Jason Glisczynski. (Contributed)

Financial Sense with Jason Glisczynski

Part 2 of 5: Significantly Reducing the Cost of Insurance

This is part two of a five-part series on The Internal 5 for Manufacturers which covers the most common challenges across the manufacturing space:

  1. Excessive Taxation
  2. High Insurance Costs
  3. Expensive Working Capital
  4. Talent Acquisition and Retention
  5. Suboptimal Business Transitions 

In this article, I’m going to do my best to “make insurance suck a little less” as one of my VFO (Virtual Family Office) constituents Jesse M. put it. 

Let’s start by setting the stage. When I talk about creating massive savings with insurance, I’m talking about insurance programs related to health, life, liability, key man, officers and directors, fleet, and so on.

Here is what most CFOs and/or business owners do with their insurance. For starters, they hate it (in my experience) so they avoid it until the renewals come up. When the renewal comes in the mail, they reach out to the agent and ask “Can we do better?” or “Can we get this cost down somehow?” This typically results in a “shop around” exercise to see if a different carrier can make a better offer.

On occasion, the owner or CFO (or whoever is tasked with this arduous activity) may reach out to a different company or broker to get a “competitive quote.” The time and effort required to get quotes from others often becomes too much of a pain and the process halts. Or worse, they go through all the effort with little to no savings or make a switch based on a “teaser” rate and end up needing to shop again 12 months later.

It’s exhausting and frankly, it sucks. I have yet to meet a business owner, executive, or other person tasked with shopping their insurance who enjoys it.

The two critical components to saving money on your insurance are—

  1. Service
  2. Structure

Service: This goes beyond answering the phone or processing a claim. This is taking a proactive approach to the relationship between you and your insurance carrier. Actively monitoring your insurance coverages and law changes and looking for opportunities to cut costs and make your life easier. Time is extremely valuable, and good service MUST SAVE YOU TIME. Every minute you spend dealing with insurance is a minute you don’t get to spend making money.

Structure: This is where massive savings can occur. Most businesses are using “off the shelf” insurance coverages. It’s a pre-packaged program designed to be sold to the masses. Alternatively, within a VFO (Virtual Family Office) framework, utilizing multiple professionals and coupling insurance with legal and tax strategies a business can significantly reduce their net insurance costs by as much as 20-60 percent. This isn’t easy to do. It requires skill, expertise, experience, advanced knowledge, and a coordinated effort with multiple professionals in different disciplines.

The complexity of a sophisticated plan or straying from the status quo creates fear, which is why most CPAs or insurance professionals steer clear of advanced planning structures. There is a reason 90 percent of Fortune 500 companies utilize advanced insurance planning structures because it works!

The question for you is this: are you satisfied with the service and structure of your insurance program?  If not, what are you going to do about it?

Jason Glisczynski is co-owner and principal advisor for Silvertree, LLC.  He is a CERTIFIED FINANCIAL PLANNER Professional and a Certified Private Wealth Advisor Professional and specializes in working with business owners, executives, and workers in manufacturing.

Investment Advisory Services are offered through Brookstone Capital Management (BCM) LLC, a Registered Investment Advisor. Silvertree, LLC and BCM are separate companies.  Visit www.silvertreeplan.com for more information.