. My daughter plays on your team and my two older daughters play on the varsity softball team at Dominion High School in Sterling, VA. Do you think the team would be interested in practicing with the high school team? The coach likes to do this.

Wow, I wrote back. They would really do this? It seemed so unreal. What kind of team would take the time just before their tournaments to help our little team?

I emailed the coach, and within a few hours, Coach Chris Tully responded with a date and two pages of things he wanted to try. He also invited the girls to come to their next home game and be introduced along with the varsity prior to the start of the game.

Who is this guy? I’m thinking.

I asked him what time he wanted the team there, and he told me anytime. We will work with your schedule.

The following Wednesday, I met Coach Chris Tully for the first time. Young guy; definitely looks and acts like a coach. I arrived late and he already had his team take charge of our team. The varsity girls really seemed to be enjoying themselves and my team was in heaven.

I started to talk with Coach Tully, and I watched as he directed the activities. The good-natured give and take between him and his assistants, the interaction of all the team with each other - this was just a normal practice and everyone was genuinely enjoying themselves.

C’mon. I’ve seen Hoosiers. I’ve seen Radio. I even played myself. Varsity sports is some pretty heady stuff.

Nope, Coach Tully told me as I thanked him for the invite for at least the tenth time. He talked about how it is important that his girls understand the role they play as varsity players in the community, and how each one of his girls had played on a house league team and dreamed of the day they would make the high school varsity team.

Then I start thinking that this is all sounding a little familiar to me. Have fun, work hard, work as a team, and always remember who you are as you press on towards your goals.

Hey, he coaches just like me! Of course, he does it much better and at a much higher level. After almost two hours, he pulled the plug on things, only to call everyone back to get a picture of the two teams together. A week later, I watched our team stand out on the field next to a DHS player for the national anthem, and I knew that all involved had prospered from the experience.

I want to thank Coach Tully, his staff and the players on the Dominion High School Varsity girls’ softball team for taking the time to work with us. I enjoy coaching this level because it is a pivotal age group, and it is invaluable for kids to have someone close to their age that they can look up to as they enter their teen years.

I also want to personally thank Coach Tully for reminding me that it is possible to improve and work towards a common goal as a team without sacrificing the fun part.

After all, isn’t that why they call it a game?

The Eight Year-Old Vegetarian

2007-03-29T15:06:00.000-05:00

By Kay T. Vassar

"Mark, can you pass me the ham?" Mrs. Tippett requested at dinner.

"No." Mark replied simply, and just kept eating.

"Mark honey why won’t you pass me the ham?"

"Because it’s not nice to touch a pig unless it’s alive."

“Then just touch the plate." Mrs. Tippett said, sounding kind of annoyed.

"I don’t even want to look at it!" Apparently, Jake, Mark’s brother, had been totally tuned out of the conversation because right when Mark said that, Josh picked up a piece of ham and ate it.

"HOW DARE YOU?!" he yelled at Jake.

"What?" Jake yelled back at him.

"You know that ham is made out of pigs! And you just ate ham!"

"Yeah, so?"

"Pigs are people, too!"

Mark got up, shaking the table. "How much better would the world be, if we didn’t eat animals? Take this paper, you could benefit from reading it!" He slammed it down on the table and walked away.

Jake picked up the paper, and read the title out loud:

The theory of PETA - Eat people, not animals.

Mr. Tippett, Jake and Mark’s dad, was laughing along with Jake. Mrs. Tippett gave both of them "the look."

Mr. Tippett stopped laughing, cleared his throat, and said, " Heh-hem, well, uh, Jake Tippett, you should respect your brother’s eagerness to, uh, help the society, and to, um, make the world a better place, one pig at a time." He said that in his deepest possible voice, trying to keep himself from laughing.

In his room, Mark had put up stickers that said, "EAT PEOPLE, NOT ANIMALS" like it said on the paper. That day, PETA had come to Mark’s class, and told them that eating animals was wrong, so Mark got really into it. He was sitting in his room, writing a letter to his family saying how he was running away to join PETA, and how he was "disgusted" with the things that they ate.

He set the letter on his nightstand, and walked out the door, because he had a door in his room. He walked next door to his friend Josh’s house whose parents were a part of PETA, and he decided to stay there until his family changed their minds about what they eat.

When Mark got to the house, he knocked on the door. Melissa, Josh’s older sister, answered the door. The family was a hippie family, and they still lived in the 70’s.

"Like heeey little mannn." she said in a relaxed, laid-back voice. "Come innn, we’re like about to do some yogaaa."

Mark looked at her kind of weird and answered,"Yeah, is uh, Josh there?"

"Like one second maaan." She went behind the door, as Mark heard Josh’s parents talking.

"Meeeel, like whos at the doorrrr?" Josh’s mom said.

"It’s the little man next door like totally lookin’ for Josh." She popped out in front of the door again, and told Mark, "He’s comin’ lil’ mannn."

Then behind the door, Mark heard, "JOOOOOOSH!"

"WHAT!?"

"YOUR FRIEND’S HERE!!!!"

She popped out in front of the door again, said "Like, come on innnn."

Mark replied, "Um, like, thanks."

He took a step inside the door, and there were posters of salads and animals up on the walls. One of the posters said, "Celery is your friend" under a big piece of smiling celery.

"Hi Mark." Josh said coming down the stairs. His dad came out of the kitchen with his hair in a ponytail, and his big sunglasses on, holding his guitar.

" Liiike hey lil’ maaan! We’re just about to liiike do character charaaades. You wanna join usss?"

"Um actually I was hoping to join your PETA thing."

"Ohhhh." He walked over to Mark and patted him on the back. "Liiike yeah man. You can stay in our veg rooooom."

"What?"

Josh leaned over and whispered, "That’s the guest room." Mark nodded and told Josh’s dad "Yeah, thanks Mr. Trustier."

"Duuude, I thought I like told you to call me Bright Moon."

Back at the Tippett’s house, Mrs. Tippett walked into Marks room. "Hey, Mark what was that at dinner- What’s this?"

She found the letter. "TOM! TOM!” She called down to Mr. Tippett. "Come here! Mark’s gone! All he left was this note!"

Mr. Tippett came up behind her and asked her, "Really?"

Here’s what the letter said:

Deer Dear Famly,

I am disgustd with yur your eeting habits, and desided too go and join the pida peeple. i mite com back if yu find me but you nevr wil find me.

Mark Tippett

Jake came around the corner to see his mother crying. "What’s wrong with mom?"

Mr. Tippett turned around and answered, "Mark ran away."

"Again?"

"Yep."

Mrs. Tippett turned around and said, "Jacob! How c-c-can you say that when my baby’s missing!?"

"Um, yeah, and I, uh, I’m, uh, bye!" He ran away before he could get in any more trouble with his parents.

Back at Josh’s house, Mark was trying to fit it with the family’s "rituals." They were naming the vegetables in their salads, and Mark was trying to figure out what to name his broccoli.

"Liiiike how’s ‘Carl’ for my lettuce lil’ maaan?", Melissa asked Mark.

"Uh, well it’s cool."

"Ok. Let’s eat!" Josh said.

At dinner, the Trustiers were sharing their "names." Melissa’s was Cloud Shine, Josh’s was Plate Warmer, and Mrs. Trustier’s was Flower Poker.

"And your name isss Raymond." Melissa told Mark.

"Raymond?"

"Do you liiike have a problemmm with that name?"

"No." Mark said nervously, then looked down and kept eating his pet salad.
Mark had started thinking, "These people are kind of weird..." They all heard a knock on the door, and Melissa got up to answer it. The person at the door kept knocking and knocking.

Suddenly, they heard barking, and Mark leaned over and asked Josh, "What’s that barking; it sounds like a Chihuahua!"

"Oh, that’s our pet cauliflower. She gets worked up when someone knocks on the door."

"Um, ok."

"Heeeey, Raymond, your parents are here."

"THANK GOODNESS! MOMMY! DADDY!" he yelled as he ran down the hall, grabbing his stuff and hugging his parents.

"Mark, we missed you soooo much!", said his mom.

Jake chimed in, "He was only gone for an hour and a half! I sleep over at my friend’s house for whole weekends at a time, and when I get home, all I get is a ‘Hey Josh, go clean your room!’"

"Liiike bye, Raymond." the Trustiers all shouted as Mark walked out the door, but when he took a step out of the door, he felt a bite on his ankle, and when he looked down, there was a cauliflower sitting there, panting.

"AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA!!!" he screamed, and ran away.

"Duuuude, I guess like some people don’t like, like animals." Melissa said, as she picked up the cauliflower and walked inside.

When they got home, Mark ran upstairs and into his room, followed by his dad.

"So, uh, Mark."

"Yeah dad?"

"Um, what made you want to join PETA in the first place? And do you still want to join? Because if you do, we're behind you all the way."

"Thanks, dad, but I am REALLY over my PETA stage. I mean after meeting the Trustiers, I don't think anyone will want to."

His dad laughed with Mark and asked him, "Sooo, do you want to go have a cheeseburger?"

