EL NIﾃ前,
FLOOD INSURANCE, AND YOU
5
ESSENTIAL TRAITS EVERY
ENTREPRENEUR NEEDS
IMMIGRATION MUST BE SOLVED IN THE USA AND CA IMMEDIATELY
Being an independent producer is a trip.
Vámonos!
!
®
allianceunited.com
Proud Sponsor and Partner of the
NAIC 10920
BIG INDEPENDENT GROUP www.allianceunited.com
866-530-5500 Ext 3704
Fax 800-761-8680
by Jon Spaugy, BIG’s Chief Executive Officer
As hard as it is to believe, the year 2015 is almost in the history books. Of course we can all look forward to reading “best of” lists until after the ball drops in NYC. People will reminisce about the past year, reflect on what went right and wrong, and then vow to make 2016 an even better year. Well I am here to say that BIG had an excellent 2015 and we are already planning for another banner year in 2016! Just based on our increased convention attendance both in Southern California and Northern California (we can’t really call the NoCal event a “mini”vention anymore!), we are on a trajectory for more positive growth. The participation in our education cruise, various training seminars, member and rep meetings, as well as our annual holiday party all point to a solid association that will only become stronger. I would say the most gratifying part of BIG’s growth this past year is the number of people who donated their time in various functions. From planning committees to onsite volunteers, our success rests squarely on the shoulders of those insurance professionals and industry supporters who are willing to sacrifice their own time because they see the bigger good that BIG is achieving.
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I am also very happy to report that BIG enjoyed a significant increase in company and vendor support in 2015. Not just through sponsorships and exhibition space, but with suggestions and advice on how to make our association the best it can be. I can say that BIG has plenty of industry executives who are on board with our mission and are willing to pitch in to help us reach beyond our goals. They see that BIG is interested in the greater good of our industry
Big Times Magazine | Nov/Dic 2015
and does not just pay lip service to enhance our public image. Anyway, my look back at 2015 involves gratitude and no small measure of pride. It wasn’t all that long ago that I sat down with some agents and company reps in the Inland Empire who were dissatisfied with level of the representation they were receiving from their trade associations. There was a lot of talk about providing the “nuts and bolts” services an agency needs for growth, but not a tremendous amount of action. Looking important is one thing, earning the title is something else altogether. So that group of insurance professionals decided to walk the walk and created the fledgling group that has grown into your BIG Independent Group. So here’s to charting a course to create new opportunities for our members, not accepting the status quo, because if you are not moving forward, you are just walking in place. I am very pleased with how far BIG has come in just a few years, and look forward to bragging about our future accomplishments in this very space one year from now. Goodbye 2015. Hello 2016!
REATA HOLDINGS, INC ADDS NEW ACCOUNT EXECUTIVE We are excited to announce that Jacqueline Ayala has joined Reata Holdings, Inc. as an account executive for Cypress Premium Funding and Ironwood Brokers. Jacqueline brings years of insurance experience from working in both retail agencies and carriers as well. She started as a licensed property and casualty sales agent specializing in commercial lines and managing the personal lines department within an agency. She then made a transition into a territory sales manager position for both a personal lines carrier and MGA over a 4 year period. Adding Jacqueline to the Reata family of companies will expand our presence within the industry. With her outstanding work ethic and unique inside knowledge, we are confident that Jacqueline will stand out from her competitors. Jacqueline is eager to establish herself as a Reata Holdings Account Executive and looks forward to a long, prosperous career.
5 | Big Times Magazine
Sidebar with
Harper &
Heim
Lawyers
LITIGATION RESPONSE PROCEDURES By Jon. S. Heim, Partner, Harper & Heim Lawyers One of the failings we at Harper & Heim, Lawyers see too often among our esteemed insurance production clients is the omission of strict procedures for responding to new lawsuits. Insurance and the tort system are thoroughly intertwined, yet insurance producers sometimes fumble when legal process arrives at the door. The resultant delay and confusion can lead to defaults or to loss or compromise of evidence or in-house security. Companies big and small need written litigation response procedures. The plans should begin with appointment of a reliable, loyal agent for service of process. That sounds elementary. However if an agent for service fails in the fundamental task of notifying the principal of a new lawsuit, the principal may fall into a default that is neither simple to cure nor certain to be cured. You could lose before you know you are in a fight. This happens more frequently than you may imagine, especially when the agent for service is one of the production agency’s busy principals, or a relative or friend of a principal. Whoever you choose as agent for service must be completely reliable and consistent in performing that simple job. If your agency has retained or regular counsel, the agent for service should be instructed to notify counsel of each new suit. Indeed, you may choose to appoint counsel as agent for service.
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Once you are alerted to a new suit, the wagons must be circled. That means gathering, segregating and protecting all documentary and physical evidence. Many courts require litigants to take all reasonable steps to ensure
Big Times Magazine | Nov/Dic 2015
that relevant documentary and electronic evidence, including e-mails and text messages, are preserved for a case even if production of evidence has not been requested. Indeed, spoliation of evidence before and in anticipation of suit can be sanctionable and actionable. It is imperative that, from the outset to the conclusion of litigation, your production agency make every reasonable effort to get and safeguard all relevant evidence. Important too is a clear, written record of all such preservation efforts. Witnesses too must be identified and listed. You agency’s litigation counsel will want a witness list early in the case. Often it is tempting to interview every potential witness right away, to “get a handle” on potential testimony. However, the questions or who and when to interview can be complicated and difficult. A variety of evidentiary rules affects whether interviews and notes and records of them are discoverable or are protected in litigation. Your agency’s attorney should have the education and experience to guide you in deciding who should interview whom, and when. If you charge forth on your own, you may create records or impressions that do not avail you later. Litigation plans should also address liability insurance. Whether or not a suit is or is potentially covered, someone in your agency should be able and authorized to compile the agency’s liability policies and get them to litigation counsel. Your agency itself should never assume that a case is or is not potentially covered, in other words
that an insurer will or will not respond to your request for a paid defense. Just get the policies to counsel and let her or him decide whether and what to claim under them. We generally recommend that insurance production agencies designate one employee as the contact person for counsel throughout a lawsuit. Of course counsel may want to speak to other employees. If all communicamay be bound by wordsathat objectively mean “I tions and arrangement flow through contact person, do” even when the party privately thought “well, someone at your agency will have comprehensive recolmaybe -- if everything still looks good.” lection of the status of and work pending in a case, and counsel will not have to update multiple employees on a Obviously, whenever you are entering into legally binding contract, you need to know it. those subjects. Just remember you can’t tell from a title alone. You must read the entire contract for binding or
In-house litigation discussions mustInbe conducted withalso disclaiming words. some cases you may care and discretion. your litigation counsel is to haveUnless to consider what actions taken pursuant an LOI may suggest thatwell you thus or don’t present at such a discussion, it may notmean be privbe bound. in the case. If any ileged or protectedmean fromto disclosure outsider is present,Asthe discussion almostpreference certainly will a matter of professional and style, be fully discoverable. Anyway, strategy is not I dislike the titlelitigation LOI and prefer to avoid it. For my money, or more properly for my esteemed an appropriate subject among operational, sales or clerclients’ money,entails a writing of commercial ical employees. That subject a broad range terms of is either a binding contract or preliminary nelegal and business gotiation, factors. and Office-wide predictions of it it should be called only what victory or aspersions onis. opponents can beand unseemly, really Nothing in between nothing with an encouraging is useful. Indeed anything and can become embarrassing if title events do not unfold as hybrid can beprincipals confusing to all and disappointexpected. Only your agency’s and executives ing to one side. But my cause here was lost long need to know what your agency is planning and doing with counsel.
