The Power of Networking

Networking has been around forever. When Saul was the Israelite King, he needed someone to be his personal assistant. He asked all his servants for referrals, and one of them knew a respectable man named Jesse, who had a well-regarded son named David. Benjamin Franklin networked among the rich and powerful in France to garner support for the fledgling American colonies. He was instrumental in arranging for the Marquis de Lafayette to lend his expertise to George Washington and the continental army.

Networking has always had a place in history, enabling people to accomplish great things. Some people believe that networking is that magical process of tapping into your circle of influence to accomplish things that would otherwise be difficult, or complicated, or downright impossible. That’s a part of it, to be certain, but the bigger part of networking is simply forming relationships, making friends, and looking for ways and opportunities to help your associates!

What are some of the ways YOU network? What are YOU able to accomplish by expanding your circle of influence?

A.    Do we look for ways to serve others? When we look for opportunities to help others, and more importantly, when we act on those opportunities, we gain the respect and trust of others. One particular networking organization (Business Networking International) has as their slogan, “Givers Gain.” It’s very true that when we serve and help others, those actions are reciprocated.

B.    Do we look for opportunities to meet others? As we expand our circle of influence we should look to create more meaningful relationships. Another professional networking organization (Corporate Alliance) has as their slogan, “Learn, Serve, Grow.” As we meet new people, we should look for ways to truly get to know them. Learn about them. Care about them. Develop meaningful relationships built on trust. This allows us to better serve them, and grow as a result.

C.   Do we engage in meaningful activities with others? As we participate in meaningful activities with others, we develop lasting friendships. These activities can be as simple as going to lunch together, or engaging in a common-interest activity. We can join a service organization or serve on a committee of a trade organization. We can join a golf league, or pinner’s social media group. There are many ways we can get to know people, but then we need to take those relationships to the next level to truly get to know others and how we can best be suited to help them.

Truly, when we network effectively by serving others, “magic happens” in our own businesses! If you’re reading this article right now, we are networking! I would love to develop a more meaningful relationship with you! I invite you to respond to this email – let’s set up a lunch or a golf outing, let’s connect further, and let’s take this networking to the next level! I’d love to hear how you network. And, I’d love to learn more about you, to see how I can help YOU!

HAPPY NETWORKING!!

Posted on August 8, 2017 .

The Buck Stops Here!

Two umpires were umpiring a high school baseball game between rival schools. One was a rookie, the other, a seasoned veteran. On one particular play, the rookie failed to cover a specific base he should have been responsible for, resulting in a missed call, and the ejection of the coach of the team that was wronged by the blown assignment.

It would have been easy to blame the rookie for missing the call. He was the one who had diverted his attention elsewhere; he was the one who ignored the base he should have been watching. But the senior umpire ultimately took the blame for the SNAFU. Why would he do that? After all, the veteran was watching his bases, and following his assigned plays closely. He hadn’t made any mistakes, and handled his assignments flawlessly.

So, how had he failed? How could he have possibly done anything to change the situation?

Before every game, the umpires get together for a pre-game conference. In a normal pre-game conference, they review assignments, discuss game scenarios, cover potential situations that may require the umps to rotate and watch bases they would not normally cover, etc. Knowing that his partner was a rookie, the experienced umpire acknowledged that he should have been more thorough in his pre-game conference. The senior ump didn't review this potential scenario in the pre-game conference. Even though the rookie had been trained in a clinic about how to cover this play, he had never experienced this particular play before, so he wasn't adequately prepared to handle the situation. The veteran assumed the rookie knew what to do, but because he failed to review this scenario in pre-game, the play resulted in a botched call and a coach’s ejection.

Does this ever happen in business? In our homes? With our friends? Do we make assumptions that we know what we’re doing, and that everyone else should as well? Do we assume that our associates, our friends, or significant others, even our children, are as experienced and knowledgeable as we are? Do we blame others when things don’t go as we plan?

Let’s revisit the baseball game… The veteran ump took ownership of his failure to teach the rookie. He acknowledged that if he had properly reviewed this game scenario in the pre-game conference, not only would the play have been handled correctly, but more importantly, the rookie ump would have been better prepared to handle the ball game.