"Well....."

"Mark, buddy, come on, we're supposed to eat animals! Why do you think God made so many? So they can eat us? Yeah, I don't think so!"

Mark laughed, and replied, "Ok, you may have a point there."

A Risk Manager in an Insurance World: Odd Man Out

2007-03-27T10:10:00.000-05:00

Reprinted with Permission from The John Liner Review Winter 2007

Commentary

Insurance professionals learn about risk management — but not, apparently, about what a risk manager actually does. The need for education goes both ways.

A Risk Manager in an Insurance World: Odd Man Out

Rick Vassar

It’s always the same old story.

I go to a party, family gathering, church — it really doesn’t mat-ter. Eventually, someone will ask me what I do for a living. I tell them I’m a risk manager, and it’s always the same follow-up: “What does a risk manager do?”

There was a time when I would spin into the old Risk Management 101 song and dance, filling their heads with probability versus possibility, losses contingent upon this and that, subrogation stuff, until their eyes glazed over and they stumbled away dazed and confused, avoiding me like a plague, not only that evening, but forever.
Now, I give them the short answer: “I purchase insurance for my company.”

“Oh, so you’re like a broker.”

“No, a broker sells insurance; I buy insurance.” I remember using this explanation on a brother-in-law about 20 years ago. Whenever I’m with him and I meet someone new, he introduces me as “This is Rick; he sells insurance.” So much for communicating what a risk manager does in a social setting.

Stranger in a Strange Land
In an insurance setting, I would expect a better understanding of what I do. So imagine my surprise when I attended the Chartered Prop-erty Casualty Underwriter (CPCU) Society national meeting a few months ago. Here I was, amongst the greatest minds in the insurance industry, celebrating the fact that I had achieved the most presti-gious insurance designation in the property-casualty side of the business.
Then it happened, early and often — “So, what do you do?”

Actually, the first question was always, “Who do you work for?” since it was assumed that you work in the insurance industry. It didn’t matter what you do — the question was, “Who do you work for?” I heard responses such as “North American Life,” “Aon,” “Marsh Mac,” “AIG,” and “Zurich.”

“So, Rick, who do you work for?”

“I work for Valcourt Building Services.”
“What is Valcourt Building Services?”

“Why, it’s the premier building services company in the United States.”
“Seriously, who are you with?”

“That’s who I work for. I am a risk manager.”

“Really? What’s a risk manager?”

“I’m your customer!”

Slight pause.

“Of course you are.”

Pulling Back the Curtain
As implausible as this may sound, this is exactly how it seemed conversations went at this convention. It was like I was invited into this club, and the members were looking around to figure out who in-vited HIM. It wasn’t lack of courtesy; these folks couldn’t have been any nicer. I just got the feeling that they really didn’t know what to think of me, and they certainly didn’t know what to do with me.

I showed up at a meeting of a national committee that I had some interest in joining. Everyone was very warm and receptive until the meeting started, when one of the first questions asked of me was how I ended up on this committee. (How did HE end up here?)

It was pointed out to me time and time again that the president of the CPCU Society was a risk manager. I didn’t have the heart or the energy to tell them that she was a risk management consultant, not a risk manager, because they just wouldn’t understand the difference.

A Side Trip to Oz
Maybe it was because the lack of understanding of the risk manag-er’s function was so unexpected or maybe it was because it wasn’t so unexpected, but for the first time in my life, I truly felt as Doro-thy must have felt when she landed in Oz.

The Risk Manager as Dorothy
You see, I never started out to be a risk manager. Twenty years ago, no one knew what a risk manager was. I was a regional operations manager who kept asking for more to do, until one day they put me in charge of claims. I stayed with that organization for 15 years, be-coming a director of risk management and learning as I went along. And, “in the land of the blind, the one-eyed man is king.” I knew just a little bit more than anyone else in the organization about risk management, so I looked like a genius.

I supplemented my experience with education, receiving the Associate in Risk Management (ARM) in 1996 and the aforementioned CPCU in 2005. I also received the Associate in Insurance Services (AIS) and Associate in Risk Management for Public Entities (ARM-P) in 2005 as well.

What I didn’t know until I passed all these courses is that, of the 27,000 CPCUs in the world, less than 2 percent are risk managers and less than 1 percent work outside the insurance industry. The fact that I have never worked in the insurance industry makes me even more of an anomaly — an insurance customer who has always been a customer!

So, just like Dorothy, I was thrust into a world that I did not un-derstand, and it was fraught with danger. I charted a path, arming myself with allies who were often as clueless as I, and we set out to find the wizard, which in this case was the insurance industry, and the explanation of how it all worked.

Dorothy’s Adventures in Oz
When I received my CPCU designation, it was as if I had made it to the great hall of the wizard, and I was allowed to take a peek behind the curtain, where I was shown how it all works. I was invited to stay, but I decided to return to Kansas and report on what I had seen. The book I wrote as a result of my foray into the Oz of insur-ance chronicles my experiences in an effort to make the road easier for other risk managers who choose to make the journey and for those organizations that want to know more about what the journey entails.

Meanwhile, Back at the CPCU Meeting …
The one part of the meeting that made me most uneasy was when this committee started to try to figure out how to increase membership, not only for this section, but also for the CPCU Society as a whole. The committee decided to look into how RIMS (Risk and Insurance Man-agement Society) has steadily increased its membership and assigned people to look into RIMS’ marketing techniques. Since I wasn’t sup-posed to be there, I didn’t tell them what I thought was obvious:

“Stop Treating Your Customers Like They Are Outsiders!”

The Educated Insurance Customer
Clearly, there is a need for the insurance industry to understand the role of the risk manager in the insurance process. Then, risk managers won’t feel like outsiders at professional insurance gather-ings. But education goes both ways — the risk manager needs to know the intricacies of the insurance industry, too.

Risk Managers Are Essential to the Insurance Process
The easiest way to get involvement from the risk management commu-nity is to recognize risk managers for what they are: an essential component of the insurance process. Far be it for me to point this out, but without an insured, there is no insurance process. There is no need for a provider if there is no customer.

But the antiquated thinking prevalent in the insurance industry seems to indicate that the less the insured knows, the more insurers can sell. The more insureds buy, the more money the industry makes. This makes absolutely no sense. The insurance industry needs to real-ize that an informed consumer makes the best customer.

If a representative of an insured (the risk manager) is given an education on risk financing, risk control, and managing his or her organization’s insurance program, the insured will see the need for insurance because the risk manager understands the process. Educating the consumer doesn’t mean lower commissions because of lower pre-miums; it means being able to insure better risks, which will allow the insurer to go out and secure more good risks, strengthening and expanding its overall book of business.

Risk Managers Are Professionals
The reason more risk managers don’t pursue the CPCU designation is because they are often not considered to be insurance professionals by the insurance industry, especially if they do not have insurance industry experience. Yet, most risk managers come from the purchasing side of the insurance equation and are usually appointed from within an emerging organization to fill a need. The more professionalism they can bring to the job, the better. Doing their job almost always involves purchasing insurance, and education aimed at insurance pro-fessionals is vital to performing their job effectively.

I was in operations and had risk management thrust upon me, and, over time, it became a career. I truly believe that those of us who have an understanding of business first and then learn the insurance side are just as effective, if not more effective, as those who come out of the insurance industry and become risk managers, because we understand that in the minds of owners, executives, and operators, production is king, and the trick is to fulfill the objectives of a good risk management program within the constraints of the production mentality. The insurance industry can benefit from our expertise.

Risk Managers Understand Risk
By its very definition, business is a risk-taking enterprise. The key for the risk manager is to determine the tolerance for risk with-in the organization and work within that established box while striv-ing to improve upon the existing controls by proving that they are working. This allows for improvement and insures against a regression that could dissolve into intolerable uncertainty.

An owner asked me once why I thought his company was losing money. Without hesitation, I told him that I thought it was the company’s “production at all cost” mentality. Of course, he told me that with-out production, there would be no company. I agreed, but pointed out that I was not worried about the production. It was “at all cost” that concerned me. If your organization’s solution to problems is just to throw money at them in order to make more money, that atti-tude will catch up with you, probably sooner than later.

A Win/Win/Win Situation …
So, why is it a win for the insurance industry to have an educated insured?
… for the Insurer …An insured that knows how the insurance process works will see the value of lowering the frequency and severity of losses and will take active steps to lower its losses and reduce its premiums. While pre-miums become lower, so do combined ratios, which will increase profits. The customer will become more loyal both to the broker and to the insurer when the insured sees that its association with both has consistently lowered its costs and increased its profits. From a transactional standpoint, the need to move the insured’s program will become a nonissue if the insured knows it is getting a good deal.

… and for the Insured …The Associate in Risk Management (ARM) designation gives the desig-nee the understanding he or she needs to be an educated insurance consumer. I would advocate that all risk managers pursue the ARM de-signation. An educated consumer makes the most efficient choices when dealing with insurers and brokers.

