FRANCHISES & ASSOCIATIONS

TRANSCRIPT

[Bruce Silverman] Hey everybody. Welcome to another edition of "Managing Risk for Tomorrow, Today" with Henry Laville. Henry. It's good to see you.

[Henry Laville] It's good to see you, Bruce. It's great to be back.

[Bruce Silverman] I'm really excited about this next topic before we get into it Henry Laville, 225-317-4265 , hlaville@eliterisk.com. Franchise and Association businesses. Most people think franchises - they're thinking, you know, McDonald's, Subway, KFC, everything else. But franchises and associated businesses can get together and create some interesting insurance solutions as well. .

[Henry Laville] Absolutely. And they might be a McDonald's or a Subway. They might also be an Anytime Fitness or Tire Choice or car service center, it could be anything. But a lot of those smaller businesses have insurance issues and don't get a lot of attention from the market on their own. There's not a lot of premium, not as much leaving the bone put together 600 Or over 1000 of them. And you've got, you've got a lot behind you and you've got a lot more options.

[Bruce Silverman] So basically, it just comes down to buying power.

[Henry Laville] Absolutely it does. And then you can have a boat program, just for your association and just for the members. So for an association that has some scripts and fees and things of that nature. This can be another add on that attracts clients, and it's another benefit to their, their end user.

[Bruce Silverman] Let's break down the word "bespoke." That's a word that is often used in clothing, it's not something that you would think is necessarily associated with insurance. So for the folks out there that are going "wait a minute, we're talking about insurance here, we're not talking about you know, the thread count of, of my jacket," let's break that down a little bit.

[Henry Laville] "Bespoke" is a word that refers to something being custom made or another clothing reference tailor fit for a specific need or type of utility. So you could have a bespoke home that's custom built from the floor into the ceiling, and everything is the way the owner wanted it. It can be the same in insurance. Franchise and association business is a great example of that. We received a submission for several hundred Car Care Centers that wanted to have risk participation. So they wanted to own some of the risks and be able to get distributions back or participate in underwriting profit, as well as layoff risks, who straight risk transfer, we can do that forum and manuscript coverage to exactly what they need it to be within reason, it can't be anything insane, but they're gonna get pretty well exactly what they want. And it's a great solution. Whereas one of those votes comes forward to the market, and they're just gonna get what's available. And that's all there is to it. The conversation ends there.

[Bruce Silverman] So at the end of the day, when these different businesses come together, that are in similar fields, everybody wins. 

[Henry Laville] Everybody wins, especially the insurance agent. So I talked to an insurance agent last night who used to used to quote, quite a lot of restaurant franchises. In fact, it's one of the ones you mentioned, he would have to quote 1200 a year, there were numerous other agencies there, I think, five or six, they're all big shop agencies. His would have been the smallest being a bank owned agency, although it's a fairly big player in my little area of operations out here in South Louisiana. But 1200 votes and I asked him well, how many did you bind? Well, he only ever bound 75 and each one of those 75 with great risk, I'm sure with some good premium. But that's a lot of work. He had other agency work with, they could have come together and put together that association program for those franchises, and met all their needs. All corporates needs, and had a much better solution. But then those clients grow roots. So whereas it's good for the insurer, because the insured gets the participation benefits. You're getting distributions, you're getting money back, you're getting ladder renewals, things of that nature, because you've got skin in the game. It's great for the agents because you built that program with you and potentially other other agents. But those clients aren't going anywhere ever now. You've built the perfect mousetrap for them a bespoke solution. And it's a lot better when you look at the work to quote all of those over and over again, that's just throwing it on the wall hoping it sticks.

[Bruce Silverman] I was doing the math in my head, you know, 365 days in a year, you're doing three to four proposals a day. And I don't think there are one cheats...

[Henry Laville] It's actually worse than that. All the quotes would be due on one day. So they would have one quarter out of the year, they'd have to do all 1200 quotes. But with that much work, why not build a program? 

