Author Archives: drdavidallenbrown

About drdavidallenbrown

Dr. Brown joined the Ferris State University faculty in August, 2013, after several years as an entrepreneur, consultant, and risk management/insurance professional. He designed, launched, and grew a business process outsourcing enterprise serving the risk management and insurance industry, serving several prominent clients such as SPX Corporation, General Motors, Ford, Burger King, City of Tampa, City of Phoenix, and many others. This business was eventually sold to Ebix, Inc. in 2008. He served as a Vice President at Ebix while completing work on his doctoral degree with a specialization in technology entrepreneurship. Dr. Brown has been a commercial insurance underwriter, market research analyst, risk manager, risk management information system consultant, software developer, and entrepreneur. In addition to his corporate ventures, Dr. Brown and his wife Jeannine founded Rivertown Bookstore, a small independent bookseller in their hometown of Portland, Michigan. Dr. Brown and his wife Jeannine have three adult daughters. When not teaching or involved in business projects, Dr. Brown enjoys reading, writing, and exploring the wide open spaces of Wyoming.

RIMS 2017 – Here we come

Bright and early Sunday morning, I depart with four Ferris State RMI students to attend the 2017 RIMS Annual Conference in Philadelphia, Pennsylvania.  I confess that at this stage of my career – having endured 30 years of planes, trains, and automobiles – business travel has little appeal to me.  Yet, I am enthused to accompany four students to this very large and impressive industry event.

It’s difficult to convey the vast scope of the RMI industry within a classroom.   Some things just have to be experienced and witnessed firsthand.  The immensity of the RIMS conference, with its thousands of attendees and vast array of exhibitors that includes many household names of the insurance industry, certainly drives home the point with students.  The educational sessions show the students that there is much more for them to learn and a cornucopia of career opportunities awaiting them.

My first RIMS conference was 26 years ago, and I still learn something new every year.  I am truly excited for the opportunities awaiting my four students.  I know that they will meet new and interesting professionals at the conference events, learn of concepts that will spark their interest, generate new ideas for their careers and personal ambitions, and yes, have some fun.

It’s going to be a great week and I will relish the opportunity to watch my students take it all in.  It may even make the planes, trains, and automobiles tedium of business travel worthwhile.  Maybe.

Heads in the Sand

Are U.S. homeowners burying their heads in the sand when it comes to their homeowner’s insurance coverage?  A 2016 survey commissioned by Trusted Choice and the IIABA seems to suggest that they are.  The three big conclusions from the survey results are that many homeowners have inadequate insurance coverage for their loss exposures, do not understand the coverage they do have, and lack enough personal savings to cover the uninsured costs of a disaster that may force them from their homes for a month or more.

It seems that a large portion of homeowners have very high expectations for the homeowner’s insurance policies they are purchasing, and very limited understanding of what it will actually cover and to what extent.  This creates a false sense of security, which relieves the homeowner of any sense of urgency toward establishing their own savings plan to get through the uninsured or under-insured aspects of a disaster.

For example, many homeowners fail to understand the difference between replacement cost and actual cash value coverage, and blindly accept what is typically the default (and less expensive) option: actual cash value coverage. Similarly, many policies provide a limit for off-premises living expenses following a covered event, but that limit is usually only 10% of the dwelling limit.  That could be woefully inadequate if a homeowner had to live elsewhere for 2-3 months after a major fire or storm damage.  Lastly, flood insurance is not even considered by many homeowners who think it cannot happen to them or believe that they have no flood exposure.  Last year, I wrote about the Louisiana floods which included this amazing statistic for a state that has a long history of floods: “…more than half (55%) of the state’s residents living in high-hazard flood zones did not purchase flood insurance.  Even worse, 88% of those living in low-to-moderate hazard zones (which were affected by this particular flood) did not buy flood insurance.”