… and for the Risk Manager Who Has Earned the CPCU Designation
I would strongly advise all risk managers to pursue the CPCU desig-nation, and I would also encourage their companies to advocate this training for their risk managers. The reason I never pursued the de-signation earlier in my career was twofold.

1. I thought it was too hard.
2. I didn’t see the value to my position as a risk manager.

I passed all the courses in 176 days — not bad for a risk manager. I am asked time and again how I was able to do this so quickly, and the only honest reply I can give is this: “It’s what I do.”

The value of the CPCU designation is this: instant credibility in my dealings with the insurance industry. When I send an e-mail or correspondence, I am afforded the respect that comes with attaining this level of excellence. It is assumed that I am an insider, and my job is made much easier with the CPCU next to my name. Insurance in-dustry people just assume I know what I’m talking about.

So, you have instant credibility for the risk manager, lower premium for the insured, and increased profits for the insurer, just by letting the insured take a peek behind the curtain. Sounds like a win/win/win situation to me.

Conclusion
In business, insurance has always been the 800-pound gorilla in the room. It’s always there, and it’s not going anywhere. Hardly anyone in business really understands it, and most don’t want to commit the time to learn. The only way to maximize your organization’s potential is to manage your risk and your insurance, and you can do this effec-tively only by learning the product and services and how to effec-tively manage them.

In this day and age of information technology as well as increased competition, it is imperative that insurance costs are managed. If you are informed, you may no longer have to accept the “hard market” as the only excuse for increased premium, and you will certainly be able to easily tap into the market, should you be given that excuse by your insurer.

There is a bit of mistrust between the insured and insurer, and the only real way to bridge this gap of trust is for each side to have a better understanding of the process and its role in the process. Sav-ings will go up and so will profit, and that’s all we are really looking for.

Bring the risk managers in.

We’re not in Kansas anymore.

Rick Vassar, CPCU, ARM, AIS, ARM-P, is the principal in The Vassar Group, LLC Risk Management Consultants as well as Vice President of Risk Management for Valcourt Building Services, LLC, both located in Virginia. Vassar has over 20 years experience in risk management and has written on various risk management topics. Vassar could never find a primer on business insurance for the business person, so he wrote it. Hide! Here Comes the Insurance Guy — A Practical Guide to Understanding Business Insurance and Risk Management (iUniverse Press 2006) was published in June 2006.

Reprinted with Permission - The John Liner Review Winter 2007 Standard Publishing

Claims People Play - It Takes a Lot of Effort to Get Something For Nothing

2007-03-18T19:03:00.000-05:00

I had the opportunity to reflect on some of the experiences I have had in my life, as well as some of the situations in which I've realized that some people are just plain stupid. To me, it seems as if there has been a progression over the years:

1955- Diner: “Waiter, there’s a fly in my soup.”
Waiter: “Don’t worry, flies don’t drink much.”

2005- Diner: “Hey, there’s a finger in my chili.”
CSR: “Cool! Hey, anybody missing a finger back there!? I’m sorry, ma’am but we charge 99 cents extra for human fingers, but don’t they taste just like chicken?”

So now this lady's in jail. I hope they investigated Uncle Louie, who was once arrested for petty theft, or as the police report called it, a “four finger discount”. Or was it Grandma Edna, who accidentally chopped her finger off cutting up a ham, prompting her daughter to say, in a most sympathetic of ways: “Get Grandma a band-aid. Anybody want to go to Wendy’s?”

As a career risk manager, I take these things with a grain of salt—naw, I’ll leave that one alone. Maybe she found it on the street. Maybe she found it on e-bay, and successfully bid $89.95 for it, and needed to make her investment work for her. It gives me pause, though, to reflect back on my life, and the wonderful ruses all perpetrated in the name of cash.

First, a little risk management 101. When someone tells you it’s not the money, and it’s the principal of the thing, don’t let them fool you—it’s about the money; it’s all about the money, and it’s always about the money.

My favorite story involves a guy who thought he was smart but was actually very stupid. He worked with my wife, and in 1987, he got married, and his wife got pregnant. The baby was born in February, 1988. This guy claimed the baby on his 1987 taxes. When the IRS came a-knockin’ on his door, he told them that the U.S. Supreme Court declared that life begins at 24 weeks after conception, and since his kid legally “came alive” in 1987, he was entitled to the tax deduction. He is still to this day paying off the interest and penalties on that stroke of genius.

Then there was the guy who was a car wash supervisor for a rental car company I worked for. He went to the doctor and was diagnosed with tennis elbow. He promptly came into the branch office and made a workers comp claim. When I took the report over the phone, I deviated from the script a wee bit. I asked name, address, date of birth, and in the middle of this line of questioning, I asked him if he considered himself an active person. Yes, he did. Do you play any sports? Yes, I played softball, basketball, tennis and soccer.

I’m sorry, did you say basketball? Okay, good, got it. Social? Okay. Safety equipment provided? Okay. Now let me go back and make sure I got these activities right. You said you like tennis? Yes, I love tennis. Okay, great. One more question: Do you think that maybe your tennis elbow could have come from… playing TENNIS!?

I loved the people who would rent a car, smack it up, and then drop it off at a suburban branch after the office had closed. When the vehicle was found the next day, the manager would call the customer to find out what happened:

Customer: I don’t know. It was fine when I dropped it off.

The customer would then call my office after they received a bill for $8,000, and say they didn’t do it. Yea, 40 cars parked all neatly parked on the lot, and the only one that ever seems to come up totaled is the one that was dropped overnight. What are the chances? And every person who tries this believes they had thought of it first.

You know those highway signs that have a blinking area to direct you either left or right. There is also a middle switch (or so I assume) so the sign blinks a straight line. I had a customer tell me that they came to the fork in the road, and there was a blinking straight line, so they went straight—into the sign. I believe alcohol was involved in that one.

I’ve had employees call for an ambulance, and call an attorney on the way to the hospital. I had an employee who took a car home and totaled it on the way. He called it in, and was absolutely flabbergasted when he clocked in the next day and was promptly arrested. I had a customer tap another vehicle while parallel parking in Washington, DC. The two occupants got out of the car, saw it was a rental, and called for an ambulance. I didn’t think this was too unusual, until the customer told me the two occupants were uniformed police officers and the vehicle he tapped was a police cruiser.

Am I jaded? You bet I am. The sad aspect of all this is that there are individuals out there for which the tort system is necessary to compensate for the negligence of others. Unfortunately, the system is mired in cases in which folks just want to make a buck. As risk managers, we lose faith as well as focus, and it becomes a war zone. And the path is paved with recidivism. Once someone so inclined finds out he or she can sit at home and collect almost the same amount in pay from work comp (I like to call it the “Watching the Beav”), they are inclined to do it again. And who can blame them. It beats working.

And don’t get me started on class action lawsuits. I tried one of those once. It was against my power company. I signed up and sent it back. A year later, I received a notice saying that the suit was settled, and my bill would be surcharged $20 a month for five months as an offset. I figured we lost. To my surprise, I found out we had actually won, and the power company was going to issue an apology. The settlement, though, didn’t quite cover the attorney fees, which was the reason for the surcharge.

Oh, well, it was the principal of the thing anyway. Although… if I had that cash now, I could have gone on e-bay…

Anybody want to go to Wendy’s?

Vassar's Book A Business Must Have!

2007-03-18T18:39:00.000-05:00

Hide! Here Comes the Insurance Guy
Expert offers up eleven crucial questions to help people determine their risk management needs

(Arlington, VA) Rick Vassar is not your ordinary run-of-the-mill insurance person. Rick Vassar does not sell insurance. He buys insurance. He is a risk manager. He’s refreshing and totally committed to making people trust him in spite of his chosen profession!

His new book, Hide! Here Comes the Insurance Guy, educates and entertains with energy and enthusiasm, and it’s a must-read for anyone who owns or operates a business.

This is a truly unique concept – an authoritative explanation of business insurance and practical cost-saving risk management strategies from the business perspective.

With a no holds barred and no prisoners taken approach, he takes the mystery out of the most mind-numbing insurance questions that plague everyone who’s ever sat down with an insurance policy and tried to make sense out of the minefield of questions that have to be answered.

“We all need insurance,” he says “but let’s face it – most of us can’t understand a single word insurance people are saying.”

With humor and a bit of spunk, you can go to Vassar for the answers!

In any organization, not managing your insurance program can cost a company thousands, if not millions, of dollars.

Hide! Here Comes the Insurance Guy is a guide to business insurance written by a businessman.

For example, here is a sampling of some of this truly sane advice about how you can attack the subject and divide up the risk management process into four distinct steps to control & improve your insurance costs:

1. Understand the language

Like any other specialization, insurance has a language and cadence all its own. You must learn the language to understand the process.

2. Know the players

Once you understand how all the pieces fit together, you will better understand the process. Better understanding leads to better management, which leads to savings.

3. Develop a strategy

Just as your business has a game plan (for example: goals, vision, mission, five-year plan), there are subtle yet distinct ways to work your insurance program to maximize your coverage for minimal cost.

