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NewswireToday - /newswire/ - Sterling, VA, United States, 09/16/2009 - Risk and Insurance Magazine, an LRP Publication has announced that Richard G. Vassar, General Manager, Risk Management for Volkswagen Group of America, has been named a 2009 Risk Innovator.


The Risk Innovator Award recognizes winners across different industries who have demonstrated innovation and excellence in risk management. These key individuals see risk differently and have resolved risk-related problems in a unique or innovative way. They view risk not only as a threat, but also as an opportunity for their organizations.

Mr. Vassar is recognized as a guiding force in the risk management community. In 2006, he published his book Hide! Here Comes the Insurance Guy. The book provides business insurance and risk management strategies in an easy to read style that simplifies the process.

Says Vassar: "I … recognized that insurance has its own language, and the book was aimed at being a translator for those with business acumen but who find insurance much too technical to warrant its study."

Several people who know Vassar well said he is the ideal person for breaking down insurance speak into understandable business terms.

Joe Donnelly, senior vice president at Kansas City-based Lockton Companies, LLC, a risk services business manager, said of Vassar: "Rick is a creative risk manager. Many risk managers will sit back and let things run themselves. Rick is more of a mind to take positive action.“

When working with Rick there was never an easy solution," noted Jim Misselwitz, senior account executive and part owner at ECBM, a very large independent broker in the Philadelphia area. "You always had to keep working a project until everybody was fully satisfied but Rick had a way of dissecting a problem that left everybody feeling comfortable."

"Rick is one of those guys who, when bombs are going off all around you, has a way of being calm, of staying focused on the end game. He had a level of knowledge such that he could communicate at any level in the corporation.”

Risk & Insurance® (riskandinsurance.com) provides business executives and insurance professionals with the insight, information and strategies they need to mitigate challenging business risks.

By Rick Vassar CPCU ARM

Author of the #1 Insurance Liability Book on Amazon.com Hide! Here Comes the Insurance Guy


CHICAGO, Dec 17, 2008 (BUSINESS WIRE) -- Fitch Ratings downgrades XL Capital Ltd (XL) and its property/casualty (re)insurance subsidiaries, including the Issuer Default Rating (IDR) for XL to ’BBB+’ from ’A’, and the Insurer Financial Strength (IFS) rating of its core operating companies to ’A’ from ’A+’. (See the full list below.) The ratings remain on Rating Watch Negative.

The rating action follows XL’s announcement that the company anticipates the estimated mark-to-market decline in its investment portfolio through November 2008 to be largely in line with the $1.1 billion of unrealized losses, other than temporary impairments and realized losses on sales the company incurred in the third quarter of 2008 and the $200 to $220 million in net investment fund affiliate losses from its alternative investment portfolio for the fourth quarter of 2008.

Rick Vassar’s insurance/Financial Interpretation – “Sorry, man, my bad…”

NEW YORK--Dec. 17, 2008--American International Group, Inc. (AIG) has issued the following statement regarding an article published today by Bloomberg:

"AIG reports all its derivatives at fair value in accordance with US GAAP including AIGFP’s credit derivative portfolios. In accordance with US GAAP, in its determination of fair value for its credit derivatives, AIG considers all available information including but not limited to market available data, dealer provided prices, prices used for collateral posting and recent trades including early terminations initiated by counterparties. In evaluating fair value for its Regulatory Capital portfolio, AIG also considers factors relating to the individual underlying portfolios including, but not limited to, asset type and seasoning, default history, loss history and attachment point.

"AIG has clearly described its valuation approach including key assumptions used for AIGFP’s super senior credit default swap portfolio in its Form 10-Q for the quarter ended September 30, 2008."


Rick Vassar’s Insurance/Financial Interpretation:

“Face it. You [screwed] up! You trusted us.”

-Eric ‘Otter’ Stratton from the motion picture Animal House (1978)



I have been asked on numerous occasions in the past few months how this could happen to a big insurance company like AIG.

Why are they investing money in sub-prime mortgages?

How could they not see this coming?

You see, the general public believes that insurance is quite a simple process. You charge premiums, you pay claims, and you keep the money that’s left over.