So what’s the problem here?  Are homeowners just burying their heads in the sand, and adopting the “ignorance is bliss” approach to their most valuable asset?  Or is the insurance industry not being diligent enough in our role as personal risk managers to these homeowners?  I know many insurance professionals who are very dedicated to their clients and genuinely want to make sure these clients are adequately protected.  But I also know that there are three harsh realities:  (1) There are only 24 hours in each day, (2) there are clients who simply don’t want to know (or pay), and (3) there are a minority of insurance agents who have stopped caring, probably as a function of the first two realities.

Therein lies the rub.  The limits of time and the limits of client interest/attention-span/willingness-to-pay can cause even the most dedicated insurance professional to become cynical.  We’ve all had clients who don’t want to understand.  It’s either too complex or too scary for them, and they mentally shutdown and hope for the best.  Many Americans are taking a similar approach to their retirement savings, but that’s another story.  Alternatively, some clients understand the coverage concepts and ramifications but then choose the cheaper coverage option. Better. At least they made an informed choice… or did they? Can we be sure that the client fully grasped the magnitude of the self-insured exposure they just accepted and have a plan in mind to prepare for it?  The TC/IIABA survey suggests otherwise because few take that next step of establishing personal savings to get them through the disaster costs that they just decided to self-insure.

As insurance professionals, we cannot just dismiss the results of the TC/IIABA survey as the symptoms of our clients putting their heads in the sand.  If they are putting their heads in the sand, it could be because we’re not doing our jobs as risk management advisors as well as we should be.  Perhaps we’re being too scary or ominous in our coverage explanations.  Perhaps our coverage terms are overly complicated.  Perhaps we’re being too cynical or too rushed in our client interactions.  My suggestion is that we take the survey results to heart, look in the mirror, and ask ourselves: How do we fix this?

Scholarship Season

scholarship_money

Spring break is upon us!  Over the next few days, Ferris State students will scatter to various warm climates for spring break next week.  When the RMI students return in mid-March, they will be facing several imminent scholarship deadlines.  The amount of scholarship assistance that is available to today’s RMI student is impressive, uplifting, and dare I say, overwhelming.  The ever-growing list of RMI scholarships certainly reflects the industry’s urgent need for young talent, and that should speak volumes to those students and parents still contemplating an academic and career direction.

Many of these scholarships have springtime application deadlines so that awards may be made during May for the upcoming 2017-18 academic year.  This time of year, I receive multiple scholarship opportunities each week that I pass along to my RMI students.  As I have blogged in the past, there are also several online resources (including our own partial list) that will help students to find RMI scholarships.  There is absolutely no reason that a diligent student cannot find at least some scholarship assistance for their RMI education.

All of this is good.  Or is it?  Let me return to my prior use of the word “overwhelming” as it relates to these scholarships.  There are so many scholarship opportunities from every type of RMI organization imaginable, that students seem to be “freezing up” when it comes to applying for these scholarships.  With so many opportunities, it becomes difficult for the individual student to discern which opportunities afford them the best chance of receiving an award, and with limited time to crank out scholarship applications, they can apply for only so many.  In fact, this is beginning to be noticed by the awarding organizations as I have begun to receive queries from some scholarship sponsors as to why their application numbers are lower than expected.  To be clear, I don’t think that’s a universal condition as many of the established and well-known scholarships continue to receive plenty of applicants and award their scholarships only to the most deserving students.  It seems to be the newer, lesser-known scholarships that are struggling to find applicants.

This is a real shame because these sponsoring organizations have funds to help students, and they really do want to bolster the young talent coming into the industry.  I hesitate to say that there may be an over-supply of RMI scholarships because that almost feels blasphemous.  How could there ever be an over-supply of such a fantastic thing as scholarship money when tuition and book costs continue to rise?

I have an idea.  What if some of these scholarship sponsoring organizations who are struggling to generate applicants diverted those scholarships funds for a few years?  Instead of begging for student applicants, put the funds into the hands of the collegiate RMI programs to use for program marketing and enrollment growth initiatives.  More RMI students enrolled at schools equals more future scholarship applicants.  Now, you might argue that the scholarships themselves should be a powerful recruiting tool for boosting RMI enrollment.  Absolutely true, but there is much more to the student decision to major in RMI and I believe that the individual RMI schools are in the best position to convey the overall value proposition (including abundant scholarship opportunities) to prospective students – but not many schools have budgeted funds specifically for marketing their RMI academic programs.

