My Client Had a Rough Claims Year Recently and I Don't Know If That Disqualifies Them or Just Changes the Conversation. Which Is It?
Most of the time it changes the conversation. Whether it disqualifies them depends on what the rest of their history looks like and what happened in that rough year.
Here's how to think about it. A captive is built on five years of loss history, not one. The actuaries are looking at a pattern, not a snapshot. One bad year inside an otherwise clean five-year picture tells a different story than five years of mounting losses. The question isn't whether your client had a bad year. It's whether that bad year is an anomaly or a trend.
If it's an anomaly, the conversation is about context. What caused it? Was it a single large severity claim, a freak event, something that's unlikely to repeat? Those things happen to good businesses. A well-documented, isolated bad year with a clear explanation is very different from a pattern of frequency losses that reflects how the business is actually being run.
If the losses suggest a deeper problem, a workplace culture that isn't taking safety seriously, operational issues that keep producing the same kinds of claims, that's a different situation. A captive rewards businesses that perform. If your client can't demonstrate that their operations will produce better results than their recent history, now is probably not the right time.
But not right now doesn't mean never. Warren will get on a call with clients who aren't quite ready and tell them exactly what needs to change and why. Get your losses cleaned up, get your safety program in better shape, and come back in six months or a year. We'll track the progress with you. That keeps the conversation open, keeps you in the seat as their advisor, and puts the client on a path toward something worth pursuing.
The worst thing you can do is walk away from the conversation entirely because of one rough year. Bring us the account. Tell us what happened. Let us tell you what we see in the data and whether this is a timing issue or a fit issue. That's a five minute conversation that keeps you from either walking away from a good client or walking into a submission that isn't ready.
Don't make that call alone. Bring it to us first.
It's always your client. Never ours.