It’s sort of like that, except that there’s one component left out. The insurance companies charge premium, put some of it aside to pay claims, and invest the rest. The insurance industry as a whole loses money on the spread of premium to losses, but makes it up handsomely on the investment returns. The industry has been doing this for hundreds of years.

So what’s the problem, Rick?

The problem was outlined in my book Hide! Here Comes the Insurance Guy in early 2006:

“I believe there was a watershed decision made in 1999 that should have put the debate of the hard market to rest. In that year, Congress passed the Financial Services Modernization (Gramm-Leach-Bliley) Act. This act allowed, for the first time, banks to offer insurance products and for insurers to offer banking services through holding companies. This created a synergy between the two industries which allowed both to tap into their customer bases and mine business from the other industry. Banks and insurance companies could offer their clients a one-stop alternative for both insurance and banking.

The result was an increase in competition in the marketplace, which led to consolidation of companies that were too weak to compete in the more dynamic market. The increased competition increased supply for a fairly stable demand, reducing the prices in the marketplace. The increased competition also caused some weaker insurers to lower their qualifications for coverage, which weakened their overall book of business and made them susceptible to the vagaries of the free market. At the same time, it provided a need for coverage in the secondary market that was not being fulfilled at a reasonable price.”

In other words, instead of insurers going to the bank to invest their money, they became the bank. Insurers found that by going to themselves to invest their money to be much easier and much more profitable.

I mean, who is going to ask questions of you if you are borrowing from you.

Sarbanes-Oxley only expanded the problem, because the transactions were being reported. No one understood the investments, but they were being reported. And don’t worry, it’s mostly our money.

Then, the bottom falls out, and the bank turns back into an insurance company and tells us that they don’t know what these swaps and stuff are all about, because this isn’t our core area of expertise.

Exactly.

One needs to look only at the insurance industry’s combined ratio, which is the percentage of each premium dollar a property/casualty insurer spends on claims and expenses. The industry average has been hovering around 102%, which means for every $100 collected in premium, $102 is paid out in claims and expenses.

The combined ratio is conservatively estimated to be around 104% in 2008, with some experts saying that it could be as high as 108%.

So, what has this taught us?

Insurers began to rely on investment income to offset poor premium pricing and underwriting decisions in reaction to increased competition brought about after Gramm-Leach-Bliley. Insurers lowered qualifications to bring in more income to invest. Once claims cost began to rise due to poor underwriting, there was more pressure on the investment side to make up the difference.
The pressure for increased investment income led to lower standards in the underwriting of investments. The greater the risk, the greater the return, unless the bottom falls out
If there is transparency in financial transactions that no one understands, are they really transparent? SarBox gives the impression of accountability without accountability, which is okay, unless the bottom falls out.

It makes me chuckle to hear insurers tell me that the insurers are actually in good shape. My question is: How good would they be if that $100 billion or so didn’t come to the rescue? The insurance subsidiaries are being kept alive to sell off from the banks – I mean holding companies.

Let’s go back to banks being banks and insurers selling insurance. When they’re apart, they work pretty well. When they got together, it was real good for awhile. Premiums came down, insurance was available, investments were plentiful. When the bottom fell out, the fall was swift and severe, and there was no place to go.

Too good to be true is all well and good, unless the bottom falls out.

Vassar Joins Volkswagen Group of America

BY MATTHEW BRODSKY
Risk and Insurance Magazine
May 14, 2008
Reprinted with permission

Rick Vassar was watching Hootie & the Blowfish jam at this year's RIMS conference, and what captured his attention was not the band resurrecting its hits from the '90s.


It was how the floor in the San Diego Convention Center undulated with the carefree dancing, stomping and stumbling of the hundreds of revelers at the show.


"How much would they get sued," Vassar remembers wondering, should the floor collapse.


Chances are, considering their astute, wry nature, many other risk managers in the hopped-up Hootie audience that night had a similar thought.


But this observation is not why we're writing about Vassar. In April, he started work as risk manager for Volkswagen Group of America Inc. That's why.


"I couldn't have scripted it any better," he said about his new gig. He now works a mere 10 miles from his home in the Washington, D.C, area. It's a chance to do good things at a big company. And it gets him back to working in the automotive business, where Vassar got his start.