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Blaming others and finding fault in our associates is easy to do. It’s the path of least resistance, and an easy copout. Pass the buck, blame someone else, and get off scott free, with our reputation unscathed. But, instead of simply looking for someone else to blame when situations go off the rails, can we try and own the situation, and perform a quick self-evaluation of our role in the scenario?

It’s difficult to admit fault, but far more often than we are comfortable admitting, we can identify some aspect of a SNAFU that we could have taken care of differently, which would have generated much different results!

In life, as in baseball, let’s look for ways we can take ownership of situations. Let’s make certain we’re communicating effectively. Let's ensure that we’re providing our associates with the skills they need to excel, and we’re providing help and guidance to those who need it. No more excuses; no more blaming others for issues and problems.

THE BUCK STOPS HERE!

Posted on June 23, 2017 .

What Keeps You Up At Night?

“What Keeps You Up At Night?”

This is the age-old question that haunts business-owners all over the world. What is it that worries business-owners more than anything else? What could happen to impact a business that the business-owner cannot adequately plan and prepare for? Is it invasive competition? Government regulations? On-the-job accidents? Cyber crime? Floods or earthquakes? What about a disgruntled employee who could sabotage the owner’s reputation? Or a key customer who decides to retire and shut down their business? Is it collection issues that jeopardize cash flow? Could it be business succession planning?

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Would it surprise you to learn that there IS a way to protect your business against these, and a myriad of other risks? The solution to these nightmare scenarios is CAPTIVE INSURANCE! Simply put, a businessman can set up their own “captive” insurance company, which issues policies to insure against these types of risks. The businessman pays premiums to his own insurance company, and those reserves are available to pay claims. If no claims occur, that “war chest” builds and grows in a potentially tax-advantaged way.

Montera Captive Insurance Management goes through a thorough risk evaluation process with our clients, identifying anything that could possibly happen to jeopardize the business. Our clients are thrilled to know that their businesses are protected against a variety of risks that they didn’t know they could insure. They are surprised that certain types of risks can be insured! For instance:

1.    A manufacturer won a bid on a large project. They weren’t able to complete all the work themselves, so they got bids from some sub-contractors for those other components of the project. Their final bid was based on the bids from sub-contractors, but when it was time to start the project, one of those subcontractors backed out. They had to come up with a work-around, which cost them a substantial sum of money. They had a policy in place in their captive insurance company to insure against contractual failure, so they were able to file a claim and recover those significant costs!

2.    A contractor owned a very specialized machine they were using on a project. That machine broke down, and it would take several days to bring in an expert mechanic to fix it. The project was time-sensitive, and if they failed to complete the project on time, they would be faced with possible fines and liquidated damages. The company had a policy in their captive insurance company to cover not only the repair on the equipment, but it also covered the costs of renting another machine to complete the project on time!

3.    A successful business-owner depended on one of their customers for a significant percentage of their revenue. That customer closed their doors, resulting in substantial loss of income. The business-owner had a policy in their captive insurance company covering lost revenue due to unforeseen loss of a key customer. They were able to file a claim to help the company replace their lost revenue as a result of the loss of that customer!

4.    A business has a fleet of vehicles which are all paid for. Rather than insure the comprehensive and collision coverages through a commercial carrier, they chose to retain that risk in their captive insurance company. If any of their vehicles are damaged in accidents, their captive pays those claims. The money they save by insuring comp and collision coverages within their captive is huge!

5.    A medical clinic has an MRI machine which gets used regularly. The technician is an avid skier. The doctor worries that if the technician breaks a leg skiing and is out for several weeks, that MRI machine will sit dormant until the technician can return to work, resulting in the loss of thousands of dollars in billable revenue. They have policies in their captive insurance company which not only insures the MRI machine against breakdown and damage, but insures against the loss of revenue produced by that key employee!

Many people have heard that captive insurance companies are not legitimate, that they are only set up for tax avoidance purposes, that the IRS is trying to shut them down, etc. The bottom line is, captive insurance companies, when formed correctly, can be an incredibly valuable risk and business management tool to protect businesses against things that go bump in the night. Contact Montera Captive Insurance Management to learn how we can help you sleep better!

Posted on May 25, 2017 .

Cybercrime: The New Wave of Terrorism

Montera just recently attended a captive insurance conference, and one of the hot topics was how to protect your business against cybercrime. We hear that term all the time, but what exactly does it mean, and what does it entail?