Don’t overlook in-house security. Employees should be involved in a case only if and as necessary. They must be instructed to keep in confidence all house discussions and communications about a case. Employees may not realize that seemingly innocent discussions with relatives, friends or business associates can impart information that compromises your agency’s litigation positions or tactics, or that can be exploited by your agency’s opponents or competitors. Whether within or beyond the ago. Theinformation, title LOI will never be revealed, banished from office, once cannot be recalled the commercial lexicon; yet the nature of an LOI and may not be further controllable. Present or former will never be standardized. We’ll all keep using employees who may disloyal ororindiscreet with inforLOIs, even though most dobe either too little too mation, who damaging much, and or even if wemay aren’t have sure what any partic-information, may ular one really does. be deposed. At least without and sometimes even notwithstanding an agreement of confidentiality among Call Jon Stanley Heim at (510) 725-7593, or all parties, deposition transcripts openly available to e-mail him at jshinslaw@gmail.com orare harpall. So one big slip can cause widespread harm to your erandheim@gmail.com. agency. Finally, put most of these recommendations in a written policy, circulate it among your employees, and discuss it periodically at employee meetings. We lawyers know that your business and lodestar is sales and service, not litigation. Still you must impart to your employees how to respond if something goes wrong and someone demands money from you for it. You are much more likely to lose that money if your agency does not know how to respond, as a team and with a plan.
BUILDING A NEW PARADIGM:
CONSOLIDATION TRENDS IN THE INSURANCE BROKERAGE INDUSTRY By Steve Vilas, Vice President – Finance and Operations, Burnham Benefits Insurance Services, Inc.
Consolidation within the insurance brokerage community has been an ongoing trend at least since the 1990s but undeniably more pervasive in the last several years, due in large part to the complexities of the Affordable Care Act (ACA) and the overall transformation of the healthcare market. In the latter part of 2012, for example, imminent health care reform compliance deadlines and increases in capital gains tax created an onslaught of mergers and acquisitions (M&A) among benefits brokers—particularly small firms selling to larger ones which were far better equipped to assist employers with ACA compliance. Though the following two years saw a decline in small transactions, insurance M&A accelerated through 2014 with an increased number of larger M&A announcements, providing enough evidence to suggest it would continue on an upward trajectory. According to a report from Deloitte, 2015 Insurance M&A Outlook, eight $1 billion+ deals were announced in 2014—for a total that equaled the last several years combined—with emerging interest from foreign buyers and initiated consolidation in the reinsurance sub-sector. In volume alone, the most active sub-sector was brokerages, with 321 deals announced, placing 2014 close behind 2012—the most active of the past ten years. With economic uncertainty and political upheaval creating disruptions across the globe, insurance regulations are far from stable, leaving the future M&A landscape still uncharted. While there’s no crystal ball for predicting the future for the insurance industry, there is a high degree of certainty that the old paradigm has permanently shifted away from long-term growth objectives as a result of a new regulatory structure, lower investment yields and excessive market capacity.
8 Big Times Magazine | Nov/Dic 2015
The changes that have occurred in the healthcare market over the past several years have undoubtedly forced the role of an employee benefits broker to evolve into one of an advisor. It is no longer enough to market a benefits program and help with open enrollment; employers need help navigating through plan options, as well as funding alternatives such as limited funding, self-funding and captives. They want help implementing benefits administration and human resource information systems (HRIS) that improve their efficiencies, and seek guidance with new regulatory requirements placed upon them not only by ACA but also state and local ordinances. Equally as important, they seek a trusted advisor who can educate their employees about their health and wellness options so that they become knowledgeable consumers when it comes to healthcare and health insurance. And finally, they are looking for innovative and engaging ways to motivate employees to embrace healthier lifestyles, recognizing that a healthier workforce keeps medical costs under control in the long term. Not long ago, the mere mention of ACA invoked fear and panic throughout the brokerage industry. While it has undeniably created a complete disruption in the healthcare industry and has imposed significant regulatory requirements upon providers, insurers, employers and individuals, it has
also spurred a tremendous amount of innovation: new local provider networks, alternative funding arrangements, new types of plans, technological innovation, a renewed focus on wellness and more consumer choice. Today’s progressive benefits advisors are recognizing their changing roles, embracing these changes by adding people and resources to meet clients’ rising expectations. It’s an expensive proposition but one by which brokers are achieving tremendous growth. However, not all firms are willing or able to make this investment and are looking for alternatives, including acquisition by larger firms. Public companies have historically been active acquirers, a trend that continues. They buy agencies using some combination of cash and stock. This is based on an established market for the shares so that the seller will be able to “cash out” at some point. Some public buyers allow the sellers to operate with a fair amount of autonomy as long as certain returns are generated, while other buyers achieve additional value through the consolidation of service and support. Clients of an acquired firm often find they have access to more products and services than they had prior to the sale, but conversely often find they are working with a new service team after the earn-out period is over, as quarterly results drive decisions over time at these firms. Private equity firms are more recent players in the brokerage segment. They have been drawn to this segment due to its strong cash flow and the PE firm’s ability to generate a strong return on equity (ROE), and today remain significant players in the M&A arena. Some have taken large, public firms private, while others have created national firms
starting with a large regional as a platform. Their approach is different than their public brethren, who hang on to and eventually integrate their acquisitions. For PE firms the objective is to buy, increase earnings and sell, often in a three-to-five year timeframe. Selling agencies will receive cash and restricted stock in deals with these buyers, with the hope that they will realize a liquidation of their shares when the company is re-sold. As with acquisitions by public firms, this can lead to more resources for clients of the acquired firm. However, because the goal of the equity investor is to sell the firm in a relatively short period of time, clients may experience more disruption in service when the company is prepared for re-sale. Large regional brokers are likely to remain the alternative for many smaller agencies and producers—traditionalists with limited human or capital resources, who are too small for the public and private equity firms or who are looking for a better cultural fit. The regional firms have added resources to support their clients’ expanded needs, and can help them evaluate funding alternatives, provide guidance to help navigate ACA, state, and local regulatory issues and can provide advice and support regarding employee communications, technology and wellness programs. As brokers adapt to this new landscape, we can expect more M&A activity (such as the Willis-Towers merger) in 2016 and beyond. Though strategically significant, transaction volumes may be less dramatic than those of the past decade but those brokerages with forward-looking investment strategies will possess both the depth and breadth within the industry to be active as a consolidator. ABOUT THE AUTHOR Steve Vilas has more than 25 years of experience with insurance brokerage/consulting firms, specifically in managing agency finances and operations, launching new initiatives, recruiting and expanding market share. As a vice president at Burnham Benefits, Vilas’ role is to expand Burnham’s footprint in other markets by overseeing new initiatives, private exchanges, captives and special programs. Vilas also works to help Burnham grow in key market areas including the public sector and the transportation and distribution industries. He has also served as chief financial officer at both VRT Insurance Services, Inc. and at Sitzmann Morris & Lavis, both in Oakland. Vilas is a current California Accident and Health Licensed agent
9 | Big Times Magazine
Q&A: Rudy Castro by Don Lukenbill
There are many facets to the insurance business. Obviously policy sales and claims adjusting are two of the bigger ones, but there are a myriad of other services offered by an independent producer, with one being premium financing.
