Multi-Family & Commercial
Real Estate Case Study

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Background:

Owners with substantial holdings of multi-family real estate properties struggle with deciding on what type and level of insurance coverage is appropriate. Oftentimes, commercial insurance is either expensive, requires significant deductibles, and/or has a number of exclusions in the policy. As a result, the owner winds up “self-insuring” by default a number of risks that may prove to be catastrophic.

Risk:

Owners of these properties forgo commercial insurance without any thought to an alternative. Any significant loss (i.e., earthquake, flood, etc.) could meaningfully impact their balance sheet. There are also losses that may not be as severe but happen with much more frequency and are being self-insured (i.e., termite/bedbug infestation, mold, pollution liability, etc.). These types of risks are typically not covered under their commercial policies.

Solution:

A captive insurance company is established to insure the risks of its owner and affiliated companies. When properly structured, premiums are tax-deductible to the company and received tax-free by the captive. The captive serves as a more efficient method of self-insure. As the captive insurance company receives premiums every year, the increasing capital and surplus serve as an efficient pool of assets for any future losses.

For larger real estate portfolios, the captive insurance company can also serve as a revenue generator. Tenant/Renters Insurance is a highly profitable product for the carrier. The owner of a captive insurance company can provide that coverage to the tenants in their properties and thus participate in meaningful underwriting profits.

A captive insurance company can be a very unique and flexible tool. It affords the owner a better way to manage their risks and protect their wealth.

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Practice Leader(s)

Max Jong

Captive Practice Leader, Managing Director

Max Jong

Max Jong

Captive Practice Leader, Managing Director

Max Jong is the Captive Practice Leader and Managing Director at Risk Management Advisors, an alternative risk and captive management firm.  Max began his career at Northwestern Mutual in 1994 after graduating from UCLA.  Over 12 years, he built a successful financial services practice while heading up an office overseeing 50 professionals in Los Angeles and Irvine, California.  The office was perennially one of the top producing organizations in the Northwestern Mutual system.

Max joined his partners at Risk Management Advisors in 2007 as he began to work with more sophisticated mid-market business owners.  RMA specializes in the design, formation, and management of captive insurance companies.  There’s also an emphasis on self-funded group benefits as well as other creative alternative risk management strategies.  The firm assists business owners in better managing their risks without jeopardizing their balance sheets.   In 2019, he headed up a merger with Risk Strategies, a Top 10 private national specialty insurance brokerage and consulting firm.  Since then, he was appointed as the Captive Practice Leader to oversee the growth and development of the organization.

For five years, Max served as an Independent Director for Fiat Lux Risk and Insurance Company, one of the largest and most sophisticated captive insurance companies. Fiat Lux was established by the University of California Regents to better manage the broad risks of the University of California system.

Max has also been a lifelong supporter of Big Brothers Big Sisters of Greater Los Angeles. He initially volunteered to be a mentor in 1995 and is currently mentoring his second "Little." Max was asked to join the Board of Directors in 2000 and eventually served as their Board Chair. After 20+ years as an active board member, he continues to support the organization by serving as a Trustee.

He is married to Alice, and they’re raising two young children, Hunter and Hayden. Max and Alice are happily married despite her irreparable mistake of going to USC. He loves to travel, golf, and is a hopeful Lakers fan.

Mike DiMayo

ACI, CFP, CLU, ChFC
Managing Director- Oxford Risk Management Group

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