ACA International Members Discuss Risk Mitigation Programs & Reducing Insurance Premiums | Ep 188

Adam Parks (00:01.294)

Hello everybody, Adam Parks here with another episode of Receivables Roundtable. Today I'm here with a group of friends from the ACA world here to talk to us about the ACA Insurance Program, what it is, why it exists, and why it's important for the receivables management industry. And today I'm actually with some industry legends. So gentlemen, thank you so much for coming on and joining me today. I've got David Schultz, David Williams, and John B

and for anybody who apparently hasn't seen anything to do with ACA in the last 20 years, could you guys go through some quick introductions? know, David Schultz will start with you. Could you give us kind of a 30 second background of how you got to the seat that you're in today?

David schuktz (00:41.581)

Sure, I'm Dave Schultz, I'm with the law firm called Hinchel and Cobartson, based in the Chicago office. I've been working as a defense lawyer for the ACA and its members for a long time. I'll just say for over 25 years, and I'll leave it at that.

Adam Parks (00:59.374)

Fair enough and greatly appreciate you coming on today and having a chat with us. John Bedard, how about you? Could you tell everyone a little bit about your background, how you get to the seat that you're in today?

John Bedard (01:06.402)

indeed thank you john the guard from the guard law group here in atlanta georgia i share the same kind of experience with david spin i think this year is twenty five years me that we have been representing debt collectors debt buyers creditors and lawyers in the marketplace helping them with their compliance all over the country and doing the defense litigation when they get sued by consumers are by the government

Adam Parks (01:32.078)

Well, fantastic. Appreciate you joining today as well. And Mr. David Williams, how about yourself?

David Williams (01:37.217)

Yeah, thanks for having me, Adam. My name is David Williams. I'm CEO of Williams & Fudge in Rock Hill, South Carolina is where we're located. And as an agency owner over the years, I've learned to know how important it is to have good attorneys with us and also get insurance. So I'm looking forward to that today. And I'm also happy to say I think this is my first appearance on a podcast as past president of ACA. So I'm happy to have that title now. I've got my plaque up there and everything. So I'm officially a past president and happy to be in that role.

Adam Parks (02:14.286)

I understand that particular statement, probably more than most. So kind of to kick this off today, guys, let's talk a little bit about why ACA is in the insurance business to begin with. I think it's important for us to kind of understand that context. And Mr. Schultz, I know that you have been part of this for such a long time. Could you help us understand kind of the background as to how we got to where we are today?

David Williams (02:16.155)

How did you do? How did you do?

David schuktz (02:38.869)

Sure. For a number of years, will say generally the 90s, the ACA offered insurance to its members, but it was really just tied to an insurance company. And they allowed the insurance company to run the program, which is what happens. And the insurance company is one of the largest ones in the country. And before that, it was another insurance company. But they didn't have a lasting relationship. There was a lot of claims that hit.

David schuktz (03:06.268)

It's an industry that gets a high volume of claims, but generally a low volume of value, low value ones. So that's unusual for an insurance company. They're not necessarily sure how to deal with that. The insurance companies typically have their own lawyers around the country. And oftentimes those lawyers didn't have experience with these kinds of cases or with this industry. And so their bad law was developing.

David schuktz (03:35.335)

the members oftentimes weren't happy with the insurance company and what ended up happening is they became uninsurable. It became situation where they were having difficulty finding an insurance company that would have a relationship with the ACA members. And so the ACA took a really very proactive role in forming a relationship, developing its own insurance program, working closely with an insurance company.

setting up the way they wanted, monitoring it much more aggressively, hand -in -hand with the insurance company. And that happened, really the genesis of that was over 20 years ago. And so it's morphed a little bit over time, but it was the roots of this was, like I said, they kind of turned it over. It was not being run very well. It made their members not insurable in the market. And so they looked for another option.

David schuktz (04:32.442)

and they developed that option hand in hand with another insurance company, which has morphed over time just the way insurance companies grow. The program has changed a little bit, but that's part of the change.