sured to actually pay for the policy. The producer can also generate revenue for their agency by premium financing. We pay anywhere from 1 to 4 % of the amount financed back to the agency.
One of the bigger players in premium financing (funding) is Cypress Premium Funding. According to its website, the company provides short term loans for businesses and individuals for their commercial insurance policies. Loans are originated through a large network of Independent Insurance Brokers who offer Cypress as an alternative to paying the premium in full to the insurance carrier. The Senior Executive Vice President for Cypress Premium Funding is longtime BIG supporter Rudy Castro.
BTM: With all the competition faced by independent agents and brokers, conventional wisdom has dictated a diverse menu of services, both ancillary and directly related to insurance, including premium financing. Do you think producers still see the logic in this? RC: Yes I do. I believe most brokers understand they need to expand their comfort zone. I have definitely noticed that agents and brokers are offering more products and services. I think they understand that if they don’t offer the insured the product or the services that they need, another agent will.
We thought it would be nice to sit down with Rudy and talk about that niche of the insurance business, as well as find out a little about someone already familiar to most BIG members. BIG Times Magazine: We don’t imagine that you grew up wanting a career in insurance, particularly premium finance. Before we get into what’s happening in the industry these days, tell us a little bit about your career path. Rudy Castro: Actually by the age of 5, I knew that I would someday be in the premium financing business. I’m kidding. You’re absolutely correct. I had been in sales/marketing in another industry outside of insurance when an old friend by the name of John Ratliff gave me an opportunity to get into the premium finance business. It was the best decision I’ve made. I truly love what I do for a living and I am glad that I chose this as a career path. BTM: With most major insurance companies offering payment options, what makes premium financing attractive to policyholders? RC: I would say some insurance companies offer direct bill payment plans and in those cases there is no obvious need for premium financing to the client. However, for those insurance companies that do not offer payment plans, we provide a solution. We do business with major insurance companies on a daily basis so we know the need is still there for many.
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BTM: By offering premium financing to customers, what are the benefits for the producer? RC: The producer definitely has some benefits. The first one, the producer does not have to collect 100% of the premium from the insured to bind coverage. By offering the insured competitive rates and terms you make it easier on both the agent to sell and bind coverage and the in-
Big Times Magazine | Nov/Dic 2015
BTM: Speaking of diversity, I see Reata Holdings (the parent corporation of Cypress Premium Financing) has a number of related companies. In fact, it is described on the website as “a multi-faceted insurance and financial services organization.” Explain how the various companies mesh together. RC: They really do mesh together. We started with Cypress Funding in 2005. In working to build Cypress we were able to also build a large distribution channel to thousands of agents. We wanted to add value to our brand. We saw a need to educate and offer workers comp markets to all our agents. The goal was to help the agent grow their commercial book of business, so we started our 2nd company Ironwood Brokers and Insurance Marketing. Today we offer 11 workers comp markets. A couple of years later we noticed that hundreds of our agents either did not have an online presence or it was very outdated so we started Sugar Tree Technologies. So we came up with the idea to help our agents by offering affordable packages with monthly payments with no interest. This is now a service exclusively for Cypress Funding and Ironwood clients only. BTM: Any plans to add more companies to the Reata family? RC: At the moment we do not have any plans to add another company. We are just working towards doing more for our agents. The plan is to add more services for our Cypress Clients and offer more products and markets for our Ironwood agents. BTM: Cypress has been a longtime supporter of independent agents and brokers, and is a staunch supporter of BIG. From the company side, what do you see as the benefits of belonging to an association such as ours? RC: We are and always will be a relationship company. I
believe it’s very important to meet with agents in person and actually listen to what they need and want. With that information I can make our company better and cater to what the agents and brokers need today. BTM: How about from the producer side? RC: I think it’s very important for the producer to get involve and learn more about the industry. You can educate yourself on the different companies and services that are out there and available. You can also meet other agents and share ideas plus you can also hear what your competition is doing. I look at it like an athlete training in the gym. You can be a professional athlete but if you’re not in gym training or studying your competition, getting the proper rest and eating healthy. You’re probably not going to perform very well and you could be replaced by the athlete that will do the work. BTM: In your experience, what are some of the things today’s agency owners are getting wrong and right? RC: In my opinion some agents could invest more in their agency. I’m not referring to more money. I’m talking about investing more time with the employees. Take the time to train your employees and give them the resources they need to accomplish their task. Every employee should know exactly what their role on your team is. You should always set realistic goals for them and maybe offer an incentive. It doesn’t always have to be money. It can be leaving a little early on a Friday. Be a leader but never micro-manage. Always use positive encouragement. Correct their mistakes but never criticize your employee or make negative comments towards them. I’ve seen agents grow their books of business fast when they build a strong team.