This could be an interesting short-term tactical shift for some scholarship sponsors that pays off with a long-term strategic success of awarding more scholarships to the most deserving students (however each awarding organization may define that) a few years down the road.

Rewarding Life

students-with-brutus

What an absolutely ideal week to be wrapping up my mini-series of blog posts on the Ferris State RMI program’s tagline:  Practical Education, Flexible Career, Rewarding Life

We have enjoyed unseasonably spring-like weather for a Michigan February, with abundant sunshine (most days) and temperatures rising into the sixties.  As if that weren’t enough, this was also the week of the Michigan Association of Insurance Agents annual convention, which I attended along with several of my current RMI students.  As we talked with many of the hundreds of insurance professionals at the convention, a common theme was how rewarding their careers have been in the insurance industry.  We talked with a few who said that they’ve only been in the industry since their 30’s and expressed regret that they didn’t discover the RMI career path in their 20’s.  That speaks volumes.

Rewarding Life… I looked up the definition of “rewarding” and found “providing satisfaction; gratifying.”  There are a number of ways that we humans can be satisfied.  Money, security, prestige, service to others, fulfilling experiences, and the list goes on.  Each individual defines their level of satisfaction and gratification according to their own personal values, and most people seem to derive satisfaction from a combination of things in balance with their values.

Over the course of the MAIA convention, my students heard a variety of personal stories from seasoned industry professionals that all boiled down to the same principle:  They’ve had (and have) a very rewarding life in an industry that has been very good to them.  What does that mean? As I wrote in the previous paragraph, it means different things to each person, but I can tell you (based on my own experience) what it means for many who work in the RMI industry.

It is a lucrative career, if you want it to be.  I personally know many RMI professionals who are well into six-figure incomes. I can’t complain in the least about my fiscal rewards over the last 30 years.  It is a very stable industry that has provided job security and stability.  The industry is diverse and always evolving, so RMI professionals are constantly learning, growing, and doing different things each day.  For example, you’re constantly learning about different insureds’ operations – it’s like a neverending episode of the Science Channel’s “How It’s Made” television show.

You meet the most interesting and smart people from all walks of life, and you have the opportunity to attend fantastic events and visit wonderful places.  My own RMI career has given me the chance to spend time in Hawaii, India, and Australia, just to name a few.  In terms of fulfilling experiences, while working on a project in Australia, I spent a Sunday afternoon sailing on Sydney Harbour, passing under the iconic Harbour Bridge and past the Sydney Opera House.  I had no idea that my insurance career would provide such an incredible opportunity when I began as an underwriting intern so many years before.

Last but not least, there is great satisfaction that comes from helping other people.  The insurance industry is entirely about helping people to live securely, and to pick them up when they are down.  Let’s be honest here, the news media loves to cherry-pick the instances when an insurance company denies a claim or there appears to be some sort of injustice.  The reality is that the insurance industry helps millions of people proactively by recommending and providing insurance protections that provide stability and peace of mind, and then gets them back on their feet at the worst moments in their lives.  You ask any insurance agent or claims professional about the most rewarding aspect of their work and inevitably they will share a story about a claimant to whom they delivered a check and provided comfort during the darkest time of that claimant’s life.

Now imagine all of the aforementioned sources of satisfaction aggregated over the course of a 40 year career.  That makes for a truly rewarding life.

 

Flexible Career

career_in_insurance

Practical Education, Flexible Career, Rewarding Life.

Last week, I posted about the practical education element of the Ferris State RMI program’s tagline.  In the continuing spirit of Insurance Careers Month, I will discuss the flexible career aspect this week.  I’d like to begin by highlighting one example of insurance career flexibility: me.

