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Self-reliance, targeted investment spell captive success: Risk Management Summit<sup>®</sup>

Self-reliance, targeted investment spell captive success: Risk Management Summit&lt;sup&gt;&reg;&lt;/sup&gt;

NEW YORK—The risk management philosophy at New York-based Tishman Construction Corp. holds closely to the old adage that, in order to get something done correctly, it's often best to do it yourself.

Since January 2002, Tishman has been financing certain risks—including commercial general liability, professional liability, employment practices liability and workers compensation—through its captive insurer, TRIMCO Insurance Co.

The captive also insures CGL; workers comp; professional risk; nuclear, chemical, radiological and biological; and property terrorism risks for sister company Tishman Hotels & Real Estate.

During that time, said Tishman Executive Vp William Motherway, the companies have not only kept losses consistently low, but also significantly reduced premium and operational costs on several fronts. As a result, Mr. Motherway said during a presentation at the third annual Business Insurance Risk Management Summit® in New York, TRIMCO has produced $2 million to $3 million in net proceeds annually for Tishman.

“I don't think that anything Tishman or TRIMCO does is particularly innovative,” Mr. Motherway said during the presentation. “What we are is very aggressive with our risk management program.”

More than anything, Mr. Motherway said, Tishman's success with its captive programs is owed to its culture of self-reliance.

“As a family-owned company (at the time of TRIMCO's launch), we wanted to do everything ourselves,” Mr. Motherway said.

Through TRIMCO, Tishman internalized several operations that otherwise might have required a third-party administrator or consultant for the construction and hotel/real estate companies, including safety management, actuarial and regulatory review, selection of legal counsel and claims management, he said.

TRIMCO also handles brokerage services for exposures not covered by the captive and insured through the standard market.

Having those capabilities in-house not only lowers the aggregate cost of managing risk—TRIMCO's operational costs are approximately $180,000 per year—it also provides services that are tailored to Tishman's operational standards and priorities, Mr. Motherway said.

“We think that by doing it that way, it's going to get done right,” he said. “Using this model, we're able to make money off of the program; and by making money, we're able to invest further in our risk management department.”

Mr. Motherway said consistent investment of money and personnel are crucial for companies looking to duplicate Tishman's success with a captive insurance program.

“It takes an absolute commitment to risk management,” Mr. Motherway said. “If you want this kind of program to work and you want it to make money, you have to stay involved and you have to realize that it's going to take a little investment in personnel. You can't do this kind of work with just one or two people; you need to build a staff.”

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