EXPLORING SHARING RISK

TRANSCRIPT

[Bruce Silverman] Hey, everybody, welcome once again to another edition of "Managing Risk for Tomorrow, Today," today with Jeff Kleid. He is the founder of Victoria insurance and Elite Risk, and he is a very knowledgeable and experienced person in the industry. His phone number is 818-968-1353 and jdkleid@eliterisk.com is the email, eliterisk.com is the website. And Jeff, today's topic, we're going to talk about the benefit of taking some amount of risk and taking it along side another carrier.

[Jeff Kleid] I like it. Sounds like a good topic. I'll jump right in.

[Bruce Silverman] Okay, well, please do consider and you're the one that wrote it. Not not quite as catchy is some of the show titles that some of your colleagues have come up with, but you'll work on that...

[Jeff Kleid]  I have never been good at spending my time trying to tell people what they need to do. I'd rather hear what they need and figure it out.

[Bruce Silverman] Because that's what makes you so good at your job..

[Jeff Kleid] No, I'm not good. I'm not gonna at the catchy stuff. I'm just not. It is what it is. But no, so yeah, it's kind of what we do, right? We we took a bunch of years of experience and put it together and said, "Okay, how do we keep figuring out how to allow somebody a chance to take some risks?", but at the same time, tell them why they should do it. And if they're already willing to do it, let's see if how much you know, you should throttle up for throttle back. I mean, like, that's really it. So we spend pretty much any given day trying to figure out, we work with brokers, right? So we're an MGA and MGU. We have our own pen, we have our own paper Victoria, right. So we we literally, we want to find somebody that's like, you know, "my rates are way really high. I don't have losses, but they keep going up." Okay, great. Well, we're not here to cut your cost necessarily, because we don't know that they're high, even though you believe they're high. But if you really believe that  they're high and you really believe that they're going to go up? Well, what if you put up some of the first dollars against that risk? So that to prove you're right, and we have a way to help people do that? At the same time, what if they say, "I've never had a claim, and I want to take all the risk"? And you're like, well, but there is a chance for claim, there is a chance for loss. There is. So maybe you want to take less of the risk, but take more than you're taking now. And so that's kind of how every conversation goes for us. That's our thought process.

[Bruce Silverman] So let's break it down. When you talk about getting a phone call from a company and saying "we want to take all the risks. We've been in business for five years, we've never had a claim." How does that conversation go?

[Jeff Kleid] Well, so then we understand, okay, what are you paying? What are you insuring against? So let's say, let's say they're paying as a business, let's say they're paying $40,000. But they're insuring against a million dollar liability issue, or they're insuring against a $5 million liability issue, and they're paying $50,000 or $60,000. We look at it and go, "Okay, I understand you feel like you're paying $40,000 or $50,000. But are you willing to self insure that million or $5 million? Like, no, that's ridiculous. Okay, well, then how much money are you really going to save by doing that? Okay, so in that situation, we might rule it out. We might say, "you know, I understand it's expensive, but you may just be your best bet is to do that, because it makes sense." Now, let's say you have somebody else, okay. So for example, let's say you have somebody with a summer camp that's got all sorts of activities. Let's say you have someone with boats, let's say if someone with parasailing, right? You have a parasailing person and they haven't had claims ever, right? Well in their mind, and like I've never had claims, I want to take 100% of the risk of that million dollars and let's say per boat, they're paying $25,000-$30,000 a boat for insurance, which is not reasonable when you're, you know, when you're in the custody of people's lives, right? And you're like, "Hey, let's go take you out on the water. We're gonna go really fast." You're gonna go up in the air, you're gonna dangle a little and if you make it back down in the boat, all's good. If you don't, someone has to be on the hook, even though you sign this 46 page thing of limitations. Let's say the boat seizes up. Let's say you know the boat hits the boat driver hits, you know, a buoy, right, whatever it is. Okay? So even though your personal experience is very low and you had no claims, the reality is that industry that discipline that exposure could happen. So instead of so let's say they have five boats, and they're paying $200,000 a year, that gives us a good scenario for us to say, "All right, why don't we split the risk with me? Why don't we use Victoria, we'll take some of that risk?" And, and you're right, you're still gonna pay the $25,000-$30,000 per boat, but of that $25k or $30,000 per boat, you'll take maybe 20% of that risk, or maybe you'll take 40% of that risk, maybe you'll take 50% of that risk. And so you're going to get back all the dollars you put in, in premium is going to go to your bucket. And you're going to you know, have you form your own little insurance company alongside of Victoria, and Victoria is going to take the other risk. So hopefully, I mean, that seems like a pretty clean, you know, example of how you would do it, and when it would come into play.

Usually, the way we do it is we deal with companies that are paying at least $200,000 to $250,000 a year in premium. So that's why we rule out 99.995% of 100 people because not everyone, you know, because people's views are different, right? Like me, personally, I look at I've got four cars, and you know, an office and, and a home and an umbrella and all this other stuff going on on my personal insurance, right? So I look at it, I'm like, "my insurance is really expensive." And I go, "Okay, well, what should it be? Like? Should it be $2,000? Less total? Should it be $5,000? Less total? Should it be 1000? Right?" So like, I'm looking at it like that, but does that really move the needle. So the $200,000 or $250,000 and above, there's a lot of unique businesses that can benefit from looking at that. And the other real benefit that mean that not even the real benefit. One of the other benefits, as you and I talked about, in another video, we talked about what's happening with what we call the hard market. Okay, another benefit of somebody trying to decide that they're going to take some risks, or even using Victoria to take some other risks, collectively, between Victoria and that client, we can come in with a bigger amount of risk that we're willing to take for even another insurance carrier for higher limits or higher exposure that they have. And we're going to, let's say, a traditional insurer, and we're saying, "Hey, we're going to take the first million dollars of exposure." And let's say Victoria takes 500, or 750. And the client, or the partner or client, whoever they are takes 250 in their own little insurance vehicle. Right? Now we're going now we're gonna get more insurers interested in us because they view us as taking that layer where most of this stuff happens. Does that make sense?

[Bruce Silverman] No, it makes tremendous amount of sense to me and anybody out there that is watching or listening, that wants more information that is in a similar situation, and wants to be able to protect themselves their business. Jeff and his team are the appropriate people to reach out to and you can reach out to Jeff at 818-968-1353, jdkleid@eliterisk.com, and the website is eliterisk.com. Another great conversation Jeff, another great topic. Not quite as clever as as your counterparts. But we'll work on that.

[Jeff Kleid] You know that.

[Bruce Silverman] You know, Henry won the award for cream or crémé, as he spelled it when he sent me the email to set up the podcast. Crémé of the crap...

[Jeff Kleid] That's awesome. That's awesome.

[Bruce Silverman] It was pretty impressive. And then, and then Adam had one called just "Band Aid."

[Jeff Kleid]  I'm sorry. I will work on it. Thank you. I am not set on my ways, I will work on it.

[Bruce Silverman] Jeff Kleid, the work in progress and he'll work for you and your company. Jeff -- Always a pleasure. We'll see on another episode soon. 

[Jeff Kleid] Thanks, Bruce.

[Bruce Silverman] "Managing Risk for Tomorrow, Today." He's the guy to do it.