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In its simplest terms, cybercrime is any form of criminal activity or mischief involving electronic transmission of data. This could include confidential records, credit cards, digital images, and entire computer systems. When you consider how far-reaching this can be, cybercrime includes:

1.    Theft of financial assets. Someone can steal a password, an identity, a credit card, not only steal financial information, but use that financial information to purchase things for themselves.

2.    Data theft/destruction/interruption. Every individual and every business is at risk for virus infection. These viruses can interrupt business flow, destroy data, and even steal personal and confidential information. In addition, businesses are at risk for distributed denial of service (DDOS) attack, disrupting their services, and costing potentially thousands, or even millions of dollars in service restoration and loss of business costs.

3.    Third Party Data Loss. Does your business maintain private and confidential information of others, including your clients and customers? What are the risks to you if that data is stolen or destroyed?

4.    Extortion. Many businesses and individuals have had their confidential data stolen by cybercriminals, who then threaten to reveal that information to the public unless they get paid, sometimes exorbitant amounts of money.

5.    Trade Secrets/Brand Damage. Perhaps the biggest loss or damage for businesses is damage to their reputation, to their brand, if their confidential information is revealed, or if they are the victims of a significant cybercrime. How long does it take to restore the public’s confidence if there is a major security breach of a trusted business?

So, what does one do to protect against cybercrime? It’s been said that “cybercrime is not a matter of IF, but WHEN! Cybercrime cannot be prevented, only managed.” The steps involved in protecting against cybercrime are:

1.    Assess your risks. Determine all your areas of vulnerability. Perform a penetration test.

2.    Assess your possible damages. What is the cost of loss of data? Reputational damage? Loss of services? Loss of physical assets? If there is a data breach of a publicly traded company, count on a major lawsuit against the directors and officers.

3.    Assess your protection. Is your computer system bulletproof? How secure is “cloud storage?” Do you carry cyber insurance? Cyber insurance is readily available on the commercial market. And, those commercial policies will offer discounted premiums if your business has taken certain measures for data security. But cyber insurance policies may not provide thorough protection for all your cyber risks, with all the ramifications and potential financial losses! Make sure your protection is adequate!

If you really want to bulletproof your cyber risks, consider captive insurance. Within your own captive insurance company, you can set up cyber risk policies, and customize them to cover your business against every type of cybercrime to which you are exposed. In addition, you can include policies to cover any other losses you may incur as a result of cybercrime. These potential losses include: loss of key clients, supply chain interruption, reputational damage, loss of trade secrets and proprietary data, litigation protection, etc.

Captive Insurance just may be the best weapon available to defend against cybercrime! Talk to an expert with Montera Captive Insurance Management, and let us help you protect your business against cybercrime!

Posted on March 16, 2017 .

HAPPY NEW YEAR!

IT’S A NEW YEAR: TIME FOR INTROSPECTION AND IMPROVEMENT!

 

WELCOME TO 2017! Our entire team at Montera Captive Insurance Management wishes you a joyful and prosperous New Year!

The new year gives us all the opportunity to reflect on the prior year’s successes and failures, and what we can do in 2017 to continue to improve and grow.

As we reflect on 2016, Montera has certainly had our share of challenges and growth opportunities. We have seen growth in both the numbers of clients we are serving, and in the size of our staff to better serve the needs this growth has brought us. We have worked hard to improve the service levels we provide, and to ensure our captive insurance companies remain in compliance with changing regulatory requirements.

In addition, we have remained active and vigilant in keeping abreast of the changing landscape that impacts our industry. Our efforts to best serve our clients have led us to pursue the following:

·         We have developed relationships with actuaries and professional insurance underwriters to help us better understand insurable risk as business needs change and evolve.

·         We continue to attend conferences and seminars, and follow court cases that impact captive insurance.

·         We have developed a comprehensive Owner’s Guide for our clients, to help them better understand captive insurance ownership responsibilities and benefits.

·         To help meet our growing needs, Ken Avery, who has been functioning as Montera’s business development director, has been promoted and is now a partner in the business. He is functioning as the Vice President of Business Development.

