Questions businesses need to ask NOW to save money on insurance.

Questions businesses need to ask NOW to save money on insurance.

Constructing Brands Podcast

Episode #24

What You Will Learn:

In the latest episode of GWP’s Constructing Brands podcast, we speak with Stan Hladik, President, and CEO of The Secret Insurance Agency in Totowa, New Jersey. In the wake of COVID-19, businesses have suffered significantly. In this episode, we discuss these challenges and Stan offers critical information businesses need to know to start saving money immediately. There are tools offered by insurance providers that are built to save businesses money, help with cash flow, and reduce premiums during this difficult time. This podcast will help you understand the opportunities available to you, the right questions to ask, and how you can start saving money and getting your business back on its feet.

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Intro (00:03):
Building materials manufacturers run a complex business, but we are here to help you plan for the future. Whether you are launching a new product, rebuilding a brand, trying to get thoughtful communication strategies in place or everything in between. Here on Constructing Brands, we will be talking with leading experts in construction, architecture, engineering, marketing, and manufacturing to help make your building materials company stronger and more profitable. With 15 plus years of experience, helping building materials companies succeed and grow your host, Eric Lanel.

Eric (00:43):
Good morning and welcome to Constructing Brands. This is the place where people in charge of building material companies, hopefully get some great insight and hear from experts in all different fields. And also hear from people who are in it themselves, who are running building material companies and are working through the challenges of every day and all the challenges that come with all the strange times that we currently are in. So with that said, I am so happy to have our next guest on. Stan Hladik is a guy who I’ve known for years and years. Stan runs The Secret Insurance Agency and Stan insightful, knowledgeable, incredibly intelligent, and really under Stands all the different ways to work with insurance, to protect you, to sleep well at night, and if Stan will let me, I’ll tell a quick little story about him, but before I do that, I just want to welcome you Stan. Welcome to Constructing Brands.

Stan (01:41):
Thanks for having me, Eric. I’m glad to be here. I love your podcasts. They’re awesome.

Eric (01:46):
Thanks Stan. So full disclosure, I’ve known Stan for years and years personally, tree falls through my roof, like the Jumanji thing it’s literally through a branch is through the ceiling. And my wife…

Stan (02:01):
That was a bad night.

Eric (02:02):
My wife runs upstairs holding our two year old at the time. Who’s now 25. So our two-year-old in her arm and she said, I heard a loud bang. Do you know what happened? And she’s not seeing what I’m seeing. I’m seeing a branch like Jumanji coming through our roof, water coming in. And she’s looking at me not knowing like what I’m looking at with my mouth wide open, I’m sure. Anyway, long and short I call Stan. And I said, what do you think? And he said pack up your family, go over to the Short Hills Hilton. I know that they have a wonderful bar I’d order, a nice glass of wine. Take a deep breath and we’ll take care of everything. You’re good. And I don’t think anybody could have said any words that would have been more comforting at that one moment. And so what started as just a lot of trust turned into a lot more trust and a great relationship. So when Stan speaks, I kind of listen and I thought that I’d want to expose my audience to Stan because he kind of is that secret, hidden gem that I think the world needs to hear about. So Stan, The Secret Insurance Agency, before we get started, the name, where did that come from?

Stan (03:19):
The name? Well, you know after 25 years in the business, it was my time to, my ex-partner was retiring, and I had to set up my own agency and I didn’t want to call it the Hladik Agency because nobody could pronounce it. Nobody could spell it. So I came up with the name. I certainly bounced it by you as well, which you were a little hesitant at first saying, oh, we don’t want to keep secrets from someone, Stan. I said, no, no, no. The secret is positive. It’s about gratitude. And you then came back to me after talking to your team and you said, you know what? We’re going to tell your customers and clients and confidants, all the secrets that their current broker doesn’t want them to know. And I’m glad we picked the name because we’re going on our 5 year anniversary this June and nobody forgets the name. We are now the largest agency in Passaic County we’re growing. And we are what I like to say, Secret Agents. We who would want to grow up to be a secret agent. We protect our clients, just like we protected you that night. And the biggest thing about our team here is we pick up the phone. They do, as I would do when that phone rings at midnight, someone needs you for a reason. We take it very seriously. You know, we’re kidding around here, but to be someone’s advocate for them to give me total trust, to ensure their personal items, their business, their livelihood, life insurance, whatever they need, they’re coming to us with trust. And we are going to value that trust and be their advocate 24/7. And that’s what the Secret is all about.

