How to Succeed in BusinessWithout Really Trying10 Practical Tips to Sharpen Valuei Y N fi ’ I P f liin Your Nonprofit’s Insurance PortfolioScott R. Konrad, Senior Vice President & Not‐for‐Profit Business Practice LeaderHUB International Northeast Limited | +1 (212) 338 2295 Direct

Today’s Discussion Themes• A practitioner’s perspective on your sector• 10 practical tips• Market watch• Open forum – Q&A

Nonprofits I’ve Known & LovedAlfred P. Sloan FoundationAmerican Civil Liberties UnionAmerican Jewish World Service Barnard College

International Rescue CommitteeInternational Society for the Performing Arts Minds Matter NationalNational Audubon Society

Boys & Girls Clubs of America Brandywine River MuseumConcern Worldwide (US)Council on Foreign RelationsCounterpart International

National Endowment for DemocracyNational Kidney FoundationNeighborWorks America New York Botanical Garden OceanaCounterpart International

Delaware Art Museum Elizabeth Glaser Pediatric AIDS Foundation EngenderHealth Episcopal Relief & Development

Oceana Phoenix House Foundation Population Council Protestant Episcopal Church in the USASave the Children USA

Family Care International Food & Water WatchGoodwill Industries of Greater NY & Northern NJHuman Rights First Human Rights Watch

SeriousFun Children’s Network The Cathedral Church of St. John the Divine The Ocean FoundationUnited Way of New York City Winterthur Museum & GardensHuman Rights Watch

International Center for Transitional Justice Winterthur Museum & Gardens World Relief

My Window Into Your Sector• Surprisingly diverse risks• Resource‐challenged• Strategic challenges trump 

proactive risk management• Diffuse accountability forDiffuse accountability for 

risk and insurance• Need for expert external 

counsel and advocacy• Loyal buyers

Why Worry About Risk?• “NY Charity Accused of Bilking Teens on Summer‐Job Pay” (08/14/15)• “California to Investigate Group Behind Planned Parenthood Videos” (07/27/15)• “Pakistan Expels Aid Agency Save the Children” (06/11/15)

( / / )• “Law Enforcement Agencies Nab Deceptive Cancer Groups” (05/19/15)• “Perp Walk: Nonprofit ED Gets Jail Time” (05/18/15)• “Nepal Earthquake: Americans Stuck as Death Toll Rises” (04/27/15)• “Wounded Warrior Project Sues Small Nonprofit Over Similar Logo” (04/30/15)• “Suit Claims AIDS Charity Bilked $20 Million in Federal Funds” (04/09/15)• “$19 Million Loss Slams Doors on NY Agency” (02/03/15)• “Boy Scouts Ordered to Pay $7 Million” (12/17/14)• “Abuse Suits Have Twin Cities Archdiocese Mulling Bankruptcy” (11/21/14)g p y ( / / )• “Ebola Tests Insurers’ Medical Evacuation Services as Airlines Cut Flights” (10/13/14)• “Suit Alleges $2 Million Embezzlement by Ex‐PBS Official” (09/26/14)• “Livestrong Gifts Fell by a Third After Armstrong Admission” (09/12/14)• “Lawsuit: NY Charity Threw Parties While Missing Paychecks” (08/05/14)Lawsuit: NY Charity Threw Parties While Missing Paychecks  (08/05/14)• And more...

#1: Consider the Big PictureInsurance premiums

₊ Deductibles and self‐insured retentionsretentions

₊ Non‐covered claims₊ Payments exceeding available insuranceinsurance

₊ Adverse claims experience₊ Workplace inefficiencies₊ Declining morale₊ Loss of reputation₊ Loss of funder confidence

TOTAL COST OF RISKTOTAL COST OF RISK

#2: Strategy First – Insurance Last

Assess & Identify

Avoid & Reduce Transfer

Ri kRetainRi k

• What risks do • Due diligence in • Consider all key • Look at your loss

IdentifyRisks

ReduceRisks Risks Risks

• What risks do you face?• How frequent?• How severe?• Worst‐case 

• Due diligence in new ventures• Property protection• Safety programs

• Consider all key contracts• Which way does risk flow?• Does the ‘other 

• Look at your loss history• Avoid ‘trading dollars’ for low deductibles

impact? • Travel risk management• HR policies• Other preventive

guy’ have the Right Stuff?• Do you?

• Absorb risk that’s predictable and affordable

preventive measures

#3: Look Off the Beaten PathTraditional& Obvious

• Workers’ Compensation

Emerging &Dangerous

• Sexual Misconduct• Workers’ Compensation• Auto• General Liability• Property

• Sexual Misconduct• Professional Liability• Information Risk• Media Liability• Property

• Management Liability• Crime

• Media Liability• International

• Nontraditional risks are rarely covered by traditional insurance• Exposure heightened by judicial and regulatory environments• Look at your business holistically – think outside the boxy y