Adam Parks (04:39.78)

Sure. So am I understanding that this is basically looking at it from the perspective of educating the underwriters, right? So ACA looked at the opportunity and said, okay, our members are becoming uninsurable because there's a high volume, even though it's a low dollar volume, they're just seeing that they're just seeing that volume flowing through. And without an education to the underwriter as to what this actually means in the context of our real business, and in the context of real dollars, to be perfectly frank, it kind of changes that dynamic a little bit, right? By educating those underwriters, you're able to bring a program to market that actually makes sense.

David schuktz (05:17.233)

they they did that they also worked with someone know what's the right kind of deductible for this type of program how to manage it so that insurance company that be comfortable press at the claims level do with these sorts of claims that's what we would necessarily see but the a c brought something to the table said this this may look scary because all these cases are catches class actions they're not really class actions it doesn't miss go that route just because of label that so it's an education with the underwriters insurance

Adam Parks (05:22.34)

the

Adam Parks (05:43.489)

Thank

David schuktz (05:46.211)

claims adjusters the managers and and and and develop a knowledge and it is they did that and he continued to that

Adam Parks (05:54.318)

That's definitely an interesting perspective in terms of how we got to where we are today. Now, David Williams, from your perspective as an agency owner and someone who's managing that process, what's the experience been like for you?

David Williams (06:08.565)

Yeah, I think listening to David talk about that, you we went through that process of when things weren't run exactly like they needed to be run. And we were working with, you know, insurance companies that didn't understand our business. And I think one of the big things was the volume of demands that we get versus, you know, the ones that actually go through. So, you know, we went through a time where we worked with insurance companies that didn't know our business as well. And we basically had to fight when we were sued to get someone like John or David on our case as our defense counsel because they have their own attorneys like David mentioned. So everything he just said is real from an agency owner standpoint. And so when we, more recently, when we're able to look at the insurance that ACA is offering, I think what you said, Adam, about the underwriters is important because now...

David Williams (07:00.331)

they understand what happens with the demands and which ones are actually class actions, which ones are not, which ones get settled, what the risk factors are associated with the businesses that we run now. So we have been back with ACA's insurance now probably, I don't know, seven or eight years. And the thing that I wanna make sure that people understand, yes, I've been involved in ACA, but at the end of the day,

I'm a business owner and I'm not going to use a product that is not going to protect our company. And that's specific with E &O, you know, as what we're talking about right now. You know, I want to make sure that we're protected, but I also want to make sure that the cost is right. And so we continue to bid out our E &O insurance and ACA's insurance has been, has, has beat the other, the competitors. And I think what, you know, David was talking about, like understanding who we are.

Adam Parks (07:28.89)

It is.

David Williams (07:57.375)

and what we do is important. And if you combine that with it being a competitive price, for us it's a no -brainer right now.

Adam Parks (08:08.96)

I like that. Now, I know you were talking about the E &O policies. Is this kind of encompassing additional policies as well? I cybersecurity insurance, for example, is something that the cost is going through the roof. And we're in kind of this unique situation as an industry to where it's being measured based on the number of records, right? How many records are potentially at risk? And that's a lot of the driving factor behind your premiums. But what types of insurance might somebody look for through the ACA program?

David Williams (08:37.601)

Yeah, I mean, they have everything available. As a matter of fact, I just got something about this yesterday where, you know, it can go to your business owner, to your automobile workers comp. They have all of that available and I encourage everyone to look at that. The big one, you know, for us, I mean, we, I think, I wish I knew exactly, but five, seven years ago, 10 years ago, especially, you know, our premium was, you know,

so much, probably 10 times what our cyber premium was. And now our cyber premium is more than, you know, and I think, and we have that through ACA as well, because there's still understanding what our business is as they are writing these policies is so critical because the last thing that you want with cyber or with any of these other policies is to think you're protected and you're not, you know.

David Williams (09:34.079)

going through and checking a box, well I got it, I got it, I got it for RFPs or whatever is one thing, but when it comes time for you to need the protection, you to need the understanding, that's what ACA really brings to the table with all of these policies. And right now, CyberD, you know, are still the biggest ones, but they can provide all of the other insurance needs as well. So I'm definitely encouraged to take a look at all those too.