Eric (05:07):
I love it. And I still remember the knee jerk reaction and I still question the name until we do campaigns and then I love the name. So it opens the door every time.

Stan (05:19):
Well, I’m glad because I would have taken your advice. I mean, you’re the best marketing mind I know. So when I was in that, you know, disarray, we had to go to the insurance department before you can go to the IRS and then you got to go back to the insurance problem. We need to pick the name, Eric, well, this is no good. And I’m like, why not? Nobody else has it. And then an hour later, you’re like we love it. And I’m glad we did, because like I said, I rarely don’t get compliments over it and people remember the name. And we have been for 5 years, we’ve been telling clients what they need to know the secrets of the intricacies of the insurance business to their advantage. And don’t let the insurance companies have the upper hand.

Eric (06:00):
So with that said, let’s jump right into it. So my audience for the most part are people who are responsible for making decisions, that guide building material companies during this interesting COVID time that we’re in. There has been a lot of other stuff that we’ve talked about. And I’ve had Stephen Katz, a really knowledgeable attorney on talking about the whole PPP loan and different ways to kind of maneuver through that. Can you tell us both general and maybe specific to a manufacturer, what things that they might want to know or think about at this moment in time specific to ways to cover your self or make sure that if in fact this period, of this pandemic comes back in six months, how is the, are there any insurance opportunities that they could think about?

Stan (06:58):
Yeah, so let’s start with COVID on a general basis. And then we’ll segue into construction materials and manufacturing. For all of my business clients, it’s been very difficult since March to explain to them that the industry is not going to be able to respond to their business income losses. For 95% of us, we’ve all had some type of commotion revenue hit expense issues, cashflow problems, etc. And typically, you know, when a building’s on fire, you have business income. When a hurricane rolls through you have business income when there’s an explosion, you have business income. And to this day there’s not been one business income claim in the United States that’s been covered. They’ve all been denied. You will read about multiple lawsuits and it’s pretty clear on the property side, there’s an exclusion for virus, right? So even though the government has shut most of us down and now most of us hopefully will be reopened in the next week or two here in New Jersey. There is no physical manifestation to the building that triggers the claim. So thus there’s no business income to be paid. And you mentioned the PPP. I mean it’s a wonderful thing that the government figured out that if the insurance industry can’t help these businesses, we have to figure out a mechanism. I’m going to liken it to terrorism. If you remember the horrific events of 19 years ago when the Trade Centers had that, there was a terrorism problem and you couldn’t sell building insurance in Manhattan or major cities because people were concerned with the terrorism issue back in 2001. So the government created to this day, it’s on every policy, a terrorism risk insurance fund, where the government backs the insurance, like 98 cents on a dollar. And you’ll find that’s going to be what happens once we get through COVID-19 hopefully we never have to go through a pandemic again, but I believe there will be pandemic insurance where the insurance companies will be able to reimburse every business owner with the knowledge that the government is then refunding them the money. So it’s a different way from PPP, it’s funneled through the insurance industry, more so to the businesses that truly need it and really lost the money, but that’s not here yet. It’s not going to be available yet. And really, I would say, as long as the PPP is still available, which there’s funds left, from what I understand, and you have to apply by June 30th, that’s what we’ve been advising all our clients to do now that most of them are getting their employees back in order by Monday. On the flip side, and this is very important for businesses who have reopened and who are reopening. And I get this question, you know, if not 1 time, 100 times a day is, am I covered if there’s a suit from the reopening and we have something go wrong, right? Whether it be the masks or the social distancing, you know, we’re going to try and follow protocols, right? We have guidelines from the CDC. We have guidelines from the governor. What happens if something goes wrong? So for the most part, the insurance policies don’t have liability exclusions. So, you know, you should check with your broker, but I’ve been telling all of my clients feel comfortable, do the best you can and if there is a lawsuit from a customer to you over your protocols of reopening, you’ll be defended and covered to the extent of your liability coverage. So people should feel comfortable with reopening and following the guidelines, but knowing that their insurance company has their back there.

