Dual Perspectives on the Importance of Insurance Crafted Specifically for Modular Builders w/ OneDigital & Wilmot Modular

Welcome, everyone. My name is John McMullen. I'm the Marketing Director here at MBI. Today, I'm happy to welcome Nick Ververis, principal at One Digital Insurance and Mike Wilmot, CEO, and founder of Wilmot Modular. Nick and Mike are here to dive into the details of insurance and risk management for modular building projects.

Nick, let's start with you. Welcome.

 

Nick Ververis

Yeah, thank you, John, I appreciate that. Some people may remember me from years gone past being in the modular industry. To give you a little bit of my background, I grew up in New England, Providence College graduate and jumped right into insurance in the early 90s. My first insurance agency, which was really the segway into the modular business, I formed a company called Religious Benefits Services. I provided insurance products to various dioceses, archdiocese in New England, Mid Atlantic area. It was fantastic and through that connection with the church, the church explained to me that they were going to begin a long initiative of affordable housing. That affordable housing was going to be manufactured. So, I didn't really know too much about the modular industry at the time and this is maybe in the early 90s. But it really kind of piqued my interest.

So, I kept building my agency, building my insurance background, and I was fortunate enough to be introduced to a veteran in the industry, a fella named Greg Kelly. Greg was the former president of a really well known large integrated company called Arthur Industries in the 70s and 80s. After meeting Greg in 98, it just seemed like it was the opportunity for me to really do something fun and different. The whole industry just really kind of very, very much interested me. So, I sold my insurance agency, and we formed American Modular in 1998. We were a wholesale commercial manufacturer. We grew the agency, but it probably wasn’t the most opportune time to open a factory. So, things were a little slow, but we made it work. For the next 6,7,8 years, we were a wholesale manufacturer. Selling to dealers pretty much in the region of the country. Was proud to say in 2000, I won an MBI award, first place temporary factory housing. So, I'm proud of that.

In about 2004, is when I had an opportunity to get out of the business and get back into the insurance business. I had an opportunity to be bought out. So, I took advantage of it, jumped back into the insurance business, and we formed a risk management company in Scottsdale, Arizona called Alternative Risk Administrators. What I started working on were all my modular friends, recognizing that there is an issue as it relates to insurance in the modular industry. It became very apparent to me, even buying my own insurance, knowing what I know about insurance for American modular that the industry doesn't understand it. So, for the next I'd say probably 20 years now, in addition to building my own insurance agency, I've been doing basically consultant risk management to a variety of distributors, manufacturers and other affiliated companies in the modular industry and had a lot of success and enjoyment doing that.

 

 John McMullen

Well, Nick, that is quite a career journey. I was hoping to dive further into insurance and risk management given your very unique, very pertinent background. I know insurance for me is a pretty hazy thing. I know very little about it, I'll be honest, I know that insurance is good. I know that I want to be covered, but after that things get a little hazy. I imagine many people feel that way, especially when you get into the particulars of how to cover a modular building and all of its moving parts and different locations. So, I'm wondering, are there common misconceptions do you think about how insurance works for modular construction?

 

Nick Ververis

Well, certainly there are. Relating it back to the insurance industry, when the insurance industry does not understand risk, they price it horribly and you end up with a product that may not be what it could be. So, part of my quest, if I could use that word, for my clients was to basically have the insurance industry specific to a number of companies that we represent, understand fully the risk. When you really break it down the risk is not that bad at all. There are a couple of things that we'll talk about in a minute, but the risk is basically very low. Given my relationships with the insurance companies, they've really bought into my experience and what I'm doing for my companies, and they become comfortable. So, the industry definitely still looks at the modular industry very different than I think it would look at a traditional construction company. They just see the mud swinging on the cranes and they think the worst thing possible. Or the proverbial mod going down the road and a school bus being hit. I think the images that come to mind and all of that is connected to how they look in price and manage their insurance products for the customers. So, I debunk most of that for my customers.

 

John McMullen

So, what are the most important things you think modular building manufacturers need to think about when they're looking at insurance policies or providers?

 

Nick Ververis

Again, having a manufacturing background, I know workers comp is probably the biggest expense. That is a major driver. To clarify, I'm pretty much property casualty insurance. I do the workers comp, property liability, auto. My parent company, One Digital, whom I'm now part of that organization. We have 200 offices across the country, and they do everything from benefits to 401k, retirement planning, and the whole Mugello. To answer your question, there are a lot of options within comp to go self-insured, partially self-insured. What I found is my larger manufacturers, the companies or insurance companies they're working with either don't do it, they're not aware of it, or they're not comfortable so they don't offer it. I think that's one area that a lot of the larger companies could be looking at is partially self-funding or fully self-funding that workers compensation.

