Talking Business Insurance

© Alain Lacroix |

Life, home, and auto. Those are the three types of insurance frequently mentioned in advertisements on television and print.  But there are other types, perhaps less well known, but equally as important to the person or business that needs them. Two of those are agricultural insurance and restaurant insurance. Healthcare coverage is another commonly referenced insurance, but since the passage of the Affordable Care Act (ACA) in 2010, and its implementation of the Health Insurance Marketplace in January of this year, health insurance has been a topic of uncommon conversation and concern. In this article, we talk with representatives of three Memphis-based businesses that are involved with agricultural, restaurant, and health insurance.

Group Benefits LLC was founded by Tim Finnell in 2009 to serve as an employee benefits broker and consulting firm. With the passage of ACA the following year, however, Finnell realized that that the world of employee health benefits was about to undergo serious changes, so he seized the opportunity to become an authority on healthcare reform. He became one of the nation’s first Certified Healthcare Reform Specialists, and he affiliated his company with NFP Benefits Partners, one of the largest brokers in the country. NFP’s compliance department has the legal and technological expertise that proves invaluable in helping Finnell’s clients comply with the new law and all other government regulations regarding employee benefits.
In addition to joining forces with the national firm, he arranged for two local brokers with outstanding professional credentials, Mike McManus and Bill Arnold, to affiliate with him and Jim Horobetz.

Combining personalized service, access to national expertise, and an in-depth knowledge of the complexities of healthcare reform has proven to be a very successful strategy for Finnell and Group Benefits.  Not only has the firm been able to make significant gains in its client list, but Finnell himself has become a sought-after source of information on that topic, interviewed by such media giants as the Associated Press, The Wall Street Journal, and CNNMoney.

“One of the main effects of the ACA,” says Finnell, “is that it is causing businesses not just to take the easy step of shifting benefits costs to the employees but to think strategically as they design, or change, their employee benefits programs. Some businesses have chosen to implement health reimbursement plans, while others have gone the route of involving employees in maintaining their own good health, all in an effort to provide good benefits for the employees, while keeping the cost of health benefits manageable.

“In fact,” Finnell continues, “for about the past decade, the focus has been on employee wellness, encouraging people to take charge of their own health and to maintain their good health. This approach has continued to gain acceptance.  It is often managed by a third party.”

Finnell says some businesses, such as Walgreen’s, have chosen to go with private exchanges for health insurance-related issues. With such an approach, the company allocates a certain amount of money to each employee for healthcare purposes, and the employee is responsible for choosing what he believes is the best plan for himself or herself, within the monetary limits of the healthcare stipend offered by the company.

“Another approach is the reward-based program,” says Finnell.  “In such a program, employees must participate in health screenings at certain intervals and meet health-related goals — weight levels, for example — at those screenings in order to maintain a certain cost level for employee group health insurance.  That approach gives the employee more responsibility not only for maintaining good personal health but a degree of control over the costs of his or her health insurance within the employee group.”

Overall, Finnell says, the ACA is helping to drive the healthcare industry toward greater efficiencies. Such innovative techniques for hospitals as implementing integrated care or collaborative care, the use of electronic medical records, and cooperative arrangements between hospitals and physicians are already being used by local hospital systems, and those initiatives have shown great promise.

Finnell characterized the ACA as both a healthcare reform measure and a tax law. He believes the reform aspect of the law is a good thing, because of its new rules governing coverage in the face of a pre-existing condition, for example. However, he’s unsure what the long-term outcome of the tax aspect of the law will be.  

Though the law is intended to enable and encourage many more people to get health insurance, so the premiums paid by younger, healthier people will help offset the payout for medical bills for older or sicker individuals, Finnell believes that the increase in the number of U.S. citizens who will be insured as a result of ACA will be minimal.

“That aspect of the law still leaves many questions unanswered,” Finnel says. “It will be interesting to see what happens when people who have enrolled in one of the ACA exchange plans get their first bills for those plans and find that they are going to be paying more than they thought they would be. They may decide to drop that insurance, and simply pay the penalty, if that is cheaper.”

Louis Clay hadn’t intended to make a career in insurance, and when his uncle died and his aunt asked him to step in and run the company, he thought it would only be temporary. That was in 1970. Today, Clay & Land is the second largest insurance agency in Memphis, with more than $90 million in premiums (compared to $300,000 when Clay first joined the company). Clay & Land is a full-service agency with clients throughout the Mid-South, but one of their niches is insurance for restaurants.