BTM: As far as your own career goes, would you recommend it to a young person still deciding on a vocation? RC: Yes, I would. I love and believe in the insurance industry. If you enjoy working with people and you are extremely competitive, this is the job for you. It’s never a boring day. BTM: If you had a custom DeLorean and could travel back in time, what would you say to Rudy Castro in 2005? RC: I would tell my younger self to stop worrying about stuff that I have zero control over. Live in the moment, work hard and the rest will fall into place. I have finally realized all of that. BTM: Now jump into that same vehicle and move forward to 2025. What would you like to hear about yourself? RC: That I am still a healthy and happily married man running a billion dollar holding company that spends lots of time with my family and friends. BTM: In a sentence or two, tell us what motivates you, personally and professionally, to succeed. RC: The love and respect of my family and peers is what motivates me. BTM: Any final thoughts? RC: I want thank BIG TIMES Magazine for the opportunity to tell you a little about myself and what I do professionally. I love what you do for the industry. I would also like to thank John Ratliff for the opportunity he gave me over 8 yrs ago, the Reata Holdings family, thank you and you guys are awesome. I couldn’t ask for a better team. To all my agents and brokers, thank you for your business and support. I appreciate it very much. Without you, there is no me.
Rudy Castro, SEVP, Cypress Premium Funding
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IMMIGRATION MUST BE SOLVED IN THE USA AND CA IMMEDIATELY By Stephen S. Santoro
The way I suggest it be done, you as insurance brokers, as well as all insurance companies and reinsurance companies will benefit greatly, and the undocumented folks here now will continue to have productive and safe lives In 2013, undocumented immigrants paid the State of CA only $2.6 billion in taxes. They also paid the USA Government $46.8 billion in taxes. CA has 12% of the USA population at around 44 million (documented). So let’s do some simple math: In 2013 I estimate undocumented immigrants paid all states taxes of $21.667 billion and the USA Government $390 billion in taxes. Okay Democrats, Republicans and Tea-Partiers: Do you really want to send them back?? I do not. I want to do business with them, make deals with them and make them USA citizens. The paragraph above is being posted everyday on both of my Facebook pages: Stephen Samuel Santoro (5000 friends); and Stephen Samuel Santoro II (2800 friends). As you all know I am followed by thousands on social media. I use social media for the good of society and not as much for business reasons. (My cousin used to always ask me: “When are you going to monetize all of those people?” He was such a capitalist! (He died on 3.26.2014 of a rare form of blood cancer.)) I subscribe to Willie Nelson’s (yes the famous country & western singer) mantra: “I just hate it when I see people treated unfairly.” I use that phrase all the time on social media. I’ll use that phrase here too. And what we are doing to undocumented workers in the USA is an OUTRAGE.
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I am the grandson of a now deceased (he died in 1971) Italian immigrant who went through Ellis Island in the early 1900’s. He came to this country with $2000.00, an 8th grade education and the will to live a better life that was not corrupted by dictators or despots. He often told me of his journey to America and how he made my life today what it is. He bought a large farm in UT and I lived with
Big Times Magazine | Nov/Dic 2015
him, mother and my grandmother there. (My parents divorced when I was 2 so it made sense to live with grandfather and grandmother.) I had horses to ride, and many fun times on that farm, but everyday was a farmers grind: Up at 4:30am and working all day long until 7-9pm at night, except when I was in school. I got a “break” then: I worked with him after school. In 1967 he sold his farm and retired. I still keep the home he bought my grandmother after he sold the farm, in the family today: It was the last big gift he gave grandmother. After my college days I invested some of those funds for the family. That money helped put me through the University of UT and helped me get started in the insurance business. Because of him, a 3rd generation was able to succeed and pay much higher tax rates than he ever imagined. However, with his eightieth grade education he died wealthier than I will. I am so grateful to him and in his debt. Latinos and other nationalities came to this country many years ago to give their families a better life. Today 5th, 6th, 7th and 8th generation Latinos and other nationalities are doctors, lawyers, accountants, managers, professionals and sales people, many who are in the 1% of all earning and net worth. The undocumented people come to this country with the intent of making money and providing for their families, whether they were or are here or in another region of the world. These people are so happy to be here (just like my grandfather who loved America more than his native Italy), they lead productive, happy and prosperous lives that make societies like America’s proud. To close the USA borders denies people like I describe the right and privilege to do better and make the world a better place than when they arrived.
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IMMIGRATION MUST BE SOLVED IN THE USA AND CA IMMEDIATELY (cont.)
In Los Angeles, CA County, Latinos make up almost 60% of the population. Imagine the taxes they pay! And they ARE TAKING OUT LESS IN BENEFITS THAN THEY PAY IN TAXES. One person, a great friend and business associate of mine, yesterday on one of my Facebook pages reminded me that “benefits, unemployment, health-care, Medicaid and Medi-Cal” fund some of them. So, not all of those taxes are a “net positive” benefit to CA, other states and the US Treasury. I called a few friends in Congress on BOTH sides (Democrats and Republicans), in border states and non-border states. I asked them this: Do they know what the actual numbers are? In other words do undocumented people pay more in taxes than they take out in benefits or vice-versa? All said they thought at worst it was “revenue neutral” (neither one is greater than the other). I pressed the issue and asked for actual numbers. I will share them when AND IF I get the numbers. In my humble, investor opinion, I think the taxes from the “underground economy”: grossly outweigh what they take out. Here is an example: In 2007 one Georgia County near Atlanta, population of about 500,000, decided to get foolish and drive out all undocumented workers through a series of really foolish measures with driver’s licenses. At the time I was a controlling investor (10% or more) in the oldest insurance company in Georgia. (Full disclosure: I bought the shares on 7.2.2004 and sold them at a handsome profit on 4.16.2010.)
Knowing these laws and measures might impact our insurance company, I called a Georgia state Congressman and asked him why he would vote for something so foolish? He stated he was doing want his constituents wanted him to do. I said the tax base of the county will crumble. You will have to repeal these laws. He told me I was another flaming CA liberal. I reminded him I was a UT resident who spent most of his time in CA, and I was a Centrist (moderate) Republican. He continued to berate me. I terminated the call. I ordered the insurance company executives to “ramp up sales to undocumented people” and we’d have a windfall year. And the tax base of that county imploded by 90% in 120 days. Brilliant move guys! And I rest my case. These undocumented people who come to this country, in particular from Mexico, Central and South America are not gang members. They are not terrorists. They are not welfare cases. They are solid, good citizens who want to give themselves and their families a better life. Some come because they fear their lives may be in danger (remember Cuban refugees to Miami, FL in the late 1970’s and 1980’s). They are not drug dealers and drug mules. They are not military mercenaries. They are people like you and me, who one day may have children who become Presidents, Congressmen, professionals and PEOPLE WHO CHANGE SOCIETY FOR THE BETTER. They are people who one day may help us find cancer’s cure. They are people who may find ways to make ocean water drinkable via affordable cleansing mechanisms. They are people who will leave this planet in better shape than when they arrived. I normally talk about financial and insurance related matters on these pages. Thank you BIG for letting me post what I am trying to convey. But for the good of society, the economy and for these people, let’s give them the path to US citizenship without long waits. USA Government Agencies can run background checks on ANYONE in seconds. Trust me, just ask the NSA. Edward Snowden proved that clearly (and illegally).