·         Ken also represents Montera by serving as a member of the Board of Directors of the Utah Captive Insurance Association, and as a member of the Utah Manufacturers Association, the Salt Lake Estate Planning Council, and Corporate Alliance of Utah. In fact, Ken was one of three recipients of Corporate Alliance’s coveted CARMA Award for 2016. Through memberships in these various associations, we gain a better understanding of the industries we serve, and we learn best practices in various business matters.

It is Montera’s continued commitment in 2017 to all those we serve and associate with, to serve you with the highest levels of service possible, to always represent Montera and the captive insurance industry with the highest levels of integrity, to ensure absolute industry compliance, and to stay current on all industry best practices. We look forward to another year of growth and progress, and once again – WE WISH YOU ALL THE SAME! 

Posted on January 26, 2017 .

IRS Section 831(b) Tax Code Changes for 2017

At the end of 2015, Congress passed the PATH Act, which included changes that apply to section 831(b) of the IRS tax code. These changes apply to ALL captive insurance companies (CICs) that take the 831(b) election in the year 2017. There are essentially two changes that impact CICs. One change impacts the yearly premium amount, while the other change impacts the ownership structure of the captive, in relation to the ownership structure of the insured entity(ies). Regarding the premium amount:

The maximum annual premium allowable to take the 831(b) election is raised to $2.2MM. This increase applies to premiums on policies issued by the CICs in the year 2017. Each year thereafter, the allowable maximum premium will be adjusted based on an inflationary index. To justify this increase, it is imperative that there should be appropriate risk, and legitimate policies issued. A responsible CIC manager should utilize an independent actuary familiar with captive insurance risks and coverages, to perform a feasibility study to determine appropriate premium amounts.

The CIC ownership structure restrictions are a little more complicated. The intent of this ownership change is to prevent CICs from being used as a way to avoid estate and gift taxes. The primary purpose of CICs should always be to utilize best risk management practices – insuring a business against risks difficult to insure on the commercial market. Too often, CICs that are set up purely for estate tax planning purposes. To eliminate this abuse, the IRS has pushed to have the tax code changed as follows:

When there are certain family relationships involved in the ownership of both a business and a CIC, the ownership structure of the CIC may be restricted. Specifically, family members to whom this rule applies cannot own a larger share of the captive than they own of the business. There are a few rules that define how these guidelines apply:

1.  The ownership constraints only apply to situations where there is a spouse, or where lineal descendants are involved. If partners, siblings, in-laws, cousins, or uncles/aunts & nieces/nephews are involved in both the business and CIC ownership, this constraint does not apply. If a lineal descendant (child, grandchild, etc.) or spouse are involved in ownership of the CIC, they cannot own a larger percentage of the CIC than they own of the business. Here are some examples that may help clarify this rule:

a. If a father, his wife, and one child jointly own the business being insured, with dad owning 51%, mom owning 25%, and the son owning 24% of the business, the spouse or child cannot own a larger percentage of the CIC than what they own of the business. They can, however, own a smaller percentage of the CIC than their ownership share of the business.

b. If three brothers each own 33% of the business, and one brother does not want to own the CIC, the other two brothers can each own 50% of the CIC, since the brothers do not constitute a lineal relationship.

c. If a family trust owns 80% the business, and the parents own 20% of the business, the family trust cannot own more than 80% of the CIC.

2.  There is a 2% de-Minimis allowance. The ownership percentages for applicable family members allow for a 2% deviation between business ownership and CIC ownership. For example, if a parent owns 52% of the business and a child owns 48% of the business, the parent and child can each own 50% of the CIC.

If you try to interpret the purpose and meaning behind these changes, you can come to a few different assumptions:

1.  Captive Insurance is protected by Congress. Initially, the IRS lobbied for stronger restrictions and revisions for section 831(b). But other industry lobbyists and legislators who recognize the value of captive insurance pushed back, and the existing language is a valid compromise. By increasing the premium limit, one can reasonably assume that congress recognizes the value and legitimacy of captive insurance, and has created an opportunity for small business owners to take full advantage of self-insuring through this powerful strategy.

2. The changes incorporate an effort to address captive insurance fraud. Many CIC managers and professionals welcome the intent to address CIC formation for purposes other than risk management and business protection. Estate planning has been a huge benefit for owning a CIC, and this has gone away to some degree. But this change also sends a clear signal that CICs are to be used for the right purpose.