Turning 50 this June, Vassar first found himself in risk management back in 1986--in car rental claims at Thrifty. Three years later, he would become risk manager for the company.


It was fast success, an indication of things to come. Yet at the time, Vassar admitted, even though he knew he was good at risk management, he wasn't digging it.


Not until he found his passion for it, in education.


Then, he said, his profession became "more than just an opportunity, more than just a paycheck--a passion to try to impact the way people think about risk management."


His goal has been to try to humanize risk management to corporate, to communicate to the C-suite what risk managers should be tasked to do. He said that most people in business see risk management as a mystery that doesn't fit into their organizational charts.


"It's become a goal of mine to educate and enlighten companies that you can save money, lots of money," he said, through smart insurance buying, loss control, safety and everything else that a risk manager can provide.


Gone should be the day that bosses single out a victim in finance or legal and damn them to become the company "risk manager" ... without training ... a week before renewals.


Of course, Vassar also has set out to educate the other side of the equation: risk managers themselves.


"It's up to the risk manager to determine their place in the organization," he said, adding that it can be a difficult and tense transition. Risk managers are not the "rainmakers" in any organization, after all. They typically do not generate revenue. Risk managers can save, and that's their way of making money for their organizations, he said.


Of course, much of Vassar's sentiment is also shared by other risk managers. Besides "Only Want to Be With You" and "Hold My Hand," risk managers at RIMS also heard a very similar message from their leaders and session speakers: Risk managers should recognize, and act upon, their importance to their corporation.


But Vassar feels so strongly about the subject that he wrote the book on it--literally--a paperback titled Hide! Here Comes the Insurance Guy. Originally self-published in 2006, the title has been picked up by book printer.


Which brings us back to his new job.


The subject of his book happened to come up during the interview with VW, and he just happened to have a copy in his briefcase.


"The book lent credibility to my experience and education," Vassar said. "They were looking for someone who could come in and roll their sleeves up and get started."


Vassar might have to roll up his sleeves, loosen his tie and eat his Wheaties for his new job. He has decades of experience--he worked with Thrifty through 2002, then became head of risk management for 200-employee Valcourt Building Services--but Volkswagon of America is a higher gear. VW is the fourth largest automaker on the planet with more than 325,000 employees worldwide and 1,400 in the States. It has a global risk management department with input over the U.S. program, as well as a global insurance program with which certain U.S. coverages must be integrated. Meanwhile, the company is in the process of relocating its headquarters, placing a new plant somewhere stateside and gearing up for a big push into the U.S. market that will see it sell 1 million vehicles by 2018.


When asked about longer hours and more stress, Vassar grins. "It's going to be a challenge."


One that he's confident he can tackle and pin to the ground. He cited his experience working in auto fleet and in claims at Thrifty, which was only broadened with his work at Valcourt. At the building management company, he had to be ahead of the game. A lot of the company's projects involved men hanging off buildings--think window-washing--so when a claim drifted his way, it was bad. The goal was to prevent them, not deal with their aftermath.


With his experience and VW's expectations, his hiring is a "good marriage," Vassar said.


"They have made a commitment to risk management," he said. "They do view risk management from an enterprise standpoint."


Not to mention the automaker's dynamic and employee-oriented environment.


"I think they're a moving force in the United States. It's my goal to make a lifelong commitment to VW," he said. "I would love to finish my career with VW."


MATTHEW BRODSKY is senior editor/Web editor at Risk & Insurance®.




May 14, 2008

Copyright 2008© LRP Publications

Hide! Here Comes the Insurance Guy takes a radically different approach to explaining risk management and business insurance. Hide! explains the insurance process, indentifies the players are and simplifies the terminology, using humor to make a mostly unpalatable subject easier to digest.

Today, the book is both the number one (paperback) and the number two (hardcover) bestsellers on the Amazon.com insurance liability book list. The paperback is also #2 on Amazon.com in the risk management category.

"It's exciting", says Vassar, "even those who are insurance novices learn a lot, and I'm amazed at how many folks find the book to be a joy to read.