I was one of the many “accidental” insurance professionals who stumbled into a commercial underwriting position fresh out of college.  A few years later, I moved into a risk management role with a large retailer.  Applying my interests and aptitudes for technology, I eventually started my own consulting practice where I worked on several Fortune 500 risk management information system projects.  An opportunity came along to develop a system and process for tracking certificates of insurance, and an entirely new business was born.  Over the course of ten years, I was able to grow and then sell that business, and then pursue the bucket list objective of earning a doctoral degree.  Shortly thereafter, Ferris State revived its RMI academic program and began searching for a lead faculty and program coordinator, and here I am today.

Over the years, I’ve talked to countless risk and insurance professionals, some who intentionally entered the industry and many who discovered it accidentally.  I am always intrigued by the unique stories of these career arcs.  They are always a fascinating story of career evolution that starts in one area of the industry and then twists and turns through a variety of different roles, opportunities, firms, and locations.  Many in the industry have had the chance to live in some wonderful places, including overseas.  Here in Michigan, insurance professionals can work in the metropolitan areas of Detroit and Grand Rapids, or near the exquisite shorelines of Grand Haven and Traverse City, or in the pristine wilderness (and sportsman’s paradise) of the Upper Peninsula.  The key takeaway from my and many other stories is that a risk and insurance career is not stagnant, but rather it allows for evolution through a number of interesting, challenging, and meaningful positions in a variety of locations.

A flexible career has another meaning besides career path mobility and opportunity.  Numerous articles describing the desire for workplace flexibility have appeared in recent years, particularly when discussing the Millennial generation.  However, I believe that this desire for flexibility is not unique to the Millennials.  In this age of instant, always-on communication, I think we all value the ability to work from anywhere we wish, and at the times that we wish.  Technology certainly supports our ability to be productive from our home office or even from the bleacher seats as we watch our children and grandchildren play sports.  The risk and insurance industry offers this type of flexibility.  Many professionals are now based out of home offices.  Field personnel who do loss control or claims work often schedule their own appointments.  I’ve spoken with many insurance agents over the years who treasure the ability to work in the office during the morning, have a client meeting over lunch, spend time on a family activity during the afternoon, and finish up their day with a little work in their home office.  The next day’s schedule may look entirely different – it’s up to them.

Let me be clear.  There is work to be done.  I don’t intend to paint a picture of insurance professionals spending all of their afternoons on the golf course,  During my consulting days, I traveled 50-75% of the time and I was away from my young family more than I cared to be at times.  Nevertheless, the work was always interesting, never boring, and I always had a degree of control over when I scheduled projects.  On the whole, I have enjoyed a tremendous amount of flexibility and variety in my risk and insurance career, and you can too.

 

Practical Education

theory_into_practice

February is “Insurance Careers Month” during which risk and insurance professionals make a concerted effort to highlight the industry’s career opportunities for young people facing a myriad of academic and professional choices.  A few years ago, when Ferris State University revived its storied risk management and insurance academic program, we re-engineered the curriculum and co-curricular opportunities for the 21st century.  As the new program took shape, I sat down with an advisory board sub-committee to craft a tagline for the program that would capture its essence and the potential that it offered students:

Ferris State University Risk Management and Insurance:  Practical Education.  Flexible Career.  Rewarding Life.

 In the context of insurance careers month, I decided to break this tagline down and discuss each of its component parts over the next few weeks.

“Practical Education” is not just lip service – it’s part of the Ferris State DNA.  The school was founded in 1884 by Woodbridge and Helen Ferris as Big Rapids Industrial School.  A review of the school’s history clearly demonstrates a focus on teaching practical skills that prepare students for gainful employment and successful careers in fields where workers are needed.  To this day, Ferris offers programs in such fields as Heavy Equipment Technology, Welding Engineering Technology, Plastics Engineering Technology, Pharmacy, Optometry, and yes, Risk Management and Insurance.  All of these are fields clamoring for young, educated talent.  The Ferris State mission and core values clearly emphasize the practical nature of a Ferris State education.

