Archive for the ‘Liquid Assets’ Category

Is a Second Opinion Worthwhile?

November 18, 2010

It is possible that, with age/maturity, I have learned a few things in my life but I’m slowly losing my tolerance for others’ stupidity or lack of knowledge when they should (because they’re professionals) know better. Why do I feel this way? To begin, I enjoy learning – profusely learning – through reading, whether it be online, books, periodicals, etc. and attending seminars, speeches, etc. I hope you do too because learning should never stop, especially for professionals – experts in their fields of practice.

Last week, I had the pleasure of identifying several weaknesses in our own firm’s marketing by listening to Faith Seekings, an online connection of mine on Facebook, LinkedIn, etc., while attending the AGM for the Canadian Institute of Management’s Toronto Chapter. I will be the last to admit that our firm is not without fault but we are always searching for ways to improve.

Last night, I attended a joint dinner meeting of the CIM/CMA/CGA Grand Valley in Kitchener and listened to Eugene Roman, in charge of New Product Development for Open Text, one of the numerous success stories of “Canada’s Technology Triangle”. Eugene spoke on issues that directly impact my own industry and attract my attention – risk, compliance, records retention, etc.

So how does this relate to my lack of tolerance then? For anyone who doesn’t know me, I have worked in the “insurance field” for 20+ years, including Risk Management, following a lengthy banking career in both Canada and the USA. I have seen much and I am constantly “shaking my head” at others’ lack of understanding of our business but this week…it was the “icing on the cake”.

For years, I have been in the minority when suggesting that if an insurance broker does not understand the business you, the client, operate, either learn it very fast or suggest that you deal with someone who has the level of expertise required to adequately protect you and to offer you advice.

Now…the rest of the story, as one of my favourite radio phrases goes…A residential builder that I have known for several years and pursued for most of that time has provided me with copies of the firm’s insurance policies – a shambles due to anyone’s lack of insurance understanding (so I am not blaming or placing fault on him) and having many different policies all due at different calendar dates. I know the insurance brokerage well and this client is one of that firm’s largest clients – and surprisingly, does not receive anything special in the area of service (possibly because the brokerage is afraid of the builder learning how inept their firm is).

One project that is currently under construction has 2 phases – with a total “insured value” of $500,000. The problem only begins when I questioned the builder as to his cost and am told the 1 townhouse structure is $800,000. The worst part of the problem is that the 1 building is nearing completion and won’t finish for another 4-5 weeks while the other building is framed and roofed and ready for the exterior to commence.

If a fire occurs and demolishes both structures (likely to happen with high winds and very frequent in the insurance industry), he is required to insure to 100% of his final cost and is penalized for every dollar of loss, except that he only has $500,000 TOTAL when he may lose $1,000,000+.

Will he be bankrupt, at that point, due to the insurance professional’s lack of business acumen? I hate to imagine anyone ever losing their business because they relied on professionals who were less than that. What might my recommendation be? For anyone without a sufficient understanding of risk management and insurance, never rely on anyone for too long without obtaining a second opinion – it might be the difference between success and failure for your company.

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Insurance, Risk and Valuation

January 27, 2010

This is something I simply don’t understand – insurance professionals who are reluctant to advise – just because of their Errors & Omissions exposure?  If they’re the professionals, why not use their expertise and training for their clients’ best interests?

Are they afraid that their clients may see them for what some salespeople truly are?  A salesman/saleswoman and not a professional advisor!

Maybe they would prefer their clients approach us first – for Risk Management advice.  This definitely helps avoid that observation, doesn’t it?

Recently, I spoke with an insurance broker who refused to assist a client in the determination of adequate Business Interruption insurance – afraid of a loss on their E&O!  He felt that the worksheet sent to a client should be completed with their accountant but mentioned that he doesn’t know any accountants who feel comfortable completing these insurance forms.  I then offered our firm’s experience and services to the broker.

We’ll be happy to review Financial Statements and Contracts/Leases/Franchise Agreements and advise on issues like Business Interruption losses, Employee Dishonesty limits, Trade Credit Insurance, etc.  We can assist in working on “replacement cost” determination/evaluation so that you are adequately insured!

Have you ever experienced a loss where you felt you were protected and found out otherwise?  Let your CFO, Controller, Accountant and Lawyer know about us!

We are very pleased to work alongside your other professional advisors and work with you and for you – not against you.

Our costs are always very reasonable.  Why not contact us now for further information?

How Much Employee Dishonesty Insurance Should Any Business Owner Or Non-Profit Organization Purchase?

December 2, 2009

EMPLOYEE DISHONESTY COVERAGE (FIDELITY BONDS)

A USUALLY OVERLOOKED COVERAGE!