[Bruce Silverman] Makes tremendous sense. Now who puts the association together? 

[Henry Laville] Well, in this case, the association was a restaurant, so you're buying franchises in it, and the commonality is corporate. So hey, we have to go and talk to the folks at corporate and get everything approved, but the association's readymade because as soon as you buy into the franchise's there, so whether it's a gym, a Car Care Center, or whatever, it's pre existing. However, there are other associations like, in Louisiana, we've got the Home Builders Association, and they've got their own insurance program for workers comp. And I believe General Liability, other workers comp is a big ticket item. And it's a great program for them. It's, it's really competitive at the size of most of those businesses are, and then there's a lot of network in there, too. So it can be everything's homogeneous, or everything's the same business, simply the same restaurant. Or it can be - Hey, we're just home homeowner facing contractors. So we are residential contractors. And we're doing pest control fence work, citing basic things like that, we'd love to come together and get some time on power. So it may look different on its face. But the end, the end state is you have more buying power together with the same or similar businesses. And you can just get a lot more done.

[Bruce Silverman] He is Henry Laville, this is "Managing Risk for Tomorrow, Today," 225-317-4265 , hlaville@eliterisk.com. So basically, it's the buy-in and the commitment - once those two things come together, everything works out for the Association for the insured, and for the agent in the agency. Right?

[Henry Laville] Once there's commitment from the Association, or from the Association of franchisors members, you start to have legs on it, you can move forward, without buy in, if you've come, for instance, these are things we can build. But if there's no buy in, we're spinning our wheels. So if they want it and they come together and say hey, and here's a letter of intent, we are bought in we want this down the road, but we need an am best rating, or we need this infrastructure for claims or this cover or whatever there is, there may be overhead for us or maybe extra effort put in. But if if the buy-in is there, then then we might really have something to look at. If not, then what are we talking about? So that is the that is the one hurdle that SPG helped put these programs together. If the agent or agents can get together and get that commitment, and it, it's quite likely a great opportunity.

[Bruce Silverman] When associations get formed, is it always the same type of business / named business? For instance, you know, I mentioned the McDonald's and the Subways. And you had mentioned some car care centers and things like that. Is it always the same franchise? Or is it sometimes that it's not the same franchise, but it's all the same type of businesses?

[Henry Laville] Quite often the same franchise, but when it's not, if they're not the same business, they're similar businesses. So I mentioned the Homebuilders Association, other states have those two, that could be any residential facing contractor. So they're not doing commercial work. But there's not 100% overlap, and there's enough to make things work from an underwriting standpoint. So they don't have to be exactly the same. But if they can be close, that sure helps.

[Bruce Silverman] So this basically is a program that helps the little guy get the same benefits as the big guy. 

[Henry Laville] Yeah, turns a little guy into a big guy. I mean, they've got all the buying power, and you look at almost a class underwriting across the loss ratio across the board, what's your average premium, and start crunching the numbers? What can we give back to them on a distribution basis? How much does it make sense to make them participate? Can they afford it? You just start checking the boxes and get moving, and it's exciting for me. I love bringing a solution to bear that has a much better end state value for the agent and for the insured. I see that as kind of leaving our mark on the industry.

[Bruce Silverman] No, it's a tremendous thing. And it goes back to the creativity which I think I mentioned on every single episode. And it's got to feel good for for the business. Because it sure insurance is one of the major expenses of being in a business and being a small business. You need to find all the ways to keep your costs down so that you can keep your profits up. And I love the approach and I love the solution. This is "Managing Risk for Tomorrow, Today," today with Henry Laville. 225-317-4265 , hlaville@eliterisk.com.  Henry. Always a pleasure to spend time with you and I know we're going to do this again and again and again. So we'll see you on the next episode.

[Henry Laville] Awesome. Thanks.

[Bruce Silverman] Thank you!