"I mean, think about it; a funny yet authoritative book on insurance and risk management, two disciplines not known for their senses of humor. And the fact that these strategies can save them so much money once they crack the code is incredible."

Rick Vassar CPCU, ARM, AIS, ARM-P is the principal in The Vassar Group, LLC and Vice President of Risk Management for Valcourt Building Services.

The Vassar Group specializes in rent-a-risk manager services for emerging companies, and Mr. Vassar also conducts workshops on the risk management and insurance process. These workshops are eligible for up to eight insurance CE credits

Both books are available through the RIMS (Risk and Insurance Management Society) bookstore www.rims.org

Posted on August 30, 2007

Blogcritics.org reviewer MaryAnna Clemons gave high marks to Rick Vassar's Hide! Here Comes the Insurance Guy "I would not be surprised to find this book as required reading in future business courses in colleges throughout the U.S...I tend to shy away from self-published work - I'm glad I did not in this case...Hide! Here Comes The Insurance Guy: A Practical Guide to Understanding Business Insurance and Risk Management

By Rick Vassar CPCU ARM

This valuable and practical resource will help risk managers and businesses alike improve and control insurance costs, potentially saving your company millions of dollars.

Bulk Discounts Now Available - Quick Turnaround...contact us @ info@vassargroup.com

Reprinted with Permission from The John Liner Review Winter 2007

Commentary

Insurance professionals learn about risk management — but not, apparently, about what a risk manager actually does. The need for education goes both ways.

A Risk Manager in an Insurance World: Odd Man Out

Rick Vassar

It’s always the same old story.

I go to a party, family gathering, church — it really doesn’t mat-ter. Eventually, someone will ask me what I do for a living. I tell them I’m a risk manager, and it’s always the same follow-up: “What does a risk manager do?”

There was a time when I would spin into the old Risk Management 101 song and dance, filling their heads with probability versus possibility, losses contingent upon this and that, subrogation stuff, until their eyes glazed over and they stumbled away dazed and confused, avoiding me like a plague, not only that evening, but forever.
Now, I give them the short answer: “I purchase insurance for my company.”

“Oh, so you’re like a broker.”

“No, a broker sells insurance; I buy insurance.” I remember using this explanation on a brother-in-law about 20 years ago. Whenever I’m with him and I meet someone new, he introduces me as “This is Rick; he sells insurance.” So much for communicating what a risk manager does in a social setting.

Stranger in a Strange Land
In an insurance setting, I would expect a better understanding of what I do. So imagine my surprise when I attended the Chartered Prop-erty Casualty Underwriter (CPCU) Society national meeting a few months ago. Here I was, amongst the greatest minds in the insurance industry, celebrating the fact that I had achieved the most presti-gious insurance designation in the property-casualty side of the business.
Then it happened, early and often — “So, what do you do?”

Actually, the first question was always, “Who do you work for?” since it was assumed that you work in the insurance industry. It didn’t matter what you do — the question was, “Who do you work for?” I heard responses such as “North American Life,” “Aon,” “Marsh Mac,” “AIG,” and “Zurich.”

“So, Rick, who do you work for?”

“I work for Valcourt Building Services.”
“What is Valcourt Building Services?”

“Why, it’s the premier building services company in the United States.”
“Seriously, who are you with?”

“That’s who I work for. I am a risk manager.”

“Really? What’s a risk manager?”

“I’m your customer!”

Slight pause.

“Of course you are.”

Pulling Back the Curtain
As implausible as this may sound, this is exactly how it seemed conversations went at this convention. It was like I was invited into this club, and the members were looking around to figure out who in-vited HIM. It wasn’t lack of courtesy; these folks couldn’t have been any nicer. I just got the feeling that they really didn’t know what to think of me, and they certainly didn’t know what to do with me.

I showed up at a meeting of a national committee that I had some interest in joining. Everyone was very warm and receptive until the meeting started, when one of the first questions asked of me was how I ended up on this committee. (How did HE end up here?)

It was pointed out to me time and time again that the president of the CPCU Society was a risk manager. I didn’t have the heart or the energy to tell them that she was a risk management consultant, not a risk manager, because they just wouldn’t understand the difference.

