The Fruits of Long, Hard Labor
It was back in the 1970s that one of Albert Fierro’s professors, an ex-insurance broker, tapped him on the shoulder and asked him if he’d given any thought to the art and science of insurance captives.
The term was new to Fierro, but not for long. He ended up writing his master’s thesis on the topic.
Now, more than 40 years later, Fierro’s expertise in captive formation is benefitting AARP Inc., where he serves as director of risk management.
Over the past three years, the Andrus Insurance Fund LLC, the AARP captive for which Fierro serves as president, has returned more than $7.5 million to the parent organization. For those not very familiar with AARP, it does much more than manage discount programs for those of us over the age of 50.
The organization also offers job training to low-income seniors, programs to help the homeless and efforts aimed at ending hunger among seniors. So that’s $7.5 million in just three years that can go back into those programs instead of being spent on insurance premiums.
Like many in insurance and risk management, Fierro doesn’t operate in the limelight, but his work is vital.
“A lot of our work is done behind the curtain but it does literally and figuratively pay off dividends for our program,” Fierro said.
And like many good things, the fruit that Fierro’s work is now bearing has its roots in actions initiated years ago.
As the hard markets that were making life so difficult for so many persisted in the aftermath of the terror attacks of Sept. 11, 2001, Fierro and his fellow AARP administrators were struggling with high workers’ compensation premiums from commercial carriers.
AARP runs a job-training program for senior citizens, known as SCSEP, for Senior Community Service Employment Program. The program is supported by U.S. Department of Labor grants and helps disenfranchised senior citizens find employment, albeit many times at minimum wage.
Given that the program employs seniors, the severity of its workers’ compensation claims are high. A slip and fall can easily turn into a $100,000 claim, according to Fierro.
Fierro, a veteran of captive formation who had helped to form the first insurance pools in California in 1976, believed that a captive was the solution to help AARP combat high workers’ compensation insurance premiums.
“The carriers are still involved with us, but we gave them a haircut,” said Fierro of the higher retentions that were part of the first pieces of the captive that were put in place in 2007.
The first wave of exposures housed in the captive included workers’ compensation, general liability and property.
More recently, the captive added employment practices liability and medical stop loss, and its managers are considering taking on some D&O exposure.
Having added a gym and in-house wellness program, Fierro thinks AARP can find further success with the captive’s medical stop loss program.
“Albert Fierro is a proven leader and innovator in the nonprofit sector, reclaiming dollars for the mission through the effective use of a captive as a risk financing vehicle for both P&C and benefits,” said Peter Persuitti, a multiple Risk & Insurance® Power Broker® award winner and a managing director of the nonprofit practice at Arthur J. Gallagher & Co.
Gallagher supports Fierro’s work through its TPA Gallagher Bassett and provides actuarial services for the captive.
Albert is also being recognized as a 2015 Responsibility Leader®.
Illuminating the Darkness
When we spoke to him, AARP’s Albert Fierro thanked us for shedding some light on the corner of the world he works in, managing risk for AARP, formerly known as the American Association of Retired Persons.
There is a lesson in Fierro’s humility.
Consider for a moment the impact of the work he does. By returning millions in equity to his parent organization through his innovative work in captive creation, Fierro is helping to expand programs that serve a vital social need.
His work helps fund programs that provide nutrition for low-income seniors. His work helps provide funding for those over 50 who might be homeless, looking for a job but lacking the necessary training.
His work ensures that money that would have been spent on premiums to insurance carriers is instead funneled back into an organization that has no profit goal, only a public service goal.
Albert thanked us for this attention.
But to Albert Fierro and Peter Persuitti, the multiple Power Broker® winner from Arthur J. Gallagher & Co. who nominated Fierro and whose nonprofit practice supports not only Fierro’s work, but the work of other nonprofits, we can only say, no, thank you.