IMMIGRATION MUST BE SOLVED IN THE USA AND CA IMMEDIATELY (cont.)
My grandfather was an immigrant. He created a family who give back more than they take out, or took out, including yours truly. I owe that man big time. And I never forget what he had to endure to help me. And giving back is my way of saying thank you to him, to grandmother, to mother and to America for giving me the luxury of carrying that USA passport. If these undocumented people were given the same chance, most, if not all will do the same. I urge you all to help me, help them and make them USA citizens. They help the economy. They pay taxes. They buy things. We sell them things, including insurance and because of insurance sales, reinsurance. They invest in their children’s education. They are net positives to our society, not net drains on it. So let me repeat this so no one EVER forgets: “In 2013 undocumented immigrants paid the State of CA, only, $2.6 billion in taxes. They also paid the USA Government $46.8 billion in taxes. CA has 12% of the USA population at around 44 million (docu-
mented). So let’s do some simple math: In 2013 I estimate undocumented immigrants paid all states taxes of $21.667 billion and the USA Government $390 billion in taxes. OKAY DEMOCRATS, REPUBLICANS AND TEA-PARTIERS DO YOU REALLY WANT TO SEND THEM BACK?? I DO NOT. I WANT TO DO BUSINESS WITH THEM, MAKE DEALS WITH THEM AND MAKE THEM USA CITIZENS. You decide folks! Thank you to Jon Spaugy and the Board of BIG for allowing my viewpoints. I’ll be back next time!
ABOUT THE AUTHOR Stephen Santoro is a former senior executive officer from two Fortune 200 Insurance Holding Companies. Both firms were/are traded on the NYSE. His background focused on reinsurance in both USA and tax haven venues. Stephen has worked in the insurance business and related businesses since 1981. Stephen also has owned controlling interests in 3 managing general agencies in CA and GA. Contact him at (310) 305-0459 or ssantoro@stephensantoro.com
14 Big Times Magazine | Nov/Dic 2015
15 | Big Times Magazine
EL NIÑO,
FLOOD INSURANCE, AND YOU By Don Lukenbill
If you have lived in California at any time this past year, you know that all the weather experts are predicting a monster rainy season due to the El Niño weather phenomenon. Accuweather meteorologists believe it will mimic a similar pattern as the winter of 1997-1998, this year’s El Niño could mean big impacts to California and the eastern half of the United States. “California will be much more active weather-wise this winter than last winter,” AccuWeather Meteorologist Ben Noll said. Scientists expect El Niño rains to be concentrated in the months of January, February and March. To refresh everyone’s memories, El Niño means The Little Boy, or Christ Child in Spanish. According to the National Oceanographic and Atmospheric Administration (NOAA), El Niño was originally recognized by fishermen off the coast of South America in the 1600s, with the appearance of unusually warm water in the Pacific Ocean. The name was chosen based on the time of year (around December) during which these warm waters events tended to occur. The term El Niño refers to the large-scale ocean-atmosphere climate interaction linked to a periodic warming in sea surface temperatures across the central and east-central Equatorial Pacific. So the weather patterns that bring the usual wet winters experienced in equatorial South America are pushed northward to the southern United States. Experts are predicting rainfall in California will increase to over 60 percent of normal. Of course, that is referring to non-drought times, because 60 percent more of nothing is still nothing. Obviously, copious amounts of rain can lead to some big problems. With the ground parched and hard from the lack of moisture the past few years, any torrential rainfall will not be absorbed deeply and mud-
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slides can be expected. Couple that with the recent wildfires that have scarred the ground and eliminated the vegetation whose roots held the topsoil in place and that will be a lot of wet ground moving toward homes. Another byproduct of heavy rains is widespread flooding. Sewer systems inundated with water that can’t handle the excess can cause streets to become urban and suburban rivers. Rivers and creeks can overflow their banks right into all those water view homes people love. What all this means can be summed up in to words: Flood Insurance. The media has been scaring people about El Niño for months. But how many insurance consumers know that their homeowners policy very likely will not cover water damage related to a sudden flood? How many people even know that there is such a thing as flood insurance? Producers who are not already marketing flood insurance are, excuse the pun, missing the boat. The National Flood Insurance Program (NFIP) has this advice for agents and brokers: By offering flood insurance as part of your portfolio, you can make your clients aware of a key vulnerability in their coverage that will more fully protect them, further building trust and increasing potential for additional sales. Offering flood insurance creates opportunities to cross-sell other lines. When clients know they can rely on you for all of their insurance needs, why would they go anywhere else? Also, the top two Errors and Omissions (E&O) pitfalls are not offering coverage and not offering the right amount of coverage. By being a flood agent and offering flood insurance, you can protect yourself and your agency from possible E&O-related lawsuits.
The NFIP suggests you remind your clients that floods are the nation’s number one natural disaster, and anywhere it rains, it can flood. Even though flood insurance isn’t federally required, anyone can be financially vulnerable to floods. In fact, people outside of mapped high-risk flood areas file nearly 25% of all National Flood Insurance Program flood insurance claims and receive one-third of Federal Disaster Assistance for flooding. In high-risk areas, flood insurance is mandatory for most mortgage-holders. So what is covered by a NFIP policy? Building Property: The insured building and its foundation; Electrical and plumbing systems; Central air conditioning equipment, furnaces and water heaters; Refrigerators, cooking stoves and built-in appliances such as dishwashers; Permanently installed carpeting over unfinished flooring; Permanently installed paneling, wallboard, bookcases and cabinets; Window blinds; Detached garages (up to 10 percent of building property coverage); detached buildings (other than garages) require a separate building property policy; and Debris removal. Personal Property: Personal belongings, such as clothing, furniture and electronic equipment; Curtains; Portable and window air conditioners; Portable microwave ovens and portable dishwashers; Carpets that are not included in building coverage; Clothing washers and dryers; Food freezers and the food in them; and Certain valuable items such as original artwork and furs (up to $2,500)
What is NOT Covered? Damage caused by moisture, mildew or mold that could have been avoided by the property owner; Currency, precious metals and valuable papers such as stock certificates; Property and belongings outside of an insured building such as trees, plants, wells, septic systems, walks, decks, patios, fences, seawalls, hot tubs and swimming pools; Living expenses such as temporary housing; Financial losses caused by business interruption or loss of use of insured property; and Most self-propelled vehicles such as cars, including their parts. While most homes in California don’t have basements, where coverage is limited, other areas (below the lowest floor) also have restrictions. These areas include: Crawl spaces under an elevated building; enclosed areas beneath buildings elevated on full-story foundation walls that are sometimes referred to as “walkout basements;” and enclosed areas under other types of elevated buildings. It’s going to get wet in the next month or so, no doubt about it, and insurance is all about making sure customers are covered for financial losses before they need it. El Niño will bring water damage with it, part of it will be caused by flooding. When people start asking about flood insurance, if they haven’t already, it’s important to have the answers.