For instance, with audits, I get involved with audits with all of my clients. In a lot of cases, I actually do their audit directly with the insurance company on their behalf. The insurance companies like customers to believe that audits are black and white for the workers comp and the general liability. The fact is, it's not. It's very gray and classifications and things can change that could benefit the client. Most agents and certainly the client themselves, aren't aware of the other classification codes and areas where they could really do something to save themselves quite a bit of money. From the manufacturing perspective, too. If we've got finished stock, whether in the plan or in the yard, the manufacturer needs to know, is their insurance basically covering cost or would it be manufacturers selling costs? With the insurance company in the event of a large claim only pay the actual cost to build it or are they paying the actual retail value of that unit? Those are questions that I would ask, and I would kind of draw out from my manufacturers.

 

John McMullen

In your experience, are there particular policy details that might get overlooked by insurers who maybe aren't as familiar with the modular construction process? You mentioned earlier that a lot of providers don't really understand the industry yet. What have you been able to bring to the industry based on all of your experience?

 

Nick Ververis

It's not so much the insurance industry doesn't understand. It kind of comes to the actual person representing the agency that brings it to the insurance company. That agent really kind of needs to know all of the intricacies when it comes to, for instance, setting a modular building. I'm very, very particular about set operations, crane operations and transport. Those are my three big ones. If you don't ask the right questions of all your subcontractors, we don't know whether they're carrying the proper kind of rigor liability. We don't know what kind of actual coverage they're carrying on their transit coverage. So, when we order modular buildings and we hire an independent transporter to transport our 20, 30, 50-unit complex to a new site, there's a claim. How would that claim be adjusted? Is it only legal liability coverage, meaning if the transporter was not found at fault for causing the damage, their insurance company is not going to pay anything where the manufacturer was relying on them to provide it fully and the situation could arise where they wouldn't. So, you really have to kind of drill down into a lot of details. Those are three, four areas that I'm very, very particular on.

 

John McMullen

Gotcha. Okay. Well, now's a great time. I want to bring in a special guest for this episode, I introduced him earlier, good friend of yours, good friend of mine, Mr. Mike Wilmot. He's the CEO, founder of Wilmot Modular. I know, you guys go way back. Mike, of course, knows the industry inside and out. I was wondering if you could both talk a little bit from your opposite perspectives. Nic, here, an insurer. Mike, you're a dealer. Perhaps you can speak about the value of good risk management for modular construction companies and what it means to really be insured as a manufacturer or dealer.

So, Mike, I'll turn it over to you. Welcome.

 

Mike Wilmot

It’s good to hear from you, John, and Nick. It's really interesting because Nick brings a very unique combination of being a modular veteran and also a risk expert. To find those two in one industry is really tough to do. As your company grows, whether it be your fleet or your modular construction site, constantly evaluating the risk is a very critical management decision for smart growth. What Nick's been able to do over the years is to not only evaluate our best insurance coverage, but also probably the best value. Where he's been unreplaceable is making sure that he's mitigated our risk. There are really two types of risk in our industry.

You have construction risk and then you have capital risk. Capital risk, I take on with the bankers every day. I thank God, I have Nick out there to take on the construction risk every day. It's a unique program, he works with our construction team, they evaluate the different risks that each project takes on and it's been invaluable with his insights of how to protect the company in case something does go sideways. It's been a very smart thing to do. Not only has his advice helped us get the best value out of the insurance, but its protected the company in the long haul.

 

Nick Ververis

Yeah, Mike, I really appreciate that. I was looking at our history, and you and I are coming on 15 years of me being your risk manager. So, it's been quite a while. I was excited knowing that you would join me on this. Mike used a very important word and that was mitigation. The hallmark of any good risk management plan is the proper preparation work prior to really anything beginning. So very common, I receive contracts, purchase orders, I want to review all of them for the insurance applicability. We make sure that the insurance certificates that are provided by subcontractors are meeting our standards. We've developed a master subcontractor agreement for Wilmot, which they use. Mike and his team understand that if it's not vetted and they don't meet at least all minimum standards of what we require, we can't use them as a subcontractor. That is just solid, good risk management.

It's all called risk transfer and really making the person who ultimately may be responsible for an issue, be responsible and not have it default to Wilmot or one of our other customers for an issue that's really not theirs. So, it's important stuff. On the distribution side, I don't know if a lot of companies really drill into that and to have that level of understanding of what they need to be looking for. Thanks for bringing that up, Mike.