Eric (10:45):
That’s great to know.

Stan (10:46):
I will tell you that another piece of this is to make sure, and it’s one component of many insurance portfolios that is forgotten. There’s a thing called employment practices liability. And it’s a very important thing for employees who come back to be comfortable with. I’ve been told by my networking attorney friends, that fear is not an option. If a business reopens you, can’t not come back over fear. And you then can say to the employee, look, you have to come back. I need you here, or I have to terminate you and replace you. But you could set yourself up whether they come back and are afraid, or whether they don’t come back and you terminate them, you could set yourself up for an employee versus employer suit, and you have to make sure that EPLI, Employment Practices Liability Insurance, as part of your portfolio. It’s an inexpensive line of insurance, EPLI is the acronym Employment Practices Liability Insurance.

Eric (11:52):
And is that something that typically companies would have?

Stan (11:55):
The law says, if you have one employee you need workers’ comp, right? And unfortunately only one out of every four clients has EPLI. In my opinion, if you have one or more employees, you need that just like you need workers’ comp, but the state doesn’t mandate that you take it. And sometimes people either aren’t offered that by their broker, or they just say, well, I don’t need it, we have a family atmosphere. My employees aren’t going to sue me. Well, a lot of things changed with coronavirus and COVID-19. And I think a business owner really needs to look at his program immediately and make sure that if an employee sues the employer over anything to do with this, and it covers other things, we haven’t mentioned. Harassment, discrimination, you know, we live in times that, you know, something could just be misconstrued in an email or a conversation and an employer can lose everything they built over, you know, a situation that one of their employees causes by their words, their Twitter, their email, anything. So I really, I want to stress that in this podcast for employers to look at, well not only carries it across the country, though, that coverage in it, and it grows every day as people get educated on it.

Eric (13:13):
So just recap, first thing, EPLI, if you don’t have it look into it, it’s not just for this, but if you are planning on reopening and you have people who are working for you, who maybe are not sure if they want to come back.

Stan (13:30):
Fearful, if they want to come back or come back and they say, Hey, so-and-so’s not wearing a mask. Or why are you letting five people in the kitchen at once using a community Keurig? You know, who knows what’s going really turns.

Eric (13:45):
All the things that are going to happen by the way that you know, that are going to land.

Stan (13:49):
They’re going to happen.

Eric (13:49):
They are going to happen. So the only question is, are they going to happen? And are people going to potentially leverage this, possibly for reason to say that their company wronged them? And if that’s the case, if for whatever reason they and by the way, they don’t have to be wrong to do it. They might just really be scared right now.

Stan (14:14):
Suits happen all the time, it’s their opinion. And we have to defend ourselves. So as business owners, what I’m saying is transfer that risk to an insurance company rather than bear the burden. We’ve got enough things going on.

Eric (14:26):
Makes perfect sense. And that could be picked up at any time. There’s not an issue right now. There’s no preexisting condition loophole?

