Issue link: http://read.dmtmag.com/i/646485
w w w. v w m m e d i a . c o m M a r - A p r 2 016 | V I N E YA R D & W I N E RY M A N A G E M E N T 1 0 9 approach to be successful, from targeted loss prevention and con- trol activities through aggressive claims administration. Workplace injuries impact human health and safety as well as the bot- tom line — and yet they're avoid- able. We know from empirical data that workplace accidents are 90% or more due to human behavior. Less than 10% of workplace accidents are attributable to hazardous con- ditions or equipment. With this in mind, your business culture will be critical to success over the long term and should be cultivated to ensure success. A roadmap to success will include ongoing leadership train- ing for managers and supervisors, empowerment of employees through behavior-based safety training and, ultimately, accountability by all — as safety is a shared responsibility. Voila, there's equity to be found for working smart. While a variety of traditional insurance markets specialize in the wine industry, such as Chubb, Fireman's Fund and Travelers, the larger wineries may choose to look at alternatives to the traditional markets. ALTERNATIVE RISK FINANCING Alternative risk financing has become increasingly popular for "Best in Class" companies in any industry today. These alternatives are considered loss-sensitive, as your loss performance is directly tied to your premiums. Today's most common loss-sensitive pro- grams are either large deductible programs, or captive insurance pro- grams for workers' compensation, general liability and auto exposures. For the largest companies, self- insurance can also be an option. Each of these alternative pro- grams offers the insured the unique opportunity to share in the profit- ability of their success from within their risk management programs and afford substantial ROI poten- tial if managed effectively. The best candidates will have demonstrated solid financials and a proven track record over time within the perfor- mance of their risk management program, such that there is predict- These items need to be audited and analyzed periodically, alongside the current risk matrix, to assure the risk management program is effec- tive in terms of stated management objectives, TCOR and, ultimately, yields a positive return on investment. Mark A Niebuh, CPCU, ARM, RF, is a senior vice president at EPIC Insur- ance Brokers and Consultants, a retail property, casualty insurance brokerage and employee benefits consultant. He started his career in the insurance industry with the Royal Insurance Co. in 1977 and moved on to the broker- age side in 1981. Since that time, he's worked with both regional and national brokerages, providing risk management and insurance expertise to a variety of middle market compa- nies across the nation. Mark is a native Californian and a graduate of California State University, Chico. Comments? Please e-mail us at feedback@vwmmedia.com. ability in loss patterns. Wineries are particularly well suited for these alternatives and are attractive to many underwriting companies and group captives. MONITORING AND MODIFYING Monitoring and modifying your program for success are the final steps in the risk management pro- cess. Your broker should be keen to seeking out new risk financing oppor- tunities along the way. For example, why not create a profit center from an ordinary business expense — the cost of insurance? For years, the For- tune 500 and other large companies have used captive insurance pro- grams within their risk management structure. Here's where employing MBO will achieve ROI for the long term in a program to improve cash flow, gain certain tax advantages and earn equity for your collective efforts. It's a paradigm shift from "buying insurance." You can use dividends for a variety of purposes, including incentives and estate planning. Your broker should be prepared to explore risk financing alternatives beyond the traditional programs and provide a feasibility study for you to make informed choices. Finally, there are the bricks- and-mortar issues still within the proverbial box. Here are some of the more generic aspects of the insured's current or potential insur- ance program, including: • Building and tank values • Bulk and bottled wine values • Equipment values: processing equipment, electronic data processing • Business interruption/extra expense exposure • Management protection liability • Automobile • Aviation • Injury and illness prevention programs • Business continuity planning: emergency response, disaster planning wine@hoyt-shepston.com