4. Invest the time

You spend years and years going to school so you can get a good job or start your own business. You go to conferences and seminars to aid in your development as your career progresses. If you take the time initially to learn about insurance, how it works, and how you can make it work for you, it will help you reap real financial benefits while providing the maximum coverage for your company.

One of the biggest questions that business owners face is whether they are properly insured. Vassar provides a really helpful set of questions to help business people answer that question. In a section called the ABC’s of Risk Management, he offers up eleven crucial questions to help people determine their risk management needs.

Some of these questions are:

1. Do you own the facility? If yes, is the replacement amount on the policy sufficient to cover a total loss to that facility? If no, do you have the proper coverage as required by the lease?

2. Are customers regularly on the premises? If yes, does your present coverage adequately protect you from them?

3. Are there employees on the premises? How many? Who does what?

4. Is there inventory on premises? Is it properly valued to cover a loss?
5. Is there equipment on-site, which is leased and, if owned, properly valued?

6. Would the loss of a piece of equipment interrupt the entire process? If the
answer is yes, would this disruption cause a significant loss to the organization? Is the company covered under any of the present coverage?

7. Do you depend on suppliers for key aspects of this process, and if so, would the loss of this supplier interrupt the process in any way?

And more.

Rick says he designed this analysis for super simplicity, which will allow you to define your risks and determine what you will need to protect yourself in the event of a accident or disaster.

Hide! Here Comes the Insurance Guy also provides valuable strategies for interacting with the insurance industry from an insurance professional who has operated on the business-buyer end of the process. Here are some of the most effective tactics you’ll ever find in the areas of business insurance and risk management demystified by a businessman who has actually achieved real cost savings for himself and his clients.

Hide! Here Comes the Insurance Guy provides insight into an aspect of business life that few people readily understand. This wonderful little book can show you how to protect your company from losses and save lots of money in the process.

Hide! Here Come the Insurance Guy – A Practical Guide to Understanding Business Insurance and Risk Management

Insurance and the Myth of the Hard Market

2007-03-13T18:12:00.000-05:00

The hard market is the stuff of legend as far as I’m concerned. To me, it appears to be a cyclical and arbitrary theory promulgated by the insurance company to justify the need for increased premiums to fuel shortfalls caused by free market conditions and certain disasters that adversely affect the insurance industry.

But that’s just me.

First, let me say that there may have been a time that the theory of a hard or soft market may have been justified. I’ve only been in the business since 1986, but the research on the issue is a little sketchy.

From what I have gathered, soft markets, in which insurance premiums drop and the market is more advantageous to the buyer, generally lasted two to five years and would follow the cyclical trends of the economy.

By 2001, we were almost nine years into a soft market, and there were no real signs that it was going to turn anytime soon. By the insurance industry’s estimation, we were at least four years overdue for the market to harden, which would have led to significant and, in my opinion, arbitrary price increases, and all I heard from the industry professionals was this:

“Be prepared. The market is starting to harden. These low rates can’t last for long.”

And so it went.

Then there were the bombings of the World Trade Center and the Pentagon on September 11, 2001. Now, there is no doubt that this was a catastrophic event, the likes of which have never been seen on American soil. But from an insurance standpoint, and particularly from a property casualty standpoint, this was not a catastrophe that should have ushered in the hard market in the insurance industry that came about immediately after these events—especially in the property casualty market.

Much of the loss of life was covered through life insurance. As of this writing, the property claim at the World Trade Center has yet to be resolved, although a federal jury has categorized the event as two occurrences, meaning that the ownership group could collect the limits twice because the policy was written on an occurrence basis.
The losses that ensued from business interruption and loss of revenue coverage were well funded prior to this loss, and therefore should have been a non-factor. I firmly believe that the insurance industry took this event and used it as an excuse to arbitrarily “harden” the market. The losses were well funded, and although the fallout from 9/11 did result in the bankruptcy of some insurance carriers, these companies can find no fault beyond their own parking lots because of their internal reserve and surplus policies before the event.

Now that the industry has had the opportunity to review the economic fallout from these attacks, these appear to be a consensus of understanding:

 Total economic loss due to the attacks was around $38 billion.
 Insurance losses amounted to roughly 50 percent of that total ($19.1 billion).
 The property damage to the World Trade Center alone was approximately $7 billion of the total
 Much of the losses were covered by life insurance, which would not significantly affect the property casualty side of insurance.

Thus, you are looking at property casualty losses, independent of the WTC loss, which was absorbed by one group of insurers and reinsurers, of less less than $10 billion. In contrast to this, the economic effects of Hurricane Katrina are estimated to be in excess of $50 billion. Hurricanes Ivan and Charley in the summer of 2004 have estimated losses of $19 billion. Yet, neither of these events seem to have had the impact on the insurance markets that the 9/11 attacks did.

I believe there was a watershed decision made in 1999 that should have put the debate of the hard market to rest. In that year, Congress passed the Financial Services Modernization (Gramm-Leach-Bliley) Act. This act allowed, for the first time, banks to offer insurance products and for insurers to offer banking services through holding companies. This created a synergy between the two industries which allowed both to tap into their customer bases and mine business from the other industry. Banks and insurance companies could offer their clients a one-stop alternative for both insurance and banking.

The result was an increase in competition in the marketplace, which led to consolidation of companies that were too weak to compete in the more dynamic market. The increased competition increased supply for a fairly stable demand, reducing the prices in the marketplace. The increased competition also caused some weaker insurers to lower their qualifications for coverage, which weakened their overall book of business and made them susceptible to the vagaries of the free market. At the same time, it provided a need for coverage in the secondary market that was not being fulfilled at a reasonable price.

These market conditions were becoming evident prior to 2001 and fell back into line fairly quickly after 2001. From an indemnity standpoint, the 9/11 attacks should have been a nonevent but for the insurance industry’s need to have an excuse to raise premiums and rid themselves of some bad risks they were forced to take due to the increased competition from FSMA.

Now be forewarned. I'm told the market is going to start to harden later this year.

Risk Management Takes A Commitment From Everyone

2007-02-18T16:59:00.000-05:00

These days, it seems all we hear about in the risk management arena is the advent of enterprise risk management. Now, I am sure that the qualification of risk management on all levels of an organization has great merit, and that the quantification at each level is very important.

The issue I have is the same issue that any good risk manager has with this premise: Risk management, to be effective, must be identified at all levels of the organization, or it won't work. It has always been like this, way before we started calling it "enterprise risk management." If your company does not have an awareness of the need for risk control in the backroom as well as the boardroom, then production needs will outweigh all concerns, and preventable losses will occur.

An owner and chief executive ask me why I thought the company wasn't making any money. I replied that the organization was motivated by production at all costs. "Well," came the reply, "if we don't have production, we have no company." I replied that it was not the production side of the equation that concerned me, it was the "at all costs" part that was troublesome.

Only with a top-down commitment can a risk management program succeed at all levels of the organization. The risk manager who has that commitment in words and deeds will be able to elicit systematic changes in the production chain, leading to a healthier workforce and reduced costs. If not, then let's face facts—at that point, all you're really doing is insurance.

Tell Me Your Insurance or Claims Horror Story - Win a Signed Copy of the Book!!

2007-02-17T16:27:00.000-05:00

You know what I'm talking about-- dealing with a car accident, your neighbor's tree falls on your house or perhaps you added a teenager to your auto policy.

Tell me your insurance nightmare story. And, as impossible as it may sound, please edit out the profanity. I get it...

In the comments below, tell me your insurance or claims horror story...

The top two stories win a signed copy of Hide! Here Comes the Insurance Guy, the powerful new book that has taken the business and insurance industries by storm

Yes, It's True - I Am An Insurance Guy on Purpose

Why I Wrote a Humorous Book On Insurance

When you mention the term "insurance guy" or "insurance gal", many different images come to mind.

You may think of these well tailored, professional types who stroll through those beautiful downtown insurance company offices, off to wherever those people go to do whatever it is they do.

Or perhaps you envision the slightly harried insurance adjuster or appraiser who comes out to look at your car when it gets smashed up.

You know the one I’m talking about-he comes out with a camera around his neck, a clipboard in his hand and at least one pen in his shirt pocket.

It doesn’t matter how much damage is on the vehicle; he always looks at you and says "Where was it hit?" He feels around, takes a couple of pictures. For some reason, he always rubs a mark of the roof with his thumb.

He then gives you an estimate, and disappears, calling out "any questions, call your adjuster". As you leave, you hear faintly in the background: "Where was it hit?"

Maybe you think of your insurance agent, whom you call when you add another car to your auto policy, and she says she needs the check today, so if you could meet her at her son’s cello recital at the elementary school at 3:15.
You pull up next to her Escalade and hand her the check. You decline an invitation to see the show, resisting the urge to tell her you have other things to do, like making a living.

If you work in the insurance industry, it doesn’t matter what you tell folks. All of them think one thing-he works in insurance; he does insurance; he must SELL insurance.