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fun facts
FUN FACTS Winter solstice is an astronomical phenomenon marking the shortest day and the longest night of the year. Winter solstice occurs for the Northern Hemisphere in December and for the Southern Hemisphere in June. When the northern hemisphere is tilted farthest from the sun, which occurs on approximately December 20th to 22nd each year, winter begins. This year, we will reach winter solstice on Monday, December 21 at 10:48 pm PST. The word solstice is derived from Latin, meaning ‘sun stands still’ and was chosen because during a solstice the sun appears to remain still in its position in the sky. When winter solstice occurs in the southern hemisphere it experiences its longest night and shortest day of the year. The opposite is true when the summer solstice occurs, and the southern hemisphere experiences its longest day and night. When winter solstice occurs in the northern hemisphere it experiences its shortest day and longest night of the year. The opposite is true when the summer solstice occurs, and the northern hemisphere experiences its longest day and shortest night. For days before and after the winter solstice occurs, the sun appears to stand still in the sky at its noon-time elevation. Some confuse the solstice with the equinox. Both occur twice a year, but the equinox occurs when the sun is directly above the equator, day and night are equal in length, and the equinox marks the beginnings of fall and spring, depending on the hemisphere. Stonehenge, in Wiltshire, England is a popular spot during winter and summer solstice in the northern hemisphere. Newgrange in Ireland is another monument dating back thousands of years that appears to have been built in alignment with the solstice. The winter solstice is also referred to as Midwinter, the Longest Night, and Yule. Solstices have been used throughout history to time many important events each year, including the sowing of seeds for crops, mating of animals, harvesting of crops, and monitoring the reserves of winter food. The actual moment that the solstice occurs cannot be observed by amateurs because the sun moves so slowly that astronomical data tracking must be used to pinpoint the actual moment of the solstice. During the winter solstice the sun appears to be at its lowest point in the sky. Following the winter solstice the days begin to become longer while the nights begin to shorten. Following the winter solstice the temperatures become colder. In the northern hemisphere the coldest months are December, January and February, while in the summer hemisphere the coldest months are June, July, and August. During the solstice, whether it is summer or winter solstice, the sun isn’t moving - it’s actually the earth tilting to and away from the sun. Thanks to our friends at Soft Schools (www.softschools.com) for the awesome facts..
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OUTDATED COMPUTER SYSTEMS PLAY HAVOC WITH THE BOTTOM LINE By Nicole McMackin, President of Irvine Technology Company
One of the greatest characteristics of computer technology also can be problematic. It’s ever-evolving. While that’s exciting for techies, it can be a headache for business leaders, whether they are corporate executives or small business owners. Businesses periodically need to upgrade or replace creaky computer systems, or risk falling behind their competitors. If they try to muddle through with a cranky jalopy when everyone else moved up to the latest sports car, they may find themselves out of the race for consumer dollars. One thing companies need to remember is that as the capabilities of technology continue to rise, so do the expectations of their customers. The bar keeps being raised higher and higher in terms of how quickly and efficiently customers expect to be served. But weighing whether to invest a substantial sum in updated technology when other needs are pressing can leave management in a quandary. Is it time to junk the system entirely and start over? Can the current system be salvaged with just an update here or there? Or is everything fine – at least for now? Frankly, unless they happen to work for a high-tech company, most business leaders probably don’t consider information technology to be one of their areas of expertise. I’m sure most of them prefer to spend their time and energy on the other pressing matters. They look at the struggling IT system they don’t completely understand, and about all they can think about is the cost they are going to face to improve it. So they keep putting off a decision. Inaction can come with its own costs, though, such as:
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• Low employee morale and production. Employees will dread coming to work when they know they must do battle each day with troublesome technology. Employees want to arrive at the office, log in to the system and get to work. An outdated system leaves them frustrated and, what’s more, production suffers when the system works too slowly or freezes up. • Cybersecurity threats. While technology is a great asset, it also represents a potential risk for every company. Hackers are hard at work looking for weak links in everyone’s IT security systems. An aging system provides a weaker defense against potential breaches that could damage both a company’s equipment and reputation. • Missing out on potential cost reductions. Technology can be expensive. That’s no secret. But the right technology also can be a solution to rising expenses in other areas of a company. An efficient computer system can help reduce costs and potentially increase revenues. Remember, too, that downtime and outages also chip away at the profit margin. Many businesses barely function – or don’t – when their computer systems crash. Most companies with an aging system could benefit from an IT assessment that would help answer the questions that leave business leaders fretting.
that otherwise could have been avoided. There are some companies who have just fell on hard times and are really well managed. Left alone and allowed to work through the problems, they will That would tell you how well your technology inbe fine and will become great firms again. This arfrastructure matches up with the goals and needs ticle is NOT targeted at them. of your business. A good assessment will tell you if you are spending too much or too little, and can You decide folks!you can gain the most leverage point out ways that from technology. But any decisions shouldn’t be Thank you to Jon Spaugy the Board she of BIG about technology for the sake and of technology, for allowing my viewpoints. I’ll be back next time! says. This isn’t like consumers lining up to buy the latest gadget-filled cell phone just because it’s the trendy thing to do. Businesses don’t need something just because it’s the newest and flashiest thing. They need what will help them succeed with their bottom line.
ABOUT THE AUTHOR Stephen Santoro is a former senior executive officer from TWO Fortune 200 Insurance Holding Companies. ABOUT THE AUTHOR Both firms were/are traded on the NYSE. His background focused on reinsurance in both USA and tax haven venNicole McMackin is president of Irvine Technology ues. Stephen has worked in the insurance business and Corp.businesses (www.irvinetechcorp.com), firm sperelated since 1981. Stephenaalso hasthat owned cializes in information technology solutions controlling interests in 3 managing general agenciesand in CAstaffing. and GA. Contact him atthe (310) 305-0459more or ssantoro@ She joined company than 10 stephensantoro.com. years ago, initially serving as Vice President of Sales.