One of the most severe crime problems any business owner or non-profit organization can face is that of a loss from employee dishonesty.  Amazingly, this insurance coverage is often overlooked!  The loss of merchandise, valuable records, accounts receivables, and money and securities from dishonest acts of employees has been estimated to cause 30% of business failures!  For every dishonest employee caught, it’s estimated that another 100 are not and, thus, get away with their crime!

Insurance coverage for Employee Dishonesty is usually purchased in one of two forms:

  1. Commercial blanket coverage, which provides a blanket limit covering all employees.  The amount of the bond is an aggregate or all-inclusive limit.  It is the most that could be paid in any one loss.
  2. The blanket position bond also covers all employees, but the difference is that the limit of the bond applies to each employee separately.

For example…a firm suffers a loss of $30,000 caused by three employees acting in collusion.  If the firm carried a $10,000 commercial blanket bond, total recovery would be limited to $10,000.  This is the maximum for one loss, regardless of the number of employees involved.

If the firm carried a blanket position bond of $10,000, recovery would be the full $30,000.  The $10,000 limit applies separately to each employee involved.

There is a formula that was developed and tested by two reputable American organizations who know all about dishonesty and its financial consequences.  It provides the best basis available for determining the amount of coverage needed per loss and can be accessed by contacting the WRiskManager to work with you.  Do you need to review the amount and kind of coverage you have?  We will be happy to assist at a very affordable cost!

For any business-owner, non-profit, lawyer or accountant – why not communicate with us for a simple and inexpensive means of protecting against a potentially significant financial loss?

We are just an e-mail away—an e-mail that might save you from a catastrophe.

Larry.wettlaufer@riskreview.ca  aka WRiskManager

RISK – My 1st Post! – Well, at least it is #1 for here (and maybe better than my other attempts)

October 22, 2009

This is my first blog attempt here and I hope better than my previous efforts 🙂 .

I have just had the most amazing week in so many ways that my excitement is bubbling over, hehe.  Reason for this is that I wished one of my many online friends a Happy Birthday on Friday last week and he (Craig, you know who you are) then proceeded to offer me immense advice on blogging and setting-up my blog on this site 🙂 .  He explained that I should be blogging every time I see, meet or hear something about “risk” since that is my expertise.  Well, here goes my effort then.

So, what else made my week so spectacular?  Well, one call to a friend of mine (Mike B.) that led to a request to speak to a group of bankers, accountants, advisors, etc. and then an e-mail from another good friend of mine (Mike A.) to gauge my interest to speak for 1.25 hours early next year to a group of Managers and then a follow-up Skype message (Andy – No, not another Mike hehe) re another speech to a group of independent management advisors – this all on Friday!

I then proceeded to mentor another online friend (Victoria) who is making a career move from agent to commercial broker and I offered my years of experience and continuing guidance to assist her.  Even in the same geographic area, it is much easier to use phone/computer communication than managing the headaches derived from fighting traffic to meet face to face.

What else has happened since Friday, then?  Well, I’ve been working with a management consultant friend of mine on his one client’s insurance requirements and ensuring that they’ve been met at affordable premiums.  I’ve provided two contacts’ names/info to another contact of mine who is in need of their services, been provided a list of 50 lenders by a new online connection (sure is nice to share contacts who can recommend me) so that my work during the next week will be quite busy in prospecting.

Well, you can see where my excitement originates from, correct?

What do I do, though?  I work in Risk Management – identifying and analyzing risks, controlling and financing risks.  My expertise is derived from nearly 20 years of Retail Commercial Banking and 20+ years of Insurance/Risk Management.  I work in the realm of Legal Contracts & Leases to Financial Statements through the spectrum of Property, Liability, Income and Human Resources and include Currency, FX, Interest Rate (yes, I did work in Banking), Employee Dishonesty, Media, Trade Credit, Business Continuity and Continuation Planning, Workers’ Compensation and Occupational Health & Safety – a broad spectrum.

Where do I spend the bulk of my time?  I review various Lenders’ Loan Agreements and Borrowers’ Insurance Policies for compliance with the terms/conditions of a Loan, recommending improved security where appropriate and knowing when a particular condition may be waived, as needed.  I even was called upon by a Lender during this week to recommend whether a loan condition for a “seismic report” be required or not – the Borrower already had Earthquake insurance and was located in a zone known to have activity so that I recommended the file be notated to never allow the Borrower to not include “quake” coverage on the policy.

As you can see, a busy and interesting week.  Not knowing when to curtail my comments, I will sign off now and be back later in the week to add something new.