I am a member of a lesser known community of professionals that choose to interact with the insurance community on a full time basis. I’m that guy in your organization who always seems a little disheveled, slightly distracted and just a tad odd.

I am a risk manager.

"Hey," you might ask "What does that guy do?"
"He’s the risk manager," is the reply. "He does the insurance. Whatever you do, don’t talk to him. Nobody ever talks to him. If you do, he’s going to bore you with all that insurance nonsense, and since people rarely ever talk to him, he won’t let you get away. Some folks say he’s brilliant, but I’m not really sure. No one really knows what he’s talking about, so they leave him alone. Actually, in a big company like this, that alone makes him a genius. He hangs out with the IT guy. Go figure."

I am a risk manager. I work for a company, trying to make sure that all the risks and loss exposures a company has can be afforded, and for those exposures that cannot be afforded without a negative financial impact on the organization, I purchase insurance.

I lead a kind of lonely professional life. When I walk the halls, people know that if they talk to me, I may try to work insurance into the conversation. So they duck around a corner or dive under a desk. Some will even get on the phone to other departments:

"Joe? Hi. Hide! Here comes the insurance guy!"

Thus, Hide! Here Comes the Insurance Guy was conceived. In 1986, I was in an operations position at a regional car rental company. My boss got mad at me and decided to punish me by putting me in charge of claims.
As time went on, I became the full time risk manager. I remember when I fell into the risk-management role at the company I was working for at the time.
I almost had a nervous breakdown. Was it because of the pressure of handling insurance for the entire organization? Or was it because that same year, the company had decided to self-insure its entire fleet of 5,000 vehicles?

Nope. It was because I couldn't understand a single word they were saying!!

For every insurance professional who takes a position as a risk manager, there are nine or ten of us who fall into the job because a need develops as the organizations grow. That need may be filled by someone who has interacted with insurance companies, or like me, due to a short term anger episode.
Regardless, I only wished I could have found a book that explains how business insurance works and what a risk manager does.

All of the information on business insurance comes from the insurance industry. In fact, most companies rely on their insurance broker for insurance expertise.

But wait, aren’t they the ones who are selling you the insurance?

I am an anomaly in the insurance industry. I currently hold four insurance designations, including the Chartered Property Casualty Underwriting (CPCU) designation, which is considered the highest and most prestigious designation conveyed in the property/casualty insurance industry. Yet, less than 2% of CPCUs are risk managers and less than 1% work outside the insurance industry.

I am a risk manager, and although I am considered an insurance professional by the insurance industry, I have never worked in the insurance industry.

Hide! Here Comes the Insurance Guy is an approachable text on how to manage your insurance program to protect the assets of your company in a cost-effective manner. The book de-mystifies the process, and educates as well as entertains.
When was the last time you could say that about an insurance book?

If you are a risk manager, you will identify. If you are an executive, a business owner or just someone totally baffled by insurance (and you're not alone), it’s a must read.

Rick Vassar CPCU, ARM, AIS, ARM-P is the principal in The Vassar Group, LLC, in Sterling, VA, specializing in risk management and insurance consulting.
Copyright 2006 by The Vassar Group, LLC. All rights reserved. Reproduction in whole or in part without permission is prohibited.
Hide Here Comes the Insurance Guy – A Practical Guide to Understanding Business Insurance and Risk Management, 2006 iUniverse, Inc. ISBN 0-595-38608-6 (pbk) ISBN 0-595-83388-7 (cloth).

Risk Management Explained

2007-02-17T16:15:00.000-05:00

Invariably as a risk manager, I am asked the question I would anticipate with fear and trembling:

“So, what exactly does a risk manager do?”

In earlier times, I would begin to explain risk control, identifying losses, insurance, risk retention, blah, blah, blah. After about 30 seconds, the puzzled look is replaced with the rather uncomfortable “eyes glazed over”, and I imagine that I begin to sound much like the parents in the Charlie Brown cartoons. Even my beautiful wife of over 16 years tells people that it has something to do with insurance… or something. She does show a remarkable interest in captives, and not due to their cash flow or tax implications. She just wants to go to Bermuda.

As a risk control specialist, I knew that there had to be a way to explain my chosen vocation without causing folks to run the other way the next time they see me. A loss exposure which affects everyone, male and female, with no accurate forecast of when and where it might occur, and the consequences of improper preparation coupled with an inadequate response could lead to catastrophic results.

Then it dawned on me. Smacked me right in the face, it did. A circumstance and situation every man has experienced or will experience in his lifetime:

“Honey, does this outfit make me look fat?”

You’re smiling, aren’t you? Admit it. You have either asked it, or had it asked of you. It is a question so fraught with peril and danger that it could lead to losses for years to come.

For me it came around the second year of my marriage to my aforementioned beautiful wife. I will forego the details of the actual encounter, and blame it on long term memory loss. I had been a risk manager for a little over a year, but it didn’t matter. I was in the middle of a disaster, I had not done any pre-event planning, and I really had not entertained the possibility of this loss exposure. I was in big trouble.

You see, ladies, there is no good answer to this question. If I answer yes, it begins a dialogue on weight, body image (“So, you think I’m fat?”) etc. If I say no, I risk being untruthful to my sweetie. She also goes out looking like the Michelin man in an outfit at least two sizes too small, which she will eventually rationalize, and then I’m really cooked.

So what do I do? I have to say that I was very proud of my response, which did not prevent a loss from occurring, but did help to reduce the loss significantly and prevent future losses of mammoth proportions. I looked her straight in the eye, pointed a finger at my midsection, and said:

“Does this shirt make me look stupid?”

Now don’t get me wrong. I was still in big trouble, but I was able to minimize my losses, as well as set the groundwork for future loss exposures. I explained that no, I didn’t think she was fat, and that even Olive Oyl would look fat in a too small outfit. I also explained that I love her too much to lie to her, and that she needed to know that she could trust me to tell her the truth. Then I gave her the one truth that is universal in this situation—

If you feel the need to ask this question… it does!! So don’t ask—CHANGE!!

So that is how I explain what I do. Identifying, controlling, reducing, preventing, and now contingencies based on loss history. This makes me sound much more exciting than I am, living a life in the reckless and carefree world of risk management. And wouldn’t you know, I had some guy ask me about loss control and the cost of risk in a social situation.

I told him about Bermuda.

Dude, Pay My Claim

2007-02-13T14:10:00.000-05:00

I really don’t like dealing with my HMO. If I asked for a show of hands for all those who find interfacing with their health insurance company a pleasant experience, you would probably get the same response if you asked the same group if they enjoy sticking a needle in their left eye.

When my family must interact with our HMO/PPO, this task falls to me, since I have a little more patience, being “in the business.” My wife did try to call one time. I begged her not to, but she insisted, saying we should share this burden. I reluctantly agreed, gave her the number, and walked upstairs to change. I came back down 10 minutes later, and she was sobbing into the phone, yelling “I don’t want to speak to a supervisor, I just want an answer to my question!” Last time she volunteered for that duty.

I really don’t have much trouble with customer service at our PPO. When I was in college, I sold books over the telephone. You know, the kind that once they start, they never stop coming? We had little flip charts: If they say no, go to chart 2, if they say no again, go to paragraph four on chart 3. If they say yes, get their info, etc. I lasted one half of one shift, and never went back, but it gave me enough experience to imagine how my PPO probably works.

I call the toll-free number, and keep hitting zeros until I am queued up. I listen to the Muzak version of Christopher Cross’ “Sailing,” and I am connected to my rep, Ted. This is one of the largest health organization’s in the country, and I get...Ted.

I always get Ted.

CSR: Thanks for calling. How can I help you?

Me: This is Rick Vassar, My member number is—

CSR: Dude, it’s me, Ted. What’s happening?

I began to think that Ted was the only one who works there, and my suspicions were validated the day I unknowingly and accidentally hit the prompt to speak to someone in Spanish. I was put on hold, listened to some song by Carlos Santana, and just before the guitar solo, I hear:

CSR: Hola, como le puedo ayudar?

Me: Uh, this is Rick Vassar, my member number—

CSR: Vato, soy Ted.

Me: Ted, I don’t speak Spanish, can you help me?

CSR: Lo siento ese, vato. Tienes que llamar otra vez y que te pasen con los que hablan Ingles loco.

I hang up and call right back, hit zeros, and get the “Sailing” hook again.

CSR: Thanks for calling. How can I help you?

Me: Yes, this is Rick Vassar, my—

CSR: Dude, it’s me, Ted.

Me: Hi, Ted. Listen, I have this claim—

CSR: Sorry, dude. Not covered.

Me: Why is that?

CSR: Uh, no referral—

Me: Well, if you look at the evidence of insurance, on page seven, paragraph four, it states that coverage should be afforded without a referral.

Silence.

Me: Ted, what’s the problem?

CSR: I told them this was going to happen.

Me: What’s that?

CSR: They told me nobody ever reads the contract...