3. Investment practices are still left up to the CIC owner. Before the changes to the tax code were revealed, there was some thought that the changes may include language that addresses investment practices; specifically solvency needs, “seasoning,” or “vesting” of premiums, purchasing life insurance within the captive, etc. Congress is certainly aware that investment practices can be grey areas, and areas of abuse by CIC owners. But congress left this aspect of CIC ownership alone. The CIC owner still bears the responsibility of prudent money management, in keeping with best-practice investment guidelines for CICs. In addition, the CIC’s domicile should have regulations in place that may control or restrict certain investment strategies. A responsible CIC manager should give appropriate investment advice to CIC owners and their investment advisors.

Posted on October 24, 2016 .

Why Should I Form a Captive Insurance Company?

There are many reasons business-owners are taking a closer look at captive insurance. “Alternative Risk Management” is becoming quite the popular buzz-phrase, when it comes to protecting a business. What is it about captive insurance that is so attractive? One of the obvious answers is tax reduction. However, taxes should NEVER be the primary reason for owning a captive insurance company! There are so many other benefits from utilizing this powerful risk management tool, ranging from protecting the business to improving safety in the workplace, to creating additional streams of revenue. Let’s take a look at some of these captive insurance ownership perks…

1.      Build a war chest to protect your business. As you pay premiums into your captive insurance company, those premiums can be invested, and you can accumulate a massive war chest over a period of time to help protect your business when you need it the most. This war chest can ultimately become the difference between closing your business after a devastating event, or salvaging the business because you have that war chest covering that loss.

 2.      Customize your insurance coverages. With your own insurance company, you have the power to determine which risks you insure, what limits you want to insure for, and what you want to exclude or include in your policies. Along with your captive insurance manager and actuary, you can custom design your risk management plan to protect your business against the risks that are important to you.

 3.      Escape the clutches of the Big Insurance Companies. When you own your own insurance company, you're not beholden to the whims of a commercial insurance carrier. Whether it's defending a lawsuit, or determining the value of a claim, you make the decisions for your insurance company. You don’t have to worry about rate increases, or having your policy terminated, or dealing with undesired limitations or exclusions. You are in control!

 4.      Administer your own claims. With your own captive, you can choose which claims to file, and ensure that those claims are paid on your terms. As owner of the business, you decide whether or not to file a claim, and as owner of your own insurance company, you decide how and when those claims should be paid!

 5.      Retain key employees. You have the option, if you choose, to include certain key employees in the ownership of your captive. You can also insure your business against certain losses that may occur when you lose a key employee.

 6.      Enable your business to focus on Risk Management. One of the side benefits our clients gain, is that when your own money is on the line for future claims, you focus even more on safety and claims prevention. Most businesses, when they incorporate their own captive insurance risk management strategy, realize the serendipitous benefit of fewer workplace incidents and losses.

7.      Protect your assets. A captive insurance company is a separate entity from your business, and the reserves in your insurance company may be protected by statute to maintain the solvency of your captive. As such, the premiums paid into a captive have that extra layer of protection against creditors and lawsuits.

 8.      Reduce your spending on commercial insurance. When you self-insure, issuing your own policies to your business, you have the potential of increasing deductibles and eliminating costly or unnecessary policies from your commercial insurance provider. By taking control of your own risk management, you can better control the policies that are best placed with a commercial carrier, and insure the other risks through your captive.

 9.      Create a new business. When you form your captive as a separate business entity, you can create opportunities for producing additional investment income. Several years down the road, your captive insurance company can become a powerful, wealth-producing business entity in and of itself.

With all these benefits of owning a captive insurance company, it’s easy to see why this form of “alternative risk management” is becoming so popular! Is captive insurance a good fit for your business? Talk to a captive insurance professional and find out for yourself!

Posted on May 31, 2016 .

Baseball is beautiful... but aren't you glad you don't have to make business decisions like you play the game?

The Super Bowl is a distant memory. The dust has settled on the NBA All-Star Game. The entertainment industry has wrapped up their awards season. The snow is pretty well gone and golf courses are opening. All this means… baseball season is right around the corner!