 

John McMullen

So, my question for you, as a company owner, as a dealer, what are you mindful of from a risk management standpoint? When you and Nick sit down to craft a policy to see what needs to be covered, what are the big areas of concern for you? You mentioned capital earlier, but really, what protection are you looking for from a risk management standpoint?

 

Mike Wilmot

What happens here John is the big side of the risk on this business is the construction side and Nick hit the nail right on the head. You’ve got to make sure that all your subcontractors are fully covered and that you have current certificates that they've all been in actuation and are in use. I think the most important mitigation risk that you can have is making sure that everybody's covered so that the risk transfer is moved to the people actually doing the work. Most construction people know that and it's true in the modular business, too. You really have to have vetted subs so that they have the proper insurance in place. The safety these days is so critical. You can't even get on to the major sites without an EMR below one. Nick has done a magnificent job with our safety team to make sure that we've done that.

 

John McMullen

What's the process for making sure that everyone is covered? If I'm a new dealer or a new manufacturer, and there seems to be more every day, which is great but how do they go about making sure that all the subcontractors or their partners are suitably covered?

 

Mike Wilmot

You basically go back to each of your subs, and you require risk insurance as you go on to the site. There has to be certificates of insurance issued, they have to be on file, and they all have to be current. The way we do it is our administrators will not issue them a purchase order until that's been fully executed back to us.

 

John McMullen

Okay, so as an insurer, Nick, what's your best advice to those in the industry looking to add to an existing policy or transition to a new policy? Is there homework that they need to do before such a change takes place?

 

Nick Ververis

Yeah, great question, John. We've discussed a lot of terms and concepts such as risk transfer, and mitigation, and all of these things are really important. I guess it comes down to an understanding of whether whoever's listening to this podcast feels that they have what I would refer to as a bullet proof plan. The confidence that the trusted professional, the agent who is providing the insurance coverage, really understands the risk as it's presented, and has developed a plan that really does capture all the different nuances of the modular industry. It's a very unique thing so that is probably my best advice. To really have that knowledge that you've got the right program in place. With a well-designed risk management plan, with all the proper components in place, it then comes down to implementation.

I've also found that that's an area that a lot of modular companies need assistance with. There are a lot of different factors that go into making sure that they're collecting all the right information from not only their subcontractors, but their lease customers who need to be providing certain protections to the customer as well. So those are important factors. You know, I've seen all kinds of losses. I've seen fatality claims, I've seen major auto transport claims, and I can tell you this stuff does happen, and it can be pretty horrible unless you again, have a bulletproof plan. That's what I certainly think that everybody should really come to the realization that they have. I also wanted to take this opportunity to remind everybody to seriously look at and consider if they don't have it, cyber liability coverage. We have seen just an onslaught of issues and claims over the last couple of years and the cyber criminals are becoming very, very sophisticated. I think that tends to be a coverage item that is somewhat overlooked. So, while I have everybody's attention, I want to ask them to maybe reconsider and relook at their current plan to see if that's something that they have in place. It's not a matter of if you're going to be attacked at some point, but everything that we're reading is it's just a matter of when. Again, wanted to resurface that and that's pretty much it.

 

John McMullen

Thank you and yes, you're absolutely right. What's the best way for listeners to get in touch with you if they have questions, Nick?

 

Nick Ververis

Well, thank you. Yeah, as you and I were talking earlier, John, I don't know what it is about the modular industry, but once it gets in your blood, it's in your blood. I love the industry; I always have, I always will. Now that I'm back as a member of MBI, I really kind of want to hold myself out as a friend and associate. I want to be able to give advice to anybody who needs help. They can certainly reach out to me. My email is my first name and Nick dot Ververis. V as in Victor, E, R, V as in Victor, E, R, I, S at one digital.com. My office phone is (860) 658-6500. Certainly, anybody can call me anytime if they just want to bounce something off me. I'm here to see if I can help everybody.

 

John McMullen

Excellent. Thank you so much Nick and Mike. I really appreciate your time today. I know sometimes people get cross eyed when thinking about insurance, but it's a very important topic. Nick, I know we're going to be doing an article all about insurance for modular construction and an upcoming issue of Modular Advantage. I'm really looking forward to that. Thank you both again, just for sharing your time with me to shine a light on both sides of this issue for us today. Thank you both.

 

Nick Ververis

Thank you very much. I really appreciate the opportunity.

 

John McMullen

My name is John McMullen, and this has been another episode of Inside Modular: The Podcast of Commercial Modular Construction. Until next time.