“It works just like other types of insurance that are necessary for businesses to carry, such as workers compensation, property damage, and liability,” explains Clay. “In addition to those, restaurants carry specialized insurance that protects their exposure to risk because of their product — the meals they prepare for their customers.”  

“Liability insurance would protect a restaurant if a customer were to slip on a wet floor, for example, but the type of insurance we call ‘restaurant’ insurance protects the business if a customer should get sick from eating a meal that the restaurant prepared, or if a diner were to break a tooth on a foreign object that somehow got into a dish.”

Clay says restaurant insurance isn’t an unusual type of insurance, but that much of it is handled by agencies in large cities, which write policies for such hospitality industry giants as the national and international hotel chains and large corporate restaurant operations. “Our clients are the smaller, independently owned restaurants,” Clay says.  “For example, we write restaurant insurance for The Cupboard, for some of the Sonic Drive-Ins that are operated by independent franchisees, and for chains such as Perkins.” Altogether, Clay & Land has between 50 and 60 clients for whom it writes restaurant insurance.

Ancillary to the “product related” insurance for restaurants’ meal service is insurance to cover the equipment that restaurants use, such as coolers, stoves, dishwashers. “A stove can present a fire hazard if grease is not cleaned regularly or food can spoil if a cooler quits working properly,” says Clay. “Those are the types of hazards that can arise from restaurant equipment, and we also work with the suppliers of those types of equipment.”

Clay & Land has grown significantly over the past 43 years, and today it employs more than 120 people, 50 of them agents. Instrumental in helping the agency grow has been the acquisition of smaller agencies whose owners were ready to retire or wanted to sell their businesses; Clay & Land has averaged about one of these aquistions per year for the past 20 years. Clay is pleased with that approach to his agency’s growth, saying it is good for the buyer and good for the seller.

Situated in the middle of the Mid-South agricultural belt, Larry Crum & Associates LLC is a major source of agricultural insurance for farming and ranching operations of all kinds and all sizes. The agency, established in 1968, is associated with Nationwide Insurance Company, whose Nationwide Agribusiness sector is the largest provider of agricultural insurance in the United States. Agency owner Larry Crum has been inducted into the Nationwide Insurance Hall of Fame and his is consistently an All Star Agency, ranked in the Top 12 in the United States. Crum & Associates has qualified as a Farm Certified Agency and most of the agency’s growth has come from the agribusiness area.

Larry Crum explains, “In our world, agricultural insurance is commonly referred to as agribusiness insurance. The term applies to farms and ranching operations as well as commercial agribusiness.” Farming and ranching involves row crops such as soybeans, corn, cotton and rice fields, etc. A typical farm has several hundred acres up to thousands of acres. These farmers insure their home, barns, implement sheds, grain bins, and farm machinery, such as tractors, combines, cotton pickers, and related equipment. They normally have cars, pickups, and SUVs, and the larger farms have tractor-trailer units to haul their grain to the local elevator.

“Irrigation equipment is necessary and costly for the farmer, so it has to be insured against wind, lightning, and even theft of copper wiring,” says Crum. “It’s not uncommon to have $3 to 4 million or more invested in farm equipment. Finally, they have a need for a few million dollars of coverage in an umbrella policy. The package is put together in a farmowner’s policy, which consists of farm liability, property, vehicles, inland marine for the equipment, and an umbrella policy.”

Crum continues, “Under our commercial agribusiness policy, we insure many different types of businesses that are related to agribusiness, including varied operation such as agricultural chemical distributors, beverage bottlers and distributors, biofuel producers, cattle feedlots, cotton gins, and warehouses. Others are dairy processors, egg laying operators, farm equipment dealers, farm stores, feel mills, fertilizer blenders and distributors, food distributors/wholesale grocers, food processors, grain elevators, grain milling plants, milk haulers, nurseries and greenhouses, refined fuel distributors, and seed conditioning plants.”

Around a metropolitan area, Crum explains, there are also “hobby farms,” usually owned by week-end farmers who have jobs in the city but live in rural areas. Their farms consist of a few acres, and they may raise some cows, horses, and pigs. They may have several acres for hay, a truck, or a garden, and just as with larger farms, Crum & Associates insures their home, outbuildings, vehicles, and any equipment they have under a farmowner’s policy.

The U.S. Department of Agriculture estimates that 2.5 percent of total farms earn incomes from agri-tourism, an extension of traditional farming. The term encompasses a spectrum of activities ranging from on-farm stores to corn mazes. Petting zoos, haunted houses, hayrides, summer festivals, pumpkin patches, and strawberry patches are some of the attractions that bring increasing numbers of urban dwellers onto farms for leisure, education, and entertainment.   


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