Stan (14:34):
So it could be picked up any time. And it won’t cover things that happened in the past, but it’ll cover things moving forward. And it depends on the carrier. Some of them put a condition that if you lay off more than 10% of your staff over, COVID-19 that that’s an exclusion for now. And I understand that because if a business hasn’t carried that, and they’re worried, they’re going to go from a hundred employees down to 50 and you have 50 people suing, an insurance company doesn’t want that risk. So they’ll ask the questions, what are your plans? And they might put more than 10% of personnel force downsizing will be excluded for the first year, but so many other things would be covered. You need to buy it with the exclusion and then work your way through and take that off on the following year. But it is attainable and we at the Secret would be glad to get anyone quotes for that right away,

Eric (15:28):
To your point, if you already have it, you don’t have to worry about any exclusion that would be come along with a new person getting it. So here’s one of those minutes were, gosh, I’m glad I listened to you back then and got it, because I didn’t realize that all this stuff might happen and now I might really need it more than I maybe never realized. Is that accurate?

Stan (15:52):
True. That’s a great statement. Because insurance I’ve always said is like buying air. You know, you don’t need it until the tree falls through your roof, right? And then you realize, gosh, I’m glad I have it. And if you’ve had that policy, and unfortunately, if you do in these tough times, have to let you know, maybe 10 to 30% of your workforce go and you have some lawsuits over that wrongful termination, this policy cover you. And I’m glad we have a lot of policies in place for some of our clients who are suffering right now.
Eric (16:26):
Okay. EPLI, what other things maybe do we need to know about?

Stan (16:31):
Real important, so everybody needs to know this as long as you’re with a name brand admitted carrier. So I’m going to say, you know, all the names that we kind of know, right? Travelers, Hartford, Liberty Mutual, Selective, Nationwide, Hanover. Gosh, I hope all my insurance companies, I represent 50. Don’t listen to the podcast. The other 45 will be mad at me, but the names of the carriers, you know, you can furlough your premiums until August 1st. So this is real important. I’m going to say it again. You’ve been closed. You’ve been shuttered. Maybe you’ve been open, but you just haven’t gotten the right revenues. And now your insurance bills are kind of backing up and maybe you could afford to pay them, but you can’t pay rent or you can’t pay this. The insurance industry has a mandate in it from the New Jersey department of banking and insurance. So I’m speaking to New Jersey clients right now. Each state is regulated differently, but New Jersey businesses can call their insurance company, ask to furlough their premiums until August 1st and then starting August 1st, whatever the balance is, let’s say you run January to January and you have a $30,000 balance on 60,000 of premiums. Right now, you can take that 30,000 and divide it into 12. So now you’re only paying 2,500 a month from August 1st to July 1st, 2021. So it’s a cashflow mechanism to help small businesses and large businesses, it works for any business, maintain their cash for important things, inventory, operations, payroll, and then the insurance industry will get their premium payments on the backend. So this money on this payment plan even can go into your next renewal. Now, obviously, if you’re renewing January 1st, you might now have double payments, right. For January and last year’s furloughed plan, but it gives you options and people, that’s what we need to give people right now. I mean, and if we’re your advocate, I want to help you with your cashflow. And there’s no, there’s no late fees. There’s no cancellation and there’s no interest. So I would like on this podcast, everybody to understand that it’s a big advantage to take care of. You just have to ask for it. And I don’t think there’s a stigma to ask for it.

Eric (18:55):
So I’ve got, EPLI really, really smart thing to look at. I’ve got the furlough. And what would people ask for, they call their insurance professional and ask for the possibility to furlough, their premiums until August 1st?

Stan (19:11):
Yeah, you have to go directly to the carrier. The agent can’t do that for you, but certainly the numbers should be on their bill or they could, my clients call me and I give them the number to speak to the insurance carrier. And they basically work out a payment plan that works for them. So if you don’t want to use the full 12 months, because maybe your renewal is in November, and you don’t want double payments starting in November on the renewal, you can say, hey, can I just furlough June and July? And then I’ll go August, October, I’m sorry, August, September, October, November. And then I’ll be ready for my renewal. So it’s a lot easier, you know, just to get that extra 45 days, 30 days, whatever. And then, you know, get it paid off so that you have money coming in, hopefully with, you know, things, you know, bouncing back a little bit and industry opening back up again in June that, you know, money will be coming back in and you can pay it off quicker at any time. It’s just trying to give you a better cashflow terms.

