Beecher Carlson formed the Risk Optimization Group in June 2018 to give clients added flexibility as insurance markets began to harden.

“We saw two and a half years ago that the market was starting to turn,” said Jay Sampson, Atlanta-based executive managing director of the Risk Optimization Group. So many clients had been buying insurance so cheaply for so long “they were on autopilot,” he said, adding that as that changed, “they needed tools and the ability to combat what was happening in the marketplace.”

The Risk Optimization Group, which won the Business Insurance 2020 U.S. Insurance Award for broker team of the year, comprises Beecher Carlson’s non-insurance placement activities, including the analytics team, the captive management team, claims and risk control services.

“We help companies evaluate their risk appetite and buy accordingly and help them understand the volatility around taking more risk,” Mr. Sampson said, noting a review and analysis can show a client different methods of covering their exposures.

“A lot of companies can buy less insurance,” Mr. Sampson said. “A lot of companies in the large commercial risk management space can probably retain a lot more risk.”

Generally, but not always, the group’s findings lead to a client restructuring its commercial insurance program, sometimes with the use of a captive. On average, customers buy less monoline insurance, Mr. Sampson said.

“Usually we find the client is going to end up taking on more risk,” he said. “A captive is a tool which can be used to retain risk. It allows more flexibility than funding an exposure on the balance sheet without a captive.” 

Clients are primarily large commercial but not exclusively. The savings must be sufficient to justify taking on the additional risk, Mr. Sampson said.

For the transaction that led to the award, the client determined its risk appetite as a percentage of earnings per share, and that appetite was large. Much of the client’s insurance program, including property and umbrella liability coverage, was canceled and written in a captive instead, Mr. Sampson said. The captive then went out and bought specific excess insurance above the client’s “appetite threshold” of $100 million. 

In so doing, the client was able to reduce its insurance spend by 60%, and because it was a three-year deal put in place in June 2018, “for the last two years, they have not participated in the hard market.” Mr. Sampson said.

FINALISTS

• Alliant Insurance Services Inc. — Alliant’s Silicon Valley office in San Jose, California, serving the construction and real estate markets, has seen rapid growth since opening in January 2016. 

• AssuredPartners Inc. — AssuredPartners’ Central Florida team specializes in creating insurance programs for condominium, townhome and homeowner’s associations. 

• Marsh LLC — Marsh’s cyber brokerage practice places coverage for cyber and errors & omissions clients including multinationals requiring coverage for businesses in markets worldwide. 

• NFP Corp. — In 2019, NFP hit double digits in revenue growth and acquisitions as it also focused on diversity and earned a place on BI’s Best Places to Work in Insurance list for the third consecutive year.