A Side Trip to Oz
Maybe it was because the lack of understanding of the risk manag-er’s function was so unexpected or maybe it was because it wasn’t so unexpected, but for the first time in my life, I truly felt as Doro-thy must have felt when she landed in Oz.

The Risk Manager as Dorothy
You see, I never started out to be a risk manager. Twenty years ago, no one knew what a risk manager was. I was a regional operations manager who kept asking for more to do, until one day they put me in charge of claims. I stayed with that organization for 15 years, be-coming a director of risk management and learning as I went along. And, “in the land of the blind, the one-eyed man is king.” I knew just a little bit more than anyone else in the organization about risk management, so I looked like a genius.

I supplemented my experience with education, receiving the Associate in Risk Management (ARM) in 1996 and the aforementioned CPCU in 2005. I also received the Associate in Insurance Services (AIS) and Associate in Risk Management for Public Entities (ARM-P) in 2005 as well.

What I didn’t know until I passed all these courses is that, of the 27,000 CPCUs in the world, less than 2 percent are risk managers and less than 1 percent work outside the insurance industry. The fact that I have never worked in the insurance industry makes me even more of an anomaly — an insurance customer who has always been a customer!

So, just like Dorothy, I was thrust into a world that I did not un-derstand, and it was fraught with danger. I charted a path, arming myself with allies who were often as clueless as I, and we set out to find the wizard, which in this case was the insurance industry, and the explanation of how it all worked.

Dorothy’s Adventures in Oz
When I received my CPCU designation, it was as if I had made it to the great hall of the wizard, and I was allowed to take a peek behind the curtain, where I was shown how it all works. I was invited to stay, but I decided to return to Kansas and report on what I had seen. The book I wrote as a result of my foray into the Oz of insur-ance chronicles my experiences in an effort to make the road easier for other risk managers who choose to make the journey and for those organizations that want to know more about what the journey entails.

Meanwhile, Back at the CPCU Meeting …
The one part of the meeting that made me most uneasy was when this committee started to try to figure out how to increase membership, not only for this section, but also for the CPCU Society as a whole. The committee decided to look into how RIMS (Risk and Insurance Man-agement Society) has steadily increased its membership and assigned people to look into RIMS’ marketing techniques. Since I wasn’t sup-posed to be there, I didn’t tell them what I thought was obvious:

“Stop Treating Your Customers Like They Are Outsiders!”

The Educated Insurance Customer
Clearly, there is a need for the insurance industry to understand the role of the risk manager in the insurance process. Then, risk managers won’t feel like outsiders at professional insurance gather-ings. But education goes both ways — the risk manager needs to know the intricacies of the insurance industry, too.

Risk Managers Are Essential to the Insurance Process
The easiest way to get involvement from the risk management commu-nity is to recognize risk managers for what they are: an essential component of the insurance process. Far be it for me to point this out, but without an insured, there is no insurance process. There is no need for a provider if there is no customer.

But the antiquated thinking prevalent in the insurance industry seems to indicate that the less the insured knows, the more insurers can sell. The more insureds buy, the more money the industry makes. This makes absolutely no sense. The insurance industry needs to real-ize that an informed consumer makes the best customer.

If a representative of an insured (the risk manager) is given an education on risk financing, risk control, and managing his or her organization’s insurance program, the insured will see the need for insurance because the risk manager understands the process. Educating the consumer doesn’t mean lower commissions because of lower pre-miums; it means being able to insure better risks, which will allow the insurer to go out and secure more good risks, strengthening and expanding its overall book of business.

Risk Managers Are Professionals
The reason more risk managers don’t pursue the CPCU designation is because they are often not considered to be insurance professionals by the insurance industry, especially if they do not have insurance industry experience. Yet, most risk managers come from the purchasing side of the insurance equation and are usually appointed from within an emerging organization to fill a need. The more professionalism they can bring to the job, the better. Doing their job almost always involves purchasing insurance, and education aimed at insurance pro-fessionals is vital to performing their job effectively.