In the past few years, class actions have been filed against carriers alleging unequal and improper claims handling, offering incentives to doctors not to make referrals, direction of care being dictated by managed care professionals and skyrocketing premiums. In 2003, some of these insurers settled their cases with doctors, agreeing to allow doctors to be doctors, increasing sensitivity to the patients’ needs and speeding up claims payments. Meanwhile, each doctor received enough cash after attorney’s fees to buy a venti latte at Starbucks. Many of these insurers have used this settlement as a marketing tool, reaping free good press well in excess of the amount settled in this “landmark” case. In fact, one of these companies’ stock price has increased over 250% since the announcement of this settlement.

But nothing has really changed. HMOs are still denying claims on a less than equitable basis, and they are denying portions of claims that are not usual and customary (to that particular company), and the patient is the one left holding the financial bag.

As a risk manager, I have a little better handle on what a company can and cannot do, so I can show them how they steered off the path. But millions of people do not know what their rights are, pay what they are told to pay and make healthcare decisions based on economics.

I have been very fortunate to get most of my claims paid, and I would have to hope that things are getting better. In the meantime, I have one assurance that I can guarantee with the utmost certainty.

I have Ted.

Reprinted from Risk Management Magazine.
Copyright Risk and Insurance Management Society, Inc. All rights reserved.

Gardisal and the Reproductive Rights Agenda

2007-02-02T11:39:00.000-05:00

In 1973, the Supreme Court, in Roe v. Wade, ruled invalid any law which would prevent a woman from terminating a pregnancy if she chooses. Let me say up front that I believe this to be the moral equivalent of thinning out the herd for most, since it seems to be one of the most fervent arguments of those who support this “right”.

What will we do with all these unwanted babies? Who will pay for them? The government can’t do it all. Besides, I have the right to choose whether I want to have this baby, and it’s none of your business.

Now, along comes Gardisal. Gardisal is being marketed as the newest miracle drug, a vaccine against the HPV virus, a sexually transmitted disease linked to cervical cancer.

Excellent! Great! Wonderful! Someone told me it could be the greatest medical breakthrough since Thalidomide.

You remember Thalidomide. It was the great miracle drug of the late 1950’s, used to relieve morning sickness and induce sleep in pregnant women. The side effects: Thalidomide stunted the growth of limbs and organs in the womb, and led to severe birth defects in the children of mothers who took Thalidomide.

Now, don’t get me wrong. I hope this stuff works, and if it is proven to be effective without any long term side effects, I will be the first to stand and cheer. The problem is that we just don’t know.

In West Virginia, Maryland, and Virginia, the states have introduced or are planning to introduce legislation that would make it mandatory for prepubescent females to receive this vaccine to protect them against the risk of HPV and in turn cervical cancer. This is where it gets really dicey.

As with many other drugs approved by the FDA, the long term effects are not known. If a parent should choose to have their child receive this vaccine, and it’s approved by the FDA, they can.

But to make it mandatory by statute is obscene. And where are the “pro choice” folks in this discussion. It appears they are lining up on the side of mandatory shots. If they aren’t, their silence on this issue is deafening.

Feminists should wise up. If you are for the right to choose, be for the right to choose. But if you are going to use the legislature and the courts to mandate your vision of the best interests of women, then your agenda is less rational and coherent than you have attempted to forward.

The long term effects of this vaccine have yet to be determined. Yet, the long term emotional and psychological effects of abortion on families in general and women in particular is well chronicled.

Disposable pregnancy (abortion) is forwarded, as is mandatory vaccination of females for sexually transmitted diseases. Yet the long term effects of these life decisions are not considered.

So, ladies, what is it:

Are you controlling the right to choose, or choosing the right to control?

The CPCU - Not Just For Underwriters Anymore

2007-01-31T08:06:00.000-05:00

In the fall of 1986, I was managing a small suburban car rental office outside of Washington, DC. Around that time, my boss came by and offered me another position as district operations manager, an opportunity I immediately accepted. There was a catch, though. I had to take over the management of claims.

No way, I thought. Who would want to do such a thankless job? But since the other position was tied to the claims job, I reluctantly accepted.

Over the next five years, the company grew by over 300%, and I became the Director of Risk Management in April 1989, a position I held until January 2002. Along the way, I received the Associate in Risk Management (ARM) designation (1996), which provided the educational foundation for this profession that I had not chosen, but had chosen me.

To be completely honest, I would probably still be at that job if not for the events which unfolded after the terrorist attacks on September 11, 2001. Due to a variety of circumstances, the company filed for Chapter 11 bankruptcy less than three months after the attacks. I decided it was time for a change. At 43 years old, this risk manager thing wasn’t going anywhere.

So I took a job selling cars, and supplemented this doing some risk management consulting. The problem with car sales is that it is not very family friendly, and with two small girls at home and a wife with a chronic illness, I decided to quit car sales and go home and take care of my family. I figured I’d just go get another risk manager’s job. Very few companies, though, were willing to take a chance on a risk manager with experience in only one industry. There was also this recession thing going on.

After about six months of doing odd jobs, substitute teaching, and some consulting, I went back to car sales, since we needed the job for the health insurance. I continued to look, and in May, 2003, I was offered a position at Valcourt Building Services. This company had been growing very rapidly, and had decided to commit resources to their insurance program in the hope of controlling their costs.

In a little over 18 months, I was able to facilitate significant savings in insurance. I also assisted in the implementation of a comprehensive safety program that complemented the insurance program and led to more savings.

This is where the CPCU journey begins.

In January 2005, during my review process, I asked permission to apply for a broker’s license, since the company had thoughts of purchasing an insurance agency. Since their plans had changed, and a broker’s license would be of little value to the company, my boss asked if there was anything else I would be interested in studying.

It was then that I mentioned the CPCU, and I explained that it was a series of eight courses, and generally takes two to five years to complete. He told me to go ahead and get started.

Well, I passed the first test on February 28, 2005, and I guess I got on a little bit of a roll, because I passed the eighth and final test on August 22, 2005. This was a total of 176 days from start to finish, or an average of one part every 22 days. I received my designation letter on September 6, 2005.

I also had a little trouble decompressing from this furious pace, so I also passed the Associate in Insurance Services (AIS) and the Associate in Risk Management for Public Entities (ARM-P) programs before the end of 2005. During this time, I also wrote four articles for publication in RM Magazine, the premier publication in the risk management discipline. A fifth article was published in June 2006.

I have also written a book Hide! Here Come The Insurance Guy™ A Practical Guide to Understanding Business Insurance and Risk Management. The book is written from the viewpoint of the business insurance consumer, and offers practical strategies and practices that serve to educate those who want to reduce the cost of their insurance programs. The book was published in June 2006 and has been overwhelmingly well received.

According to the CPCU Society statistics, only 2% of its membership are risk managers, 1.7% characterize their job function as “Risk Management/Buyer” and only 0.5% work in non-insurance industry related organizations. Achieving the CPCU designation affords me a unique perspective on the insurance industry; a credentialed insurance professional who does not work in the insurance industry.

To this end, I have also started my own risk management consulting practice. The Vassar Group, LLC, is being launched in conjunction with the publication of the book. For every credentialed risk manager out there in business, there are probably nine or ten professionals like me, who came into the discipline quite by accident. The book as well as the business will help them to fill in the gaps, providing practical, cost-effective solutions to their risk management and insurance needs.

Achieving the CPCU has given me the confidence to pursue these other avenues. I have also found that adding this designation has served as an introduction to contacts I would not has access to but for the CPCU. The attainment of the CPCU designation commands instant respect among those in the insurance industry.

Attaining the CPCU designation also gave me the unique perspective of how the insurance industry operates. As a risk manager, one must effectively communicate to those in both the back room and the boardroom. Seeking support for a program at the executive level and then communicating the program to the rest of the organization once consensus is reached can be a daunting task to the risk management professional. The respect that the CPCU affords me in both the corporate and insurance arenas has given me the additional strength necessary to complement and enhance our already successful risk and insurance programs.

I want to encourage everyone in the industry, both on the buying side and the production side, to pursue the CPCU designation. For those of you who are thinking about it, get yourself started. I think you will be pleasantly surprised at how approachable most of the subject matter is to the insurance professional. For those of you in the middle of your studies, take heart. You will do it, and it will be well worth it.

People ask me how I could possibly pass these courses in six months, especially those who know that I have never been much of a student. There is only one plausible answer I can give them:

It’s what I do.

Four years ago I was selling cars. My career path was unsettled at best. Now, with the help of the CPCU designation, I am truly excited about what the future holds for me. It has given me the education and the confidence to pursue a new path and the field is now wide open.

Tort Reform - If You Really Want It, Take Shakespeare's Advice

2007-01-28T18:14:00.000-05:00

Tort reform is a hot issue these days. It was a hot issue yesterday, and it will be a hot issue tomorrow. It seems to have manifested itself in the medical malpractice area, but could probably use some restraints in all areas of tort liability.

That will never happen. The most basic reason for this is that the special interests groups are trying to get the federal government to mandate controls on tort liability. But insurance is controlled by the states.
This issue has been batted around for over 100 years, and always ends up back in the hands of the states, for better or for worse:

In 1869, in Paul v. Virginia, the U.S. Supreme Court ruled that insurance was not interstate commerce and therefore was not subject to federal regulation.

