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A good CFO is forward-thinking and handles debt and equity with long-term strategies in mind. The difference between a good CFO and a great one is the ability to analyze data and use that to project the future financial picture of the company.
– Marco Maranzano, Vice President, Robert Walters, New York
Few things change the financial health of a company like a targeted program designed to mitigate risk and increase profitability. Understanding the financial building blocks and ongoing management of an effective resident risk management strategy to meet the needs of large multifamily and single-family portfolios is crucial.
Effectively managing the deployment, ongoing administration, and cash flow of such a program frees up the executive team to focus on essential tasks.
Here are the steps for ensuring your resident risk management program meets your needs:
1. Historical Review: A Comprehensive Analysis
√ Losses: Successful program design should start with a five-year loss history. How impactful have occurrences resulting from resident negligence been?
√ Subrogation: Has effective subrogation against policies secured by residents been obtained?
√ Renters Insurance: The average price of renters insurance is $188 annually. A best practice is to include the cost borne by residents for complying with lease requirements.
2. Framing The Future: Program Design
√ Fee Management: The most successful programs combine a three-part approach to resident risk management; renters insurance, certificate management, and fee management. The decision must then be made on where to allocate fee income; in a loss fund, captive solution, or master policy.
√ Fee Allocation: When your solution involves driving money to a captive or loss fund, proper allocations of funds to support your historical loss rates are critical.
√ Operational Considerations: Lease wording, certificate tracking, deployment across a portfolio, training, and marketing are all fundamental for a resident risk management program that is successful and profitable.
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