Pub. 21 2022 Issue 2

Maximize Reinsurance to Build Wealth and Achieve Your Financial Goals

Are you taking advantage of your reinsurance program to maximize results? You could be missing out on opportunities for building wealth and achieving other important financial goals.

Reinsurance, like other financial and insurance solutions, can be complex to navigate. A reinsurance specialist can help you understand, how to maximize premium production, the structure(s) that will benefit you the most, and which products to include in those structures.


  1. Premium expertise
    Actuarially determined premium with continuous scrutiny of attained loss ratios to drive profitable underwriting results
  2. Claims discipline
    Expert adjudication of claims that aligns with the contractual coverage
  3. Investment discipline
    Making sure the reinsurance trust assets are growing over the contract terms for additional financial strength of the reinsurance program

When selecting a provider, you must consider the following:

  1. Products that fit your needs and are expertly underwritten
  2. A great delivery or sales process that will drive strong product penetrations with a customer satisfaction focus and essential legal compliance
  3. A reinsurance structure that fits the needs of your owners, shareholders, and/or family for both short- and long-term wealth development
  4. An advisor who can evaluate the program’s performance and make recommendations for changes as market conditions and opportunities for new products might arise

There are several structures to consider: controlled foreign corporation, non-controlled foreign corporation, dealer-owned warranty company and self-insured (typically nominal or no insurance backing the program). Each program has different features and benefits that need to be evaluated based on a needs analysis before making a final decision. Large and mega dealer groups have options that are more complex, too.

Within these structures, different programs are offered to meet a wide variety of objectives, such as:

  • Planning for retirement
  • Funding charitable giving activities
  • Including employees to help motivate, retain and share in the dealer’s success
  • Establishing succession planning, where employee(s) or family member(s) build their wealth in the program to generate funds for future ownership opportunities
  • Providing assets for business acquisition/growth
  • Funding facility upgrades/construction of new facilities
  • Gaining wealth and fund retirement
  • Extinguishing operational debt

Identifying your short- and long-term priorities and goals is key to selecting the right programs.

Advisors come with their own set of financial interests. Be cognizant of those interests and be willing to temper a strong sales pitch. If the advisor will benefit from the selection of a provider, then you may want to consider a second opinion to ensure the evaluation is truly objective. Due to the complexity of many of these programs, finding an advisor that will keep your specific interests a top priority is key. An advisor should help you evaluate the relevant variables to ensure you select the best structure. For example, if your operation is smaller and growing, you should have a plan that contemplates that growth.
Although fees are important, they must be evaluated on the level of service anticipated for operational considerations to drive product penetrations consistent with your overall goals. Consider that the true concern should be who will help you sell the most products for maximum profitability. A lower fee program may not be the best option for generating the most revenue. The best choice should be one that can help you drive millions of dollars into a reinsurance program that has considerable tax benefits. Choose wisely. Contract length and terms could keep you in an agreement for 10 years or more, with an advisor who may not have your best interest at heart.

It’s essential to pay continued attention to your program and stay informed about how the program is developing. Ask for recommendations to help maximize results and inquire if there are any changes you should make. Also, monitor trends like frequency and severity of loss and 30/60/90-day claim that could have an adverse effect on your program’s performance. Make sure your consultant provides updates on any changes in tax law. You can end up making costly mistakes if someone without the right level of expertise is managing your program.
Finally, evaluate structures and programs based solely on your own goals and objectives. You may like how a peer runs their operation or you’re seeing their success; however, it is crucial to keep in mind that their program was customized to meet their objectives, which could be quite different than your own. Make decisions about your reinsurance program the same way you would any other decision you make for your business.

Steve McLaughlin is Area Sales Manager in Philadelphia for Zurich North America. He can be reached at 610.716.2609 or via email at