In 1890, the Sherman Antitrust Act forbade insurance companies from banding together and colluding to fix prices. This act is still in effect today.

In 1944, the South-Eastern Underwriters Association (SEUA) decision effectively gave the right to regulate insurance to the federal government after it rendered the decision that the SEUA had conspired to control 90 percent of the insurance business in six states.

Congress passed the McCarran-Ferguson Act in 1945, which restored state regulation of insurance less than one year after the SEUA decision.
It’s fairly obvious that insurance regulation is going to continue to be controlled by the states, and this right has been fiercely protected throughout U.S. history. So, although you will find pockets of state legislation that restrict the awards in tort liability cases, this issue will never get up enough steam to become a federal mandate and will probably be struck down as unconstitutional in deference to states’ rights.

This is not the primary reason, though. The real underlying reason is …

Lawyers!

It’s so obvious, isn’t it? A lawyer sues another party because of their negligence. What does the other party do? They hire a lawyer. Either the other party or its insurance carrier needs legal representation to represent its interests in this action. If the complaining party settles or wins the case, the plaintiff attorney profits. If the defendant wins or loses, the attorney for the defense profits.

If tort reform is passed, who stands to lose the most?

Lawyers!

And most of the folks in Congress, before they became representatives, were …

Lawyers!

Enough said. If all the lawyers are against tort reform, and it would be struck down even were it enacted, it will never happen.

From Hide! Here Comes the Insurance Guy Copyright 2006 Richard G. Vassar All Rights Reserved

To Settle or Not to Settle

2007-01-27T17:35:00.000-05:00

When I was in car rental risk management, if I saw one of our cars on the six o’clock news, I knew I needed to get intimately acquainted with that file, because we were to become constant companions for a long, long time. So when I saw the Vioxx wrongful death decision on every news channel recently, I was quietly happy that I do not work there.

This case accentuates a philosophy that we in the risk management profession know can become a harbinger of bad things to come—when someone in upper management says those five dirty words: “Let the lawyers handle it.”

Now, I have nothing against lawyers. Well, most lawyers. Okay, a couple of lawyers. Seriously, though, legal representation is essential in our area because of the very nature of torts. That is not the issue. The issue is whether or not counsel should have the ability to dictate the strategy and direction of a claim, and whether that direction is in the best interest of the organization.

First and foremost, I have never been comfortable with putting my organization’s financial future in the hands of twelve people who are not smart enough to get out of jury duty. The Vioxx case exemplifies exactly why the executive branch must weigh the concerns of risk management more heavily than the concerns of the legal team. The legal team’s place is to execute the will of the organization to determine the best possible economic outcome from the mess that has been made. The company holds the map, the lawyers drive the car.

Just for the heck of it, let’s look at the numbers on this thing. Merck has reserves on this of $675 million. Let’s just say that Merck decided to settle these claims. First, you should remember that 4,200 people did not die. Although the plaintiff attorney stated over and over that this was never about the money, as I have so liberally stated in the past, it is always about the money. In a death case, it is the only remedy. There is an economic value to a 63-year-old man, and eventually you are going to hit the plaintiffs number. I would say that number would be about $2 million. If Merck decided to aggressively settle these cases, you could safely say that its legal fees would amount to about $25 million.

Conservatively assuming that 25% of these cases go away for nuisance value, it would leave about $200,000 per case to settle. If a wrongful death case is worth $2 million, $200,000 per claim should be plenty to settle out.

This case in Texas will probably cost Merck $20 million, and conservatively about $3 million to litigate. There are 4,200 other cases out there which will grow to over 10,000 cases because of the publicity in this case. Kenneth C. Frazier, Merck’s senior VP and general counsel, was quoted as saying “There are other Vioxx cases coming to trial and we will vigorously defend them one by over the coming years.” Litigation costs will conservatively top $100 million, leaving about $550 million to settle. Using the same 25% in nuisance cases, this leaves a little less than $75,000 per case.

Settling leaves about 167% more per claim to pay out. Litigating increases legal fees by over 400%. If you use all of the $200,000 per case for this scenario, total paid losses would amount to about $1.5 billion plus the $100 million for legal fees. I rest my case.

I have two very simple standards when it comes to the direction of a claim and whether to litigate or settle. One, if I like their case better than mine I settle, period. Second, if the cost of litigation could exceed the total amount for which the claim can be settled, I am inclined to settle.

Even if I know the plaintiff is not entitled. Even if I know that “we can win this thing.” I would rather pay someone who may not really be entitled to a settlement than to let twelve people I don’t know make that decision for me.

Again, let me state that I have the greatest respect for attorneys. An organization needs to understand that claims management is economic, and upper management must be involved in the decision making process, since their allegiance is to their company, while attorneys and outside vendors have primary interests which may be secondary to the company.

Rick Vassar, CPCU, ARM, is the corporate risk manager for Valcourt Building Services located in Arlington, Virginia. Seriously, some of his best friends are lawyers.

Reprinted with permission from Risk Management Magazine.Copyright Risk and Insurance Management Society, Inc. All rights reserved.

Risk and Insurance Management Society (RIMS) · 1065 Avenue of the Americas · 13th Floor · New York, NY 10018 ·

Hide! Here Comes the Insurance Guy - Numbing the Pain

2007-01-22T20:13:00.000-05:00

Check out the intro to the book. Informative yet humorous... Who knew!!?

It's like Novocaine before getting root canal - it makes the whole process a little less painful. Enjoy!

The first thing people ask me about this book is: “Why a book on insurance? And business insurance, to boot?”

To me, this question really means: “You’re kidding, right?”

In fact, when I initially pitched this idea to the publisher, I was met with an uncomfortable silence on the other end of the line. Fortunately, being in the insurance end of business, I’m pretty accustomed to stunned silence.
After about five seconds of this, I gave it my best marketing effort:

“Sounds kind of like death, doesn’t it?”

The reason for this book is simple. There are too few insurance professionals who work outside of the insurance industry. The insurance industry is a wonderful career choice for those who pursue it and stay with it. Most who go into this line of business stay in the business until they retire—or die.

I am an anomaly in the insurance industry. I have spent my entire career in business and not in insurance. I am not a purveyor of insurance; I am a consumer of insurance.

I am a risk manager.

A risk manager determines the financing needs of an organization, provides coverage for the company, and works the insurance program on behalf of his or her employer.

I am a buyer, not a seller. I look out for the needs of the commercial consumer, and I have no ties to the insurance industry other than as a consumer. At no time have I ever worked in the supply side of insurance.

On the other hand, the insurance industry has certified me as an expert in the property casualty field, conferring on me four professional insurance designations (certifications) including the Chartered Property Casualty Underwriter (CPCU), which is considered the gold standard in the property/casualty insurance industry.

I am not saying this to toot my own horn but to point out that I have always represented the interests of the business consumer, whether a sole proprietorship or a Fortune 100 company.

Yet there are precious few of us who have remained untouched by the supply end of the insurance food chain. Most, if not all, of the information that is communicated concerning business insurance is generated by the insurance industry itself.

Don't Fear the Reaper - State Farm and the Lessons of Katrina

2007-01-14T18:50:00.000-05:00

Don't Fear the Reaper--this is the name of a song by Blue Oyster Cult. This group's songs had very few lyrics, and this song exemplifies why. It really makes little sense except for those whose thoughts have been somehow chemically altered.

I hate that song.

When the winds started to blow from Katrina, I was watching on TV. As we watched the winds blow homes and buildings off their foundations, I told my wife that most of the claims would be denied. The reason: most dwellings are covered for wind damage but not flood damage. If there is a combination, some insurers would choose to deny if any water hits an insured dwelling.

The same thing happened after the 9/11 attacks with life insurance. Some insurers called the attacks an "act of war" and therefore not covered.

State Farm got tagged this week trying to pull this wind/flood combination. But this is a cautionary tale for everyone who owns anything - a home, a business, a car...

Read your policy!! If you live in a flood zone, buy flood insurance. If you live in a hurricane or tornado area, make sure there is no doubt that you will be covered before it happens.

I had a hailstorm hit my neighborhood a few years back. All the homes were covered except those insured by my company. The insurance company told us that hail had hit our house, and that we had hail damage, but the hail that hit our house wasn't the hail that caused the damage. They said it must have been the hail storm that occurred about two years, which of course was outside the reporting time for any claim, and therefore not covered.

We fought and fought and fought them. In a fortuitous turn of events, though, just as we were about to take them to court, another storm came through and left no doubt as to the damage incurred.

If you can't afford to lose something, make sure you know what's certain and what isn't certain.

If not, you will have to let the insurance company decide.

Oh yeah, my insurance company only paid for half of the roof!!

"We can be like they are (don't fear the reaper)..."

