Personal risk management Featured

8:44am EDT June 30, 2006
There are a number of different perks that can be awarded to executives. Country club fees, use of a company car, limousine services and complimentary tickets to sporting events are just a few of the common ones.

A less glamorous, yet ultimately more rewarding, benefit is providing access to a personal risk management program. After all, as executives’ incomes grow so does their need for the best in personal insurance products. Offering this type of benefit allows a company to protect their executives on a personal level. Meanwhile an executive’s assets can grow unhindered by liability issues.

“Today, personal risk management equals wealth protection,” says Seth Gilman, vice president of Sander A. Kessler & Associates Inc. “A risk management program is ideal for companies with a large amount of highly-compensated executives.”

Smart Business spoke with Gilman about why it makes sense to offer executives a personal risk management program, what factors should be considered when choosing a program and how companies can benefit from offering this service.

What is the importance of a personal risk management program for business owners and executives?
Most successful individuals have very complex, ever-changing risk profiles that demand sophisticated and specialized risk management services. Ultimately, you need to try and align the resources that are available out in the market that include insurance, risk management, employment and security issues. All of these issues need to be addressed.

Just as business owners and executives would address such issues on a business basis, they need to also address them on a personal basis. Ultimately, by working through this process, they will be able to secure the peace of mind that accompanies making sure that the assets and lifestyles that they’ve worked so hard to achieve are fully protected.

What exposures or concerns do most successful business owners and executives have about their current program?
The No. 1 issue that concerns business owners is personal liability. Because of their increased public prominence, their multiple homes and larger extended families, a single serious liability issue can wipe out a large percentage of their wealth and erase all of the benefits they achieved from their prudent financial planning.

What factors should be considered when determining the correct program?
Because the number of wealthy business owners and executives has grown so dramatically, there are some new insurance products that are designed to cover not only their primary homes and autos but also their vacation homes, yachts and art collections. These products are specifically tailored for the high-net-worth family. When seeking coverage, they want to make sure that they have the correct insurance contract that covers their requirements. They should work with insurance companies that are experienced in meeting the needs of high-net-worth households and who have the type of contracts that are appropriate.

How can a company benefit from offering this type of program to its executives?
This type of program provides a valuable service to top executives. It demonstrates to the executive that not only are they appreciated on a business level, but that they will be taken care of on a personal level. This can be done by giving executives access to the marketplace at no cost to the company itself. The executives are responsible for the premium, but are awarded a significant discount. For example, if the company has a large number of highly compensated executives, they can access excess liability policies with very high limits and receive a large discount based on volume. These are technically individual policies that the executives pay for, but because the company offers them, and it’s all within one company, they can receive discounts of up to 50 percent. This is a great perk for executives because they can have everything taken care of for them inhouse. Many times, they are so busy that it can be difficult for them to take care of these concerns at home. It’s an efficient and effective way to get those folks covered.

What types of companies offer this kind of perk?
Obviously, it doesn’t make much sense for just a business owner or a company with only one or two executives. But for a company with a number of highly compensated executives, it can be advantageous. Also, it is a great way for companies to make sure that their executives are not only taken care of on a professional level, but also on a personal level.

SETH GILMAN is vice president of Sander A. Kessler & Associates Inc., a property and casualty insurance and employee benefits firm. Reach him at (310) 309-2200 or