#4: Sweat the Details• No 2 insurance policies are 

created alike• The fine print will help or hang 

you at time of need• Know what you’re buyingKnow what you re buying• Don’t overlook insurer solvency– And sector experience and 

i d i i fl ibilicommitment, underwriting flexibility, value‐additive services

• Lean on your broker

#4: Sweat the Details – Common Traps• Coinsurance• Narrower excess terms than 

i

• Definition of “Insured”• Water damage 

l i /li i iprimary• Liability coverage for 

individuals in non‐owned

exclusion/limitation• Professional Services 

exclusion(s)individuals in non owned autos

• Securing insurer’s consent 

exclusion(s)• Multimedia content• “Insured contracts”

to engage D&O counsel• Inadequate Crime 

protectionprotection

#5: Avoid “Bidding” Insurance

• Pits multiple brokers against each other to quote

• Empowers a single broker to represent your interests

Marketing Competition Broker Selection

q• Risks fragmenting the marketplace• Transactional focus emphasizes going‐in price instead of best qualification to manage long term

p y• Focuses on reducing long‐term cost of risk

• Places greater weight on broker’s resources and capabilities as a riskqualification to manage long‐term 

cost of risk• May result in “right horse/wrong jockey”

resources and capabilities as a risk management partner

• Promotes consistent message in marketplace

• Must be carefully managed• Demands thorough post‐marketing analysis

• Maximizes negotiating leverage of controlling broker

• Broker shoulders most of the work – clean analysis

#6: Start Early• Quality can’t be rushed• Begin planning 120 days out

Exposure update program structure- Exposure update, program structure, potential markets, placement objectives

• Communicate continuouslyCommunicate continuouslywith  broker

• Allow time for insurer analysis- Loss trending & developmentLoss trending & development, physical surveys

• Minimize opportunity for timing‐related excusestiming related excuses

#7: Showcase Your Strengths• Top‐level engagement• Internal risk management 

infrastructure• Corporate safety initiatives• Lessons learned from claims• Lessons learned from claims• Regard for long‐term 

relationships 

#8: Meet Your Underwriter• You tell your own story best• Be more than an abstract name• It’s a relationship business• Strategic partnerships will help 

you through market cyclesyou through market cycles

#9: Treat Your Broker as a Partner• More than a transactional 

intermediary• A trusted counselor and advocate• Strategic role• Extension of your team• Extension of your team• Give a seat at the table

- New ventures- Contracts- Operational changes- Shift in strategic directiong

#10: Know ‘The Deal’• Two basic methods of brokerage 

remuneration- Commissions paid by insurers (% of premium)

- Negotiated fee for service

• You can’t assess the value of a service without knowing what it costscosts

• Insist on complete operational and financial transparency

Bonus: A Look at Today’s Market• Our market is inherently cyclical• Recent years have been favorable 

for insurers• It’s a good time for buyers

Third consecutive year of rate– Third consecutive year of rate softening

– Plentiful capacityH l h i i– Healthy competition

– Underwriting discipline 

Insurer Combined Ratios: 1990‐20158.

8 122.

3125

o

109.

4

110.

2

118

109.

5 112.

5

110.

2

07.6 10

9.7

110.

2

4 07.911

1.1

112.

3110

115

120

Com

bine

d R

atio

10

104.

1

102.

5 105.

4

104.

2

98.9

102.

4

10

103.

4

98.3 99

.9

98.910

2.0

100

105

mm

erci

al L

ines

C

91.1 93

.6

90

95

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13F

14F

15F

Com

m

2007‐2012 figures exclude mortgage and financial guaranty segments.Sources: A.M. Best (1990‐2014F); Conning (2015F) Insurance Information Institute.

Commercial Renewal Rate ChangesPeak = 2001:Q4 

+28.5%

Pricing turned negative in early 2004 and remained that way for 7.5 years

Pricing turned positive in Q3:2011, the first increase in nearly 8 years

Trough = 2007:Q3 ‐13.6% Rate trends 

roughly flat

Renewal Pricing TrendsEarly 2009 through Early 2015

Few accounts are seeing increases

Source: Barclays Commercial Insurance Buyers’ Survey, 2015

#11: Use the Market to Your Advantage• Ride the wave of rate reductions• Canvass purposefully and 

i llstrategically- Rifle‐shot approach

• Consider alternatives if...- It’s been 3‐5 years since last outing- Your business has changed significantly- Your insurer’s appetite or pricingYour insurer s appetite or pricing has changed significantly

- Policyholder service has deteriorated• Avoid going to the well too oftenAvoid going to the well too often

Open Forum – Q&A

For More InformationScott R. KonradSenior Vice PresidentNot‐for‐Profit Business Practice LeaderHUB International Northeast LimitedHUB International Northeast Limited5 Bryant Park | 1065 Avenue of the AmericasNew York, NY   10018(212) 338 2295 Direct(347) 491 9671 Mobile(347) 491 9671 Mobilescott.konrad@hubinternational.com

Scott Konrad is an officer of HUB International Northeast, with responsibility to build, brand, grow and lead a specialty practice serving the insurance, risk management, and employee benefit needs of tax‐exempt organizations.  An industry veteran with 38 years of experience, Scott began his insurance career as a claims adjuster with Liberty Mutual Insurance Company. He transitioned several years later to the brokerage sector, serving in ainsurance career as a claims adjuster with Liberty Mutual Insurance Company. He transitioned several years later to the brokerage sector, serving in a variety of claim management, sales leadership, and relationship management roles with global brokers Johnson & Higgins, Marsh & McLennan, and Willis, over the majority of his career. From 1996 to 2003, Scott was an officer of the Church Insurance Companies, the denominational insurance arm of the Episcopal Church, for which he established a regional service center and managed deployment of the companies' products and services to over 2,000 institutional clients in 20 Episcopal dioceses throughout 11 Northeastern states. Scott joined HUB in 2013 from Crystal & Company, an independent, privately‐owned insurance broker. A graduate of Colgate University, Scott has been recognized by Risk & Insurance magazine as a Power Broker® to the Nonprofit sector for the past five consecutive years, and he is a frequent speaker and author on nonprofit risk management themes. He launched and fronts HUB’s corporate partnerships with InsideNGO and the Nonprofit Risk Management Center. Scott is accredited in Risk Management for Churches and Schools by the University of Cambridge (UK), and serves on the diocesan insurance board for the Episcopal Diocese of Connecticut.