Recently, another CFO with a large fleet and dozens of terminals spanning the country wanted to know how I distinguish myself. I explained my philosophy: help companies grow their business and the key people will keep asking for new ideas to generate additional growth. Specifically, as an insurance agent, how can I apply a “Growth Through Insurance” philosophy?

Our dialogue went this way:

Did you know there are certain specific insurance policies that can be chosen because they will align with a company’s mission, sales objectives and asset growth plans?

An insurance company exists to collect and invest money while waiting for covered claims to be paid. The language of its policy describes what is covered. My role is to understand how premiums are determined and exactly what is the necessary coverage so a client can expand without too much extra insurance burden. In 1986 asbestos claims, medical malpractice awards, product liability lawsuits were going through the roof. Insurance companies hiked premiums massively, non-renewed customers, substantially restricted coverages. The US Congress authorized a special way to write liability-only protection, like commercial auto, to create a market for businesses hit by this insurance crisis. They legislated into existence risk retention groups.

Members in the same industry have the same exposures so they look for the same insurance coverage. Companies like yours which may have subsidiaries or divisions or related companies can take advantage of this.

Potentially, this can be used by your company to finance your growth around the country.

First, for example, your commercial auto exposure can be insured this way, each group within your company buying a policy more carefully written to apply to what you really do, since it will come from your RRG. Then you can expand the insurance capital base by soliciting the owner-operators for their commercial auto liability if you choose. By adding them, the insurance premium growth and the capital accumulation potential for your company’s RRG increases substantially.

In your industry, trucking & transportation, DemoTech (an insurance rating company like AM Best) has rated a ARCOA which is owned by U-Haul. Others that are rated by DemoTech include Quality Distribution in Tampa owns Bay Insurance RRG, an RRG started by Roadrunner Transportation Systems Inc named Velocity Insurance Company RRG. Others DemoTech carriers you may know are ATTIC RRG for the thousands of trucks operated by seven trucking firms. Homebuilders have warranty RRGs that boost ROI with additional revenue after selling the houses, auto dealers have garage-keeper to build capital through liability insurance premiums and RRG-insured service contracts. There’s even a cross fit RRG for about 3,000 cross fit gyms, to protect against liability claims. They collect additional premiums when the instructors buy professional liability from the RRG. You can likewise build revenue in your transportation company with a solution to control the insurance spend on your trucks, trailers, and the owner operators’ units.

According to the 3/15/2018 study by the National Association of Insurance Commissioners – NAIC – who regulate RRGs,” transportation was experiencing hardening rates in the commercial market and as a result was experiencing more RRG activity… About half of the active RRGs have less than $3 million in premium …”

By studying your company, an RRG may be a solution to control your commercial insurance premiums, paying your claims and making the remaining capital available to grow business or assets like distribution centers and terminals, tractors, trailers and other equipment, or real estate as you expand around the country.

We will review your insurance loss history to study if you qualify to set this up. 5 years of loss runs, insurance policies, and exposure information will let us begin to analyze your potential.

And, we can help you with new directions to operate based on what your incident reports and claims information reveal. These provide an intimate insight into your business which are routinely underutilized to provide clues about additional ways grow both your balance sheet and your profits. Even how to include the insurance mechanism as a feedback loop to continuously improve your operations.

Secondly, perhaps we can create a profit center by introducing a deductible buy-back program for your owner-operators. For example, from what I’ve seen in the RV towaway industry, so they have skin in the game, Owner-Operators have a physical damage deductible, say $5,000 deductible per occurrence. We could create for your owner-operators a $4,000 deductible buy-back for a monthly premium determined by an actuary based on your current group experience: let’s assume $45 per month. (I have no idea your owner-operator size or the correct amount; this is just a guess). If an accident occurs damaging your customer’s RV, instead of chasing the Owner Operator for his $5,000, the deductible buy-back pool would pay out up to $4,000, leaving you to collect only $1,000 from the owner-operator.

Both cases: RRG and deductible buy-back, could create capital growth through insurance.