McMackin has an established career in sales and management with a strong emphasis of account ownership within Fortune 300 organizations.
Some things are
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THE FOG OF UNCERTAINTY:
IDEAS FOR DEALING WITH UNCERTAINTY TO REACH YOUR DESTINATION The idea for this article came while driving up the coast towards Malibu, California. The morning sun was rising and I noticed a fog bank several miles off the coast. It was interesting to see it from this perspective. The wall of fog stood before the magnificent coast line with many miles of visibility mountains in both directions. As the sun continued to rise, the top of the fog bank was whisking around which made for a beautiful scene. As I headed up into the mountains to get to my destination, I kept looking back to see how it was progressing. As I ascended in elevation, I could clearly see the fog was covering the ocean as far as the eye could see. The fog was progressing towards the shore and in just a matter of a few minutes what was clear visibility along the coast was now completely obscured. Have you ever had this experience in either your business or personal life? You have a course, a plan, a direction and then… the fog rolls in. What do you do? I’d like to share an experience. Then we’ll jump into some specific steps that you can consider and talk over with your team members as we move into the New Year. I have been an avid sailor and that usually leads to getting bigger boats over time. We traveled to San Diego, California to purchase
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our next boat that was 28 feet in length. We needed to get the boat to Marina del Rey, California which is an 100+ mile journey. We had planned on bringing it up over a two day period. Our plans included having all the appropriate tools – a navigational chart, GPS, fog horn, radar deflector mounted on the mast but we had no radar. When we woke up in the early morning hours to set sail on our sailboat journey and opened the hatch we could barely see the boat next to us – the fog was so thick that visibility was only 15-20 feet at best. We waited a bit for the fog to clear but we had a schedule to keep. So with charts and GPS in hand we set out and made our way through the harbor very carefully. Our charting was spot on but we had a spotter/ listener on the bow to make sure we didn’t miss anything. Things were going well until we hear the sound of waves crashing – we were off course and fortunately we had our spotter on the bow. We adjusted our course immediately and made it out to sea. The fog cleared and we had porpoises swimming all around us with clear sailing and visibility. On the final leg home, we hit fog again. This time we made it to the breakwater which appeared right in front of us by only 100 feet or so. It was just where we thought it would be thanks to the planning. Uncertainty can seem to be a constant theme. Yet if we have a plan and remain flexible with our goals then we can make it through the fog and reach our destination safe and sound. By using the ideas we are about to share you’ll know if your organization is heading towards the rocks, the open sea or on a clear course towards your destination. Think for a moment about the various components of a boat that are needed in order to keep it afloat and heading in the intended direction. Observe how they compare to your organization.
Components of a Vessel Hull – Need to have a structure that can endure and thrive in the elements. Fuel – The energy needed to move the vessel forward and towards its destination. Crew – The crew will either make sure the ship reaches its destination in a timely manner or cause it to go off course or cause an incident that could result in loss of resources. The Changing Environment Water is the most unstable surface on our planet. No matter how much planning a business does a rogue wave can come along and cause havoc. This might be changes in the market, unhappy clients, distribution channels, technology, financial, etc. Preparation can only go so far yet if your organization has one key ingredient you’ll be able to survive and thrive beyond your wildest dreams.
Key Ingredient to Thrive The answer always comes back to having the right crew on board. It all begins with the selection process, mentoring and staff development. If this is done correctly or you have the right people with potential for growth, you’ll not only make it through to 2011… you’ll also be ready to ride the wave of 2012 and beyond! Let’s take a look at how this works. By having the right crew on board, you’ll have: * Contributors – That will help the ship reach its course through innovation, ingenuity, timely fulfillment of tasks, follow through, etc. * Happy customers – They’ll keep coming back due to the outstanding service and quality of the product. * Happy employees – They’ll go the extra mile for the organization and its customers. This also leads to positive word of mouth that can
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attract top talent. * Open Minded Culture – Problem solving is the key to anticipate needs, deal with weather changes, being open to adapting to the environment. * Profitability – You’ll meet your organization’s goal and objective where everyone is rewarded for doing a great job and your organization will be able to continue to provide services and products with the opportunity to visit other destinations in the future. An organization can build a sturdy ship but without the right people behind the scenes it won’t leave port. All this starts with the captain of the ship and with its officers. If they select the correct crew up front, they know the job will get done correctly, in a timely manner and the work can be trusted. Can you trust that your crew will do their job not only correctly but in a timely manner? Do they also contribute ideas for further improvement so you can get the maximum value from each individual? If the answer is “I’m not sure” then your answer may be reflective of the future survival of your vessel. Every organization must have all hands on deck with crew members that are excited and grateful to be aboard and have the ability to perform the best they can. A Whale of a Tale for Teamwork A manager once had an outstanding team but always told everyone what to do. This person didn’t listen, didn’t ask questions, demanded a higher level of volume without asking if the organization could handle it and created a closed environment. Over time things started to slip through the cracks, customers were not getting the attention they needed, whale-
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sales slipped, people started to leave and the organization began to develop a bad reputation where recruitment became a problem. Upper management stepped in and started to ask the team members for their feedback. It turned out that the manager was not a good fit for that position and was transitioned into another department. When the new manager was selected, it was based not only on experience but also the ability to work with others. They learned that it is vital to understand a person’s work style and how they interact with others in order to have a high performing team. If just one person isn’t “playing well in the sandbox” the effects can ruin a brand and effect sales and future growth of an organization. A Checklist for Success * When selecting the crew – have a clear understanding of the ideal crew member and have a system and process to assure you have selected the correct crew members. This can be done through interviewing and asking questions for specific examples and compare those answers to what an ideal crew member would do. Gather as much data as possible from reference and background checks as well as provide an in-depth work style and personality assessment with Lighthouse Consulting Services. The information should be used to validate the interview responses, background and reference checks. * Ask each current crew member for feedback on where they think that the team and themselves could be more efficient in the market place within the next 30-60-90 days. This means that everyone on your ship needs to have their eyes and ears open to seeing where it might be possible to improve and enhance processes, structure, services, customer service, etc.
* Captains and officers need to listen to everyone and create a truly open environment. Come up with three things that you can do that will make that happen. * Define what the ideal crew member would possess in skills, work style and personality and make it measurable. * Assist the current crew to fulfill that role. Make sure you have an in-depth work style and personality assessment of your crew members so you’ll have the insight on how to help everyone thrive and to get the best performance from each team member. Through in-depth assessments you will discover how your staff solves problems, deals with stress, makes decisions, processes information, creates and follows up on leads, etc. This will help to ensure that you have the right person in the correct position so they can perform to the best of their ability. Contact us at reception@lighthouseconsulting.com to get started.
the voyage. The key is to hire right the first time and to assist those on board to be the best that they can be. This will lead to happy customers, happy employees, innovation for the future, efficiency for delivery of the product or service, and, of course, a profitable bottom line. To take a leadership assessment to see if you have what it takes to help your organization sail well into the future, please click on here. You can gather additional ideas for working with your current and future crew members by reading our books, “Cracking the Personality Code” and “Cracking the Business Code”. To order the books, go to: www.lighthouseconsulting.com.