Eric (20:14):
What a great solution to a scenario that so many people are stepping into. What other things Stan do we need to know about right now?

Stan (20:24):
Well, what you need to know too. And it’s amazing. I think I’m one of gosh, I, you know, obviously you’ve been talking to my peers throughout this seeing, what they’re doing, but I’m one of the few agencies who’s reopened and stayed open during the crisis. We were considered essential as financial services. So we have our team here you know, 75% of staff is here. They worked from home for, you know, a month and a half close to 2 months, but some people are staying home, you know, who for certain reasons or risk factors and that’s okay too. But what we’ve been doing is proactively calling every one of our clients. And this is important. Follow me here, payroll sales, right? Your hit for those 2 months or 3 months, are in your policy premiums, whether it’s workers’ compensation or sales under general liability, and your broker can adjust those policies, now. When I talked to my clients back in April, I was like, well, it doesn’t matter if we adjust them in April or we adjust them in June. Let’s wait until you reopen and see what the hit is. But, you know, I have some larger businesses, caterers. I don’t know when they’re going to be able to reopen, right, but let’s make the adjustments to your policies now, rather than wait for the audit, you need this premium relief, now, even if you furlough it, why do you even want to pay that in August? Because those sales aren’t going to be there in 2020. So when, when my clients speak to a Secret Agent, what we do is we work with the carrier to reduce maybe 20, 30% on payroll and sales, so that immediately they see that relief in their bills.

Eric (22:10):
Wow. So, the translation, what I’m hearing is because your sales have dropped because possibly your payroll is down. Those are the factors that go into a premium. And so by sharing where you’re sitting right now, you can adjust that premium so that it actually reflects the business at the moment.

Stan (22:34):
Right. It’s fair because if you didn’t have the payroll, you know, why should you be paying that premium and be waiting for a big refund next February? It doesn’t make any sense? And there’s an additional thing I want to point out without getting too technical, but New Jersey and the country created what’s called an idle employee class for workers’ comp. So, you know, workers’ comp manufacturing has manufacturing class, it would have clerical, it might have outside sales, correct?

Eric (23:04):

Stan (23:04):
That might be the three classes for our construction materials you know, customers who are listening to the podcast. So let’s say they got PPP funds in April or May, but they weren’t at full capacity. Maybe the employees were getting payroll, but they were sitting home. So we’re talking about people not working from home, you know, but just idle, but getting paid. So if you look at the PPP, it doesn’t cover workers’ comp premiums. And while clerical is a nominal rate manufacturing or any type of construction or distribution or trucking classes, it’s 10 cents on a dollar that you pay someone. So you talk about sometimes tens of thousands of dollars each month that go to workers’ comp and you could get those premiums completely waived, even though you had the payroll. So, the payroll never dropped because you had the PPP, but now you should get an idle employee credit from your workers’ comp carrier. And unfortunately, there’s so many agencies that are still closed, or I’ve been hearing from referrals. They haven’t been able to get in touch with their broker. And I have been providing this advice to, you know, those potential clients. So the Secret, you know, so that they can use that. Now they need that help now and can avoid those high expensive workers’ comp premiums.

Eric (24:24):
So it’s called?
Stan (24:27):
Idle, IDLE, idle employee class. It’s a 0 rate it’s as if the payroll doesn’t exist, because there was no risk for that person to get injured at home.

Eric (24:40):
So, yeah, it makes perfect sense. And quite frankly, never would have thought to ask it, but the fact that you’re bringing it up, it just speaks to the knowledge. Thank you so much. Is there anything else, because I mean, I’ve got the EPLI, I’ve got the furlough premium, I’ve got the idle. What other things, is there anything else that our audience needs to know about?