I was in operations and had risk management thrust upon me, and, over time, it became a career. I truly believe that those of us who have an understanding of business first and then learn the insurance side are just as effective, if not more effective, as those who come out of the insurance industry and become risk managers, because we understand that in the minds of owners, executives, and operators, production is king, and the trick is to fulfill the objectives of a good risk management program within the constraints of the production mentality. The insurance industry can benefit from our expertise.

Risk Managers Understand Risk
By its very definition, business is a risk-taking enterprise. The key for the risk manager is to determine the tolerance for risk with-in the organization and work within that established box while striv-ing to improve upon the existing controls by proving that they are working. This allows for improvement and insures against a regression that could dissolve into intolerable uncertainty.

An owner asked me once why I thought his company was losing money. Without hesitation, I told him that I thought it was the company’s “production at all cost” mentality. Of course, he told me that with-out production, there would be no company. I agreed, but pointed out that I was not worried about the production. It was “at all cost” that concerned me. If your organization’s solution to problems is just to throw money at them in order to make more money, that atti-tude will catch up with you, probably sooner than later.

A Win/Win/Win Situation …
So, why is it a win for the insurance industry to have an educated insured?
… for the Insurer …An insured that knows how the insurance process works will see the value of lowering the frequency and severity of losses and will take active steps to lower its losses and reduce its premiums. While pre-miums become lower, so do combined ratios, which will increase profits. The customer will become more loyal both to the broker and to the insurer when the insured sees that its association with both has consistently lowered its costs and increased its profits. From a transactional standpoint, the need to move the insured’s program will become a nonissue if the insured knows it is getting a good deal.

… and for the Insured …The Associate in Risk Management (ARM) designation gives the desig-nee the understanding he or she needs to be an educated insurance consumer. I would advocate that all risk managers pursue the ARM de-signation. An educated consumer makes the most efficient choices when dealing with insurers and brokers.

… and for the Risk Manager Who Has Earned the CPCU Designation
I would strongly advise all risk managers to pursue the CPCU desig-nation, and I would also encourage their companies to advocate this training for their risk managers. The reason I never pursued the de-signation earlier in my career was twofold.

1. I thought it was too hard.
2. I didn’t see the value to my position as a risk manager.

I passed all the courses in 176 days — not bad for a risk manager. I am asked time and again how I was able to do this so quickly, and the only honest reply I can give is this: “It’s what I do.”

The value of the CPCU designation is this: instant credibility in my dealings with the insurance industry. When I send an e-mail or correspondence, I am afforded the respect that comes with attaining this level of excellence. It is assumed that I am an insider, and my job is made much easier with the CPCU next to my name. Insurance in-dustry people just assume I know what I’m talking about.

So, you have instant credibility for the risk manager, lower premium for the insured, and increased profits for the insurer, just by letting the insured take a peek behind the curtain. Sounds like a win/win/win situation to me.

Conclusion
In business, insurance has always been the 800-pound gorilla in the room. It’s always there, and it’s not going anywhere. Hardly anyone in business really understands it, and most don’t want to commit the time to learn. The only way to maximize your organization’s potential is to manage your risk and your insurance, and you can do this effec-tively only by learning the product and services and how to effec-tively manage them.

In this day and age of information technology as well as increased competition, it is imperative that insurance costs are managed. If you are informed, you may no longer have to accept the “hard market” as the only excuse for increased premium, and you will certainly be able to easily tap into the market, should you be given that excuse by your insurer.

There is a bit of mistrust between the insured and insurer, and the only real way to bridge this gap of trust is for each side to have a better understanding of the process and its role in the process. Sav-ings will go up and so will profit, and that’s all we are really looking for.

Bring the risk managers in.

We’re not in Kansas anymore.

Rick Vassar, CPCU, ARM, AIS, ARM-P, is the principal in The Vassar Group, LLC Risk Management Consultants as well as Vice President of Risk Management for Valcourt Building Services, LLC, both located in Virginia. Vassar has over 20 years experience in risk management and has written on various risk management topics. Vassar could never find a primer on business insurance for the business person, so he wrote it. Hide! Here Comes the Insurance Guy — A Practical Guide to Understanding Business Insurance and Risk Management (iUniverse Press 2006) was published in June 2006.


Reprinted with Permission - The John Liner Review Winter 2007 Standard Publishing