A.M. Best Gives 'Hide Here Comes the Insurance Guy' A Positive Rating

2006-12-28T20:56:00.000-05:00

The key to success for any tool is acceptance by the industry it targets. When I published Hide Here Comes the Insurance Guy, I knew it had to be accepted by the insurance industry if it was going to be taken seriously. The overwhelmingly positive response has both validated the book and humbled me as an author.

Below is a review from David Dankwa, associate editor of BestWeek, which is a publication of AM Best, the financial rating company. The article appears in the November 13, 2006 edition, along with a podcast interview available at bestdayaudio.com.

In New Book, Risk Manager Explains 'Commercial Insurance' in Plain Language

OLDWICK, N.J. November 13 (BestWire) — "If I had grown up in Wisconsin, I would know cheese; Georgia, peaches; Florida, AARP," writes risk manager and author Rick Vassar.

As fate would have it, Vassar was raised in a suburb of Hartford, Conn., the insurance capital of the world, where "folks gather at the local diner in the center of town and discuss such compelling subjects as the necessity of waiver of subrogation and additional insured status or the effects the new insurance commissioner would have on the local economy.

"This is where "the insurance curse began in my family," he writes.In his book, "Hide Here Comes the Insurance Guy," described as a practical guide to understanding business insurance and risk management, Vassar shares the wealth of information he's gathered over several decades in what he calls "plain speaking" insurance language.

There aren't any books available that address the needs of the business insurance consumer, and second, many business professionals refuse to enlighten themselves on the nuances of the insurance trade, he says. As such, "the insurance guy" Vassar describes in his book is a lonely person, something of a corporate outcast. He is the type of co-worker people steer away from in the hallways, afraid that he'd work insurance into a conversation.

Using humor, Vassar, also founder and president of Virginia-based Vassar Group, provides insight into the commercial insurance industry from a risk manager's perspective, offering practical advice on the insurance purchasing process. As he describes how terrorism insurance works, how to value one's property when considering property coverage, and workers' compensation strategies, he also picks on attorneys in a section called "The Skinny on Attorneys" and on adjusters in "Anatomy of an Insurance Adjuster."

Vassar discusses in depth the selection of an insurance broker and argues that bigger isn't always better. The difference between a big, national broker and a local or regional broker is like Advil and Ibuprofen, he writes. "You're only paying extra for the name."Vassar says if a company is in tune with what's going on in the marketplace, it can get the same pricing from a small local broker that would from a midsize, regional broker or Marsh & McLennan.

Also, from a service standpoint, Vassar says he prefers a midsize broker to handle his company's midsize account. "Currently, we have a good bit of premium but it wouldn't be a big number for a national broker, like Marsh. For a midsize broker, it's a significant portion of their overall book of business. So, we're more of a big fish in a small pond, whereas with a bigger national firm, we wouldn't get the same level of service," he says.

He frowns on the practice of corporate insureds assigning brokers to shop specific markets, often at the urging of the incumbent broker who insists that "the underwriter only wants to work with one broker per account." Vassar writes that assigning markets defeats the purpose of a free-market system.

He writes also about the role of lawyers in claims processing. "If you're an organization, especially in a self-insured or self-funding situation and you're going to make a decision that's going to have a financial impact on your company, then it needs to be the company that is making the decision as to the financial viability of either settling the case or taking it to trial. Many companies just hand it off to lawyers as soon as they get a lawsuit."

Vassar cites the McDonald's hot coffee case, "where there was an opportunity to settle the case as a medical claim, and they ignored it. Well, the issues in that case were that there was a legitimate injury, a legitimate burn, and eventually they did work to improve the cups and they lowered the temperature of the coffee that they were serving. They also later settled the claim for a much higher amount."

While the book targets buyers of insurance, Vassar says the insurance community also can learn a lot from it. "I believe the book will give valuable insight to the insurance community as to how risk managers and businesses process their information concerning risk and insurance. If a broker or insurer has a better understanding of the needs and concerns of the insured, they will be better able to market products that will meet these needs."

And what do businesses need? Vassar says it is: "The best price and the comfort of knowing that what they are buying will cover an event that creates a financial uncertainty which could prevent them from opening their doors tomorrow, or could close their doors forever."

(Listen to an audio conversation with author Rick Vassar at bestdayaudio.com)(By David Dankwa, associate editor, BestWeek: David.Dankwa@ambest.com) BN-NJ-11-13-2006 1032

Tell Me Your "Insurance Guy" Story

2006-12-12T22:07:00.000-05:00

Yes, It's True - I Am An Insurance Guy on Purpose

Why I Wrote a Humorous Book On Insurance

When you mention the term "insurance guy" or "insurance gal", many different images come to mind.

You may think of these well tailored, professional types who stroll through those beautiful downtown insurance company offices, off to wherever those people go to do whatever it is they do.

Or perhaps you envision the slightly harried insurance adjuster or appraiser who comes out to look at your car when it gets smashed up.

You know the one I’m talking about-he comes out with a camera around his neck, a clipboard in his hand and at least one pen in his shirt pocket.

It doesn’t matter how much damage is on the vehicle; he always looks at you and says "Where was it hit?" He feels around, takes a couple of pictures. For some reason, he always rubs a mark of the roof with his thumb.

He then gives you an estimate, and disappears, calling out "any questions, call your adjuster". As you leave, you hear faintly in the background: "Where was it hit?"

Maybe you think of your insurance agent, whom you call when you add another car to your auto policy, and she says she needs the check today, so if you could meet her at her son’s cello recital at the elementary school at 3:15.

You pull up next to her Escalade and hand her the check. You decline an invitation to see the show, resisting the urge to tell her you have other things to do, like making a living.

If you work in the insurance industry, it doesn’t matter what you tell folks. All of them think one thing-he works in insurance; he does insurance; he must SELL insurance.

I am a member of a lesser known community of professionals that choose to interact with the insurance community on a full time basis. I’m that guy in your organization who always seems a little disheveled, slightly distracted and just a tad odd.

I am a risk manager.

"Hey," you might ask "What does that guy do?"

"He’s the risk manager," is the reply. "He does the insurance. Whatever you do, don’t talk to him. Nobody ever talks to him. If you do, he’s going to bore you with all that insurance nonsense, and since people rarely ever talk to him, he won’t let you get away. Some folks say he’s brilliant, but I’m not really sure. No one really knows what he’s talking about, so they leave him alone. Actually, in a big company like this, that alone makes him a genius. He hangs out with the IT guy. Go figure."

I am a risk manager. I work for a company, trying to make sure that all the risks and loss exposures a company has can be afforded, and for those exposures that cannot be afforded without a negative financial impact on the organization, I purchase insurance.

I lead a kind of lonely professional life. When I walk the halls, people know that if they talk to me, I may try to work insurance into the conversation. So they duck around a corner or dive under a desk. Some will even get on the phone to other departments:

"Joe? Hi. Hide! Here comes the insurance guy!"

Thus, Hide! Here Comes the Insurance Guy was conceived. In 1986, I was in an operations position at a regional car rental company. My boss got mad at me and decided to punish me by putting me in charge of claims.

As time went on, I became the full time risk manager. I remember when I fell into the risk-management role at the company I was working for at the time.

I almost had a nervous breakdown. Was it because of the pressure of handling insurance for the entire organization? Or was it because that same year, the company had decided to self-insure its entire fleet of 5,000 vehicles?

Nope. It was because I couldn't understand a single word they were saying!!

For every insurance professional who takes a position as a risk manager, there are nine or ten of us who fall into the job because a need develops as the organizations grow. That need may be filled by someone who has interacted with insurance companies, or like me, due to a short term anger episode.

Regardless, I only wished I could have found a book that explains how business insurance works and what a risk manager does.

All of the information on business insurance comes from the insurance industry. In fact, most companies rely on their insurance broker for insurance expertise.

But wait, aren’t they the ones who are selling you the insurance?

I am an anomaly in the insurance industry. I currently hold four insurance designations, including the Chartered Property Casualty Underwriting (CPCU) designation, which is considered the highest and most prestigious designation conveyed in the property/casualty insurance industry. Yet, less than 2% of CPCUs are risk managers and less than 1% work outside the insurance industry.

I am a risk manager, and although I am considered an insurance professional by the insurance industry, I have never worked in the insurance industry.

Hide! Here Comes the Insurance Guy is an approachable text on how to manage your insurance program to protect the assets of your company in a cost-effective manner. The book de-mystifies the process, and educates as well as entertains.

When was the last time you could say that about an insurance book?

If you are a risk manager, you will identify. If you are an executive, a business owner or just someone totally baffled by insurance (and you're not alone), it’s a must read.

Rick Vassar CPCU, ARM, AIS, ARM-P is the principal in The Vassar Group, LLC, in Sterling, VA, specializing in risk management and insurance consulting.

Copyright 2006 by The Vassar Group, LLC. All rights reserved. Reproduction in whole or in part without permission is prohibited.
Hide Here Comes the Insurance Guy – A Practical Guide to Understanding Business Insurance and Risk Management, 2006 iUniverse, Inc. ISBN 0-595-38608-6 (pbk) ISBN 0-595-83388-7 (cloth).