Baseball is as beautiful as it is unique. It’s played on a diamond. No two ball parks have the same field dimensions. There’s no time period. You hit until you make three outs. The managers wear the same uniforms as the players. There are nine players on the field, spread out over an area about of about 100,000 square feet. But the challenge of the game ultimately boils down to who can do what with a ball that’s a little less than 3 inches in diameter.

You may play your position on defense, and never get to touch the ball the entire game. But when that ball comes to you, you better be ready to make the play! And, you better know how many runners are on base! How fast are they? How many outs are there? Where’s the cutoff man going to be? Where will the play be?

A player has to be ready to process multiple factors in an instant, and make the right play in that same instant. It’s all on him. He can’t hand the ball off, wait for specific instructions, hold the ball, survey the field, and ponder his options for a few moments. He has to be ready to act NOW!

When a player is batting, he has about 10 seconds to figure out his hitting strategy while the pitcher is preparing to pitch, and about ONE second to analyze and process the pitch once it's on its way to the plate! Is it in the strike zone? Is it a fastball, or is the bottom going to drop out of it as soon as it reaches the plate? Should he drive it opposite field, or crush it down the line? Again, the batter has to be ready to act NOW!

As beautiful a game as baseball is, aren’t you glad business and industry doesn’t function like this? Isn’t it nice to be able to take time to ponder our decisions, bring in advisers and assistants, look at all the options, put all the key pieces into place, and then act on the decision?

Whether your decisions involve lining up the right suppliers, creating the right marketing plan, designing the right office space, hiring the right individuals, implementing the right financial goals, or developing the right risk management strategy, take time to process all your options, and make the right decisions! DON'T STRIKE OUT!

 

Posted on March 15, 2016 .

What’s So Important About Having the Right Captive Management Firm?

If you’re considering working with a captive insurance management firm, what should you consider? There’s an old adage’ in the captive insurance industry: “If you’ve seen one captive manager, you’ve seen one captive manager.” All captive management firms are not alike! Because captive insurance is so misunderstood, it’s difficult to know what to look for in a good captive management firm. But if you select the wrong captive management firm, you may find yourself in hot water with the IRS, or domicile regulators! Following is list of eight questions that can help you determine just how qualified a captive manager is:

1.      How much experience does the captive manager have? Does the captive manager understand relevant IRS court cases and revenue rulings, and adapted their best practices to conform to appropriate standards?

2.      Is the captive manager affiliated with any professional captive insurance associations? If so, are they attending conferences and staying abreast of current industry standards?

3.      Has the captive manager had any captive insurance clients audited by the IRS? Is there a pattern of frequent IRS client audits, and how have those clients fared in those audits?

4.      Does the captive manager do a thorough feasibility study, using an independent, experienced insurance actuary to determine coverages and premiums? Using an independent actuary means that the manager is striving to achieve the highest levels of legitimacy for the captive insurance companies.

5.      Does the captive manager spend time educating the client, and the client’s team of professional advisors regarding best practices and industry standards? The manager should work closely with your tax advisor, your financial advisor and your legal advisor to ensure everyone is educated regarding appropriate captive strategies for tax, investments, and business and estate planning.

6.      Does the captive manager employ a legitimate risk distribution strategy? Each captive manager should have a strategy for their clients to satisfy the IRS-required risk distribution ruling.

7.      Are the captive management fees appropriate? Are there any hidden fees? You should ALWAYS ask what the services are, for the fees you are quoted. Many managers provide an all-inclusive, turnkey service, while other managers provide an ala carte approach, with fees added on for the same services being offered by the turnkey management firms.

8.      Can the captive manager provide references; not just from current clients, but from CPAs, financial advisors or attorneys they’ve worked with? You should ALWAYS ask for references from current clients and professional advisors, to ensure the manager has a stellar reputation!

Let Montera Captive Insurance Management take care of all your captive insurance needs. Quite simply: We think we're the very best at what we do!

Posted on February 5, 2016 .

Introducing Montera Captive Insurance Management

Introducing a turn-key approach to forming and managing 831(b) captive insurance companies. With a customized solution you can use pre-tax dollars to create a substantial war chest to protect the business you have worked hard to build. A captive insurance company may be the best comprehensive business planning tool available to small business owners today.

Posted on May 7, 2015 .