If you have the right team in place, your organization will be able to deal with the many challenges that will come along during ABOUT THE AUTHOR Dana Borowka, MA, CEO of Lighthouse Consulting Services, LLC and his organization constantly remain focused on their mission statement – “To bring effective insight to your organization”. Dana has over 25 years of business consulting experience and is a nationally renowned speaker, radio and TV personality on many topics. He provides workshops on hiring, managing for the future, and techniques to improve interpersonal communications that have a proven ROI. He is the co-author of the books, “Cracking the Personality Code” and “Cracking the Business Code”. To order the books, please visit www.lighthouseconsulting.com.
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5
ESSENTIAL TRAITS EVERY
ENTREPRENEUR NEEDS By Randy H. Nelson, author of the Amazon best-selling book “The Second Decision: The Qualified Entrepreneur.”
within a company entails knowing your responsibilities and role, and knowing when to share or even delegate responsibility. • Self-awareness. In some cases, the person who created the company may not be CEO material and needs to understand that and find someone else to fill that role. You have to take into consideration your own needs and desires and the needs and desires of the company. It’s about the self-awareness journey through which you evaluate your skills and interests in each key aspect of managing a growth company.
So why do some new businesses go belly up after a short existence while others prosper?
• Understanding of issues and challenges. Within any company’s life cycle, numerous issues and challenges may arise. To lead a successful business, the entrepreneur needs to understand and acknowledge that four issues in particular may pose a challenge to his or her efforts to become the Qualified Entrepreneur that is necessary to success. Those issues are: insistence on autonomy; unwillingness to build structure, cultivate expertise or delegate; boredom; and failure to engage in self-examination.
Often it all comes down to the qualifications of the person who started the business. Anyone can start a business because no real qualifications are required to do that. But not everyone is qualified to run a business once it’s off the ground and that’s a huge factor in why so many fail.
• Self-assessment. It’s a bit ironic that entrepreneurs who are good at holding others accountable for their performances don’t take time to gauge how well they are doing themselves. It’s important for the success of your business that you be able to do self-performance reviews.
There are five essential traits that every entrepreneur needs to improve the odds of business success:
ABOUT THE AUTHOR Randy H. Nelson is a speaker, a coach, a Qualified Entrepreneur, a former nuclear submarine officer in the U.S. Navy and author of “The Second Decision – The Qualified Entrepreneur” (www.randyhnelson.com). He co-founded and later sold two market-leading, multi-million dollar companies — Orion International and NSTAR Global Services. Nelson now runs Gold Dolphins, LLC, a coaching and consulting firm to help entrepreneurial leaders and CEOs become Qualified Entrepreneurs and achieve their maximum potential.
Entrepreneurship remains alive and well in America with thousands of people starting new businesses each year. But the success of those businesses is another matter. About half will fail in their first five years, according to Gallup.
• Discipline. It’s important to be disciplined within yourself to help move your organization forward and to produce good leadership decisions within a managerial team. An entrepreneur who is disciplined understands that they don’t know what they don’t know. This self-knowledge makes it clear how the entrepreneur’s shortcomings may be affecting his or her company, and so helps the entrepreneur make better decisions for the long run. For the business to succeed in the long term, a transition must occur from the business being about “me” as its entrepreneur/CEO, to being about the overall needs of the company. • Leadership. To help a business succeed, it’s important that the entrepreneur understands that leadership
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HOMEOWNERS ENCOURAGED TO APPLY FOR FUNDS TO BRACE AND BOLT THEIR HOMES Next year, 1,000 homeowners across the state will receive up to $3,000 to seismically retrofit and protect their homes from earthquake damage. The Earthquake Brace + Bolt program is expanding to include more than 150 ZIP codes in vulnerable areas in Northern and Southern California. State officials and earthquake experts joined Pasadena homeowners today who took advantage of funds from the program to retrofit their 1927 bungalow. Assemblymember Adrin Nazarian (D-Sherman Oaks) secured $3 million in the 2015-2016 state budget to expand the program to more homeowners in earthquake-prone areas across California. Eligible homeowners can apply for funding to retrofit their homes in January at EarthquakeBraceBolt.com. “Expanding the Brace + Bolt program to 1,000 new homes is an important step forward in preparing California for a large earthquake,” stated Assemblymember Adrin Nazarian. “Bracing and bolting homes to their foundation can help protect property and save lives. I look forward to continuing our work with Governor Brown, Insurance Commissioner Dave Jones and the Legislature to make further improvements to Californians’ seismic safety.” United States Geological Survey seismologists predict a major temblor is likely to strike California, causing serious damage to millions of homes and residential structures. There are more than 1.2 million vulnerable homes in California that need retrofitting to protect them. “The California Earthquake Authority developed the Earthquake Brace + Bolt program because we know mitigation works,” said Glenn Pomeroy, CEO of the California Earthquake Authority. “This funding allows an additional 1,000 Californians to make their homes a safer place.” Homes eligible for an Earthquake Brace + Bolt retrofit have a crawl space under the first level with a short, weak, wood-framed wall called a cripple wall and are typically built before 1979. This retrofit bolts an older home to its foundation and adds bracing around the perimeter of the crawl space in order to keep it from sliding or toppling off its foundation during an earthquake. “I knew my 1920s home needed bolting but didn’t fully appreciate the peace of mind I’d feel after the work was done,” said Deena Willis, a Pasadena homeowner and Earthquake Brace + Bolt program participant. “I feel safer knowing my house has been strengthened and am thankful that this program made it possible.”
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“Homeowner insurance policies do not cover earthquake damage. We encourage all Californians to take steps to protect their homes before the next major earthquake strikes,” said Insurance Commissioner Dave Jones, who serves on the Board of the California Earthquake Authority. “Thanks to the leadership of Assemblymember Adrin Nazarian, the Earthquake Brace + Bolt program has expanded so more Californians can protect their homes.” If an unsecured house is damaged during an earthquake, homeowners can face hundreds of thousands of dollars in repair costs, while the cost of bracing and bolting a home averages between $3,000 and $5,000. From: California Department of Insurance (www.insurance.ca.gov).
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