On today’s show, we discuss insurance and risk management for your organization.
Clay Ogden could easily be described as the ace of the SRA Team. In his role as National Business Development Manager, Clay does it all as he interacts with business owners and advisors to identify risk management strategies. As a former professional Golfer on the Nationwide, Web.com, Canadian and mini-tours, Clay nurtures many of his business relationships on the course and brings more than 12 years in risk mitigation to identify opportunities and consult with clients and representatives.
Many businesses think they are insured for everything. The pandemic showed us some risks that are actually typically uninsured that could potentially cause a business closure. These include:
- Supply chain interruptions
- Dispute resolution
- Loss of a key employee to an accident/illness
- Brand/reputation damage
How is the 831(b) insurance program different from typical policies like errors and omissions, directors and officers, general liability, workers’ compensation?
Utilizing the 831(b) tax code, a business can complement these policies and fill in the gaps with tax-deferred dollars.
How can a business decide if this is right for them?
This is for a business that has some excess funds to set aside. There will be no access to the funds for a 12 month period. Ideally, you want to take excess profits from good years to prepare for bad years. In the first year, funds are only available for claims. In the second year, some surplus funds will be available in the 831(b) to defer, loan from, or dividend from.
What is the ratio between investment and coverage?
Typically, the amount of coverage for this type of program is 2x the premium. For the more traditional insurance policies, underwriting will determine coverage limits. This program offers ways to be more efficient with the dollar investment. One example would be raising the deductible on the more traditional policies and setting up a deductible reimbursement through this program.
What questions should an organization ask when contemplating insurance?
- What issues have there been in the past?
- What things keep you up at night as a business owner?
- What kinds of things are you afraid might hurt your business?
Top 3 Takeaways
- There are lots of businesses that are not aware of these special insurance programs. 831(b) can be a great option for the uninsured or even for the traditional insurances. There are a lot of avenues where you can benefit the business, from both cash flow and risk management standpoints.
- Our eyes have been opened about what is and is not typically covered.
- Those that plan ahead do well in good and bad times. Those that are more reactive struggle in the inevitable bad times.
Contact Clay Ogden:
LinkedIn SRA: https://www.linkedin.com/company/sra-831b/
LinkedIn Clay: https://www.linkedin.com/in/clay-ogden-547123103/