The new Ferris State RMI academic program has been designed from the ground-up to provide this practical education.  Our students learn the foundational concepts of the risk management process, insurance coverages, insurance law, and terminology.  But that’s not all.  The reality is that in many fields, a significant portion of the technical knowledge a person gains in school will be obsolete within ten years of graduation.  The truth is that the technical learning continues well beyond college graduation, and in fact, never really ends.  Insurance coverages will evolve with emerging risks such as cyber-risk, and who knows what comes next in the 2030s, 2040s, and beyond.

At the heart of our practical education is an emphasis on experiential learning, adaptable degree programs, and development of timeless skills.  Practical education means that our students will complete internships where they go to work in the “real world” of risk and insurance.  It means they attend industry conferences where they are exposed to emerging industry issues and begin building a professional network.  It means that they participate in co-curricular activities such as Gamma Iota Sigma.

Practical education means that students complete the foundational RMI courses and then have the opportunity to draw a variety of other courses from across the University to complete their degree and to suit their interests and career direction.  Interested in becoming a cyber-security/cyber-risk expert? Take a few of our information security courses.  Interested in predictive analytics for risk and insurance? Take data analytics and data mining courses.  Interested in the agency side of the business? Take our agency operations course along with a few small business management courses.  Examples of practical tailored education abound.

Practical education means that students learn and practice the skills that every employer seeks.  The RMIN 489 capstone course includes units, exercises, and activities in such areas as critical thinking skills, logic, problem-solving, and collaboration, to name a few.  Just next week, the RMIN 489 students will be addressed by an industry veteran who will be coaching them through several case studies drawn from genuine situations from the realms of underwriting, claims, sales, and risk management.  The cases we use in this course are not canned textbook cases – they are real-world (with names changed to protect the guilty/innocent) situations for which there is rarely “one correct solution.”  The intent is to exercise the students’ problem-solving and analytical skills as they evaluate each case against the foundational risk and insurance knowledge they have gained.

This is real-world stuff.  This is a practical education.

What a Riot

riot_berkeley

For most of my adult life, riots were such a rare occurrence that the phrase “what a riot” was a way of saying “that was a lot of fun.”  Over the last few years, and especially the last few weeks, the term “riot” has no connotation of “fun” about it.  Well, at least not to sane people.  I’m sure some of the riot participants think they are having a grand ol’ time as they destroy the property of others and inconvenience people.  In fact, as best I can discern, many of the rioters seem to think they are engaged in a noble and patriotic activity.  Were they remaining peaceful and not destroying property, I would likely agree that their protest is noble.

I could get all political here, but I won’t. Except to say that it is clearly one particular side of the political spectrum causing all of the chaos right now, and it is supposed to be the side that espouses its belief in tolerance, peace, love, and freedom of speech.  Yet, the latest violent riot in Berkeley, California was intended to (and successfully did) prevent controversial libertarian Milo Yiannopoulos from speaking.  The violence and hate on display among these rioters was truly ironic – and the rioters themselves seem to be totally blind to the irony.

The relevance of the increasing frequency and intensity of riots to risk management and insurance is clear.  Insurance coverage is typically afforded for “riot and civil commotion” in most homeowners and commercial property insurance policies.  Soft markets notwithstanding, insurance underwriters have to be taking a harder look at locations they are insuring and evaluating the potential for riots.  Major population centers and especially colleges and universities are of particular concern these days when it comes to riot loss exposures.  Risk managers in areas where protests may evolve into violent riots have their hands full right now, and need to be talking with local law enforcement about plans to protect property and personal safety.

Whatever happened to the nobility of peaceful, non-violent protests? We just celebrated Martin Luther King Jr. Day to remember his accomplishments that were brought about through peaceful protests and the open expression of ideas as encapsulated in Dr. King’s I Have a Dream speech.  The riots, and the rioters are disgraceful, not noble.  And they are costing us all dearly in the form of increasing insurance costs and even more so in the form of dividing us more deeply as a nation.

Incidentally, it’s been awhile since my last blog post.  It was a busy autumn.  That’s my only excuse.  I’ll try to get back to a more regular posting schedule in 2017.  I’m sure there will be plenty of risk and insurance material to cover.  Stay safe and sane out there folks.