The Risk Adverse Property Management Firm

Understanding the risks to your business and methods to manage

those risks.

About

Cary Smith, CIC- PresidentTreaty Oak Insurance PartnersBased In San AntonioFormer Insurance Company EmployeeHartford, CIGNA, SAFECOExclusively work with NARPM members

A Few Observations•As the frequency of risk increases, premiums increase.

•As the severity of risk increases, premium increase.

•As the frequency and/or severity of risk increases the number of available insurance companies interested in providing product decreases.

•Underwriters do not like insuring businesses that lack processes, controls, and management oversight.

Methods to identify riskFor the most part, these methods consist of the following elements performed in this order.

•Identify Risks to Your Business•Characterize Likelihood and Consequences of Threats•Prioritize Identified Risks- Quantify•Identify Methods to Reduce Risks

Assign a number 1-5

Cost of Risk * Likelihood * Severity = Risk Level

Methods to manage risk

Once risks have been identified and assessed, we manage the risks using four techniques:

•Avoidance•Reduction•Sharing or Transfer•Retention

Insurance as a Risk Management Tool- Transfer•Transfer risk in exchange for a premium.•Deductible is the risk you accept.•“Self Insure” is 100% acceptance of risk.

You can reduce reliance on insurance through sound business practices and proper controls.

You can reduce premiums as well!

Risks To Your Business

In the eyes of an insurance company, you are a general contractor you face risk from third party liability.

You also face risks from your business activities.•Employment•Auto•Professional•Fiduciary

Threat Assessment for Property Managers

Property Management

Firm

Property Management

Firm

EmployeesPractices

RegulationEducation

EmployeesPractices

RegulationEducation

ContractorsContractors

OwnersOwners TenantsTenants

Threat Assessment for Physician

Medical Office

Medical Office

EmployeesPractices

RegulationEducation

EmployeesPractices

RegulationEducation

Customers &Professional Liability

Customers &Professional Liability

Self Diagnostic

Owners

•Do you use an association approved management contract?•Do you enforce the contract’s requirements for insurance?•Do you conduct an annual audit to ensure compliance?•Do you monitor and respond when the owner’s policy cancels/changes?

Self Diagnostic

Contractors

•Do you require all contractors to have insurance?•Do you receive evidence of insurance from your contractors prior to payment?•Do you require contractors to list you as an additional insured?•Do you require a waiver of subrogation in your favor?•Is the contractor accredited/licensed?•Are they members of their trade association?

Your business

•Do you background check all employees prior to hiring?•Do you use an employee handbook that details the rules?•Do you conduct performance management reviews?•Do you have controls in place for AR, AP?•Are your people trained on enforcing contract requirements?•Do you have a procedure for employees using their vehicles while on business?

Self Diagnostic

Tenants

•Do you background check all prospective tenants?•Do you have a signed lease agreement?•Do you require tenant’s insurance?

Self Diagnostic

Let’s Talk

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