Stan (25:05):
I like to speak to something that I feel is unique. I know, you know, a lot about our Secret Sauce 365, right. And what we uniquely have made a proposition to our valued clients. And this is something that well prior to COVID, and I probably asked the question when I started in the business 30 years ago, every business owner or personal client wants the same thing, right? They like the lowest rates possible, right. And no gaps in their coverage, right. It’s always the same answer. What do you want from your program? And we feel that in Secret Sauce 365, we have a risk management products that besides procuring insurance, for someone we’re able to go into an industry, you know, like the construction materials industry and help them gravitate towards best practices. We have software where we can rate, grade them on a scale of 0 to 100. And then let’s say they score an 85. Well, what are the 3 to 5 things that could get them towards 100? And these are things that are going to reduce claims and have their insurance underwriter look at it and say, wow, this is a company that is buying into safety management, taking care of their employees, making sure their contracts are in good order for risk transfer for let’s say something like product defect, right? So we’re selling the materials, but where did those materials come from? Do they come from Asia? Were they domestic materials do we have the right insurance certificates in place so that if something goes wrong and there’s a product defect, or even a recall that we can transfer that expense risk because it shouldn’t really be our problem. It should be someone else’s problem, but you need to have that paperwork in order. And if we could do all that two things happen, Eric. First we lower claims, right? We were able to shift them elsewhere or from a workers’ comp perspective and make sure they don’t even happen. And number two is the insurance carriers will give us upfront credits because they see us doing all these things that they know are going to help reduce the claims. And that’s all insurance is it’s a risk and a bet that there won’t be claims and we’re able to solve exactly what people wanted. We’re getting them lower premiums upfront, continue to keep driving those premiums down by giving them good safety management and low claims. And then the second part, if you remember was making sure they have no gaps, we’ll make sure they have that EPLI. We’ll make sure they get the idle employer class when times are tough. We’re we’re going to tell them the secrets that there are other broker isn’t letting them know.

Eric (27:56):
So for people listening, maybe we could send them to a spot where they could get more information on this.

Stan (28:03):
Absolutely. It’s a spot you created my friend. I get compliments on my website at least every other day, just type it in T for the S for secret I for insurance and you will see more about the Secret Sauce. What makes us tick here? You’ll have a list of all our great carriers we represent and you know, we would love to hear from them. They could just click and let us know they’re interested in a quote and we’ll be back to them right away.

Eric (28:35):

Stan, thank you so much for spending so much of your valuable time here today. And gosh, it seems like if I’m counting, you just gave us three ways to immediately view opportunities to maybe reallocate and save some money right now when we need it most and also look at aligning our business for future success, the Secret Sauce. Gosh, thank you so much. I always joy speaking with you, but I always remember how much I get out of these conversations we have. So I’m glad we were able to share it with all the folks listening.

Stan (29:10):
Thank you, Eric. You’re a great friend. Thank you for having me. As I said in the start, I love these podcasts and we’re all in it together to help each other through the tough times. So keep up the great work and getting this information out there to the people. You’re awesome, you and your team are awesome at GWP.

Eric (29:28):
Thanks buddy. So now, if anybody wants to get in touch with you, what is the best way that they could get in touch with you, Stan?

Stan (29:34):
So, like I said,, just click and let us know your information. We’ll be in touch. Obviously our phone number is (973) 812-7327. I’ll give you that one more time. It’s (973) 812-7327. Obviously if you’re calling ask for me, I want to speak to you directly. I want to see what’s going on in your life and your business and help you out.

Eric (30:02):
And that’s Stan Hladik from The Secret Insurance Agency. Thank you, sir.

Stan (30:06):
You’re welcome, Eric. See you soon.

Eric (30:07):
See you soon.

Conclusion (30:08):
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