Adam Parks (10:02.116)

And there's no shortage of insurance needs in our space, right? I feel like every time I get an RFI, the premiums are higher. I mean, even as a marketing company, BrandingArk has to carry a $10 million policy to meet the qualifications and needs of our clients. So and that's withholding no data, I can only imagine how crazy it's starting to get on the other side of the world. Now, Mr. Bidard, I know you've spent a lot of time on the kind of defense side of this as has Mr. Schultz, but talk to me a little bit about the interactivity between the defense councils and these insurance programs. How does that all kind of come together into one story?

John Bedard (10:41.052)

Yeah, one of the things, well, there's a couple things that are unique about the ACA's insurance program. And these things that are unique are specifically designed to mitigate risk and reduce risk, which also has, from David's perspective, downward pressure on premium. And the first of those things is this program called the Collection Notice Review Program, the CNR program. And that was a program developed many years ago.

Adam Parks (11:05.827)

Okay.

John Bedard (11:10.971)

to allow a c a members and insurers to have their communications at the time it was mostly letters reviewed by an experienced lawyer that can identify risk in those letters and advise that the member on it and say hey look this you can reduce the risk on this letter reduces the likelihood of a claim on that letter which reduces the likelihood of insurance company having to pay out which now has that

John Bedard (11:39.63)

you know, concomitant result of reduction in premium because risk is now lower. That program has really evolved over these years, especially with the onset of regulation F. The program got completely revamped and now every ACA member has available to it tremendous forms and guidance on how to evaluate their communications, not just letters now, but websites, emails and text messages.

John Bedard (12:09.358)

and how to identify and review risk associated with the content of those communications to avoid claims and and and and ultimately you know avoid insurance companies have to pay out so the collection notice review program of which dave shultz is also a member of that cnr panel reviewing these communications for a c members as well is has been a really really successful program in reducing claims on debt collector communications nationwide. It has been really a tremendous success. The other thing that the panel, that the program does is has a unique defense panel. There are lawyers that are ACA members all over the country that are really experts in this area of the law. And Dave Schultz is also one of those lawyers. the insurance company has a relationship with these lawyers and with ACA so that when a claim happens, we make sure we have the right expertise handling the claim. The impact of that expertise on those claims is again downward pressure in risk and downward pressure on premium when we have the most knowledgeable and the most expert lawyers in the country.

Adam Parks (13:19.33)

Nice.

John Bedard (13:33.35)

handling the claims that do come through the program. And so I think those are really two elements that make this program unique, which is why the ACA Insurance Program can be so competitive in the marketplace.

Adam Parks (13:47.918)

Well, look, everything is a risk versus reward probability, especially when it comes to insurance. So the insurance companies are looking at it and saying, how can we reduce our risk and the education that you've provided to those underwriters into the insurance companies by taking actions like reviewing those notices that are going out, right, reviewing the letters and the other communications, you're able to substantially, I would think, reduce that risk level. And I know insurance companies are not, you know, generally have a high risk tolerance, right? So the more that they can mitigate those risks step by step, the more likely they are to continue participating. But the insurance is a necessary evil within our business, so to speak, right? It's an expense we're always gonna have, we're always gonna need that safety blanket, that's never gonna change. But this opportunity to kind of leverage the, I'm call it the think tank, the legal think tank at ACA to manage and... kind of help mitigate some of those risks if and when a claim when a claim does arise, I think puts you in a great position as an organization. Is there anything else that I'm kind of missing here? Go ahead, David.

David schuktz (14:57.678)

mind echoing one thing that John said also is there's a relationship between defense lawyers, the ACA, and the insurance companies close. And a benefit of that for the industry is also trying to avoid making bad decisions on fighting. Because of that relationship, everybody thinking about it, you decide, well, these are cases we think we should be settling. These are cases we think we should be fighting. And along the way, let's try to make the best law in the best jurisdictions.

Adam Parks (14:59.652)

Sure.

Adam Parks (15:12.578)

Yeah.

Adam Parks (15:25.218)

Yep. Strategy.

David schuktz (15:26.062)

That dynamic happens as well.

David Williams (15:28.545)

And I couldn't agree more. And I think that's something that we've collectively worked hard on over the years from the days of John talked about 25 years ago of, okay, well, if you get sued, you got to find somebody that can defend you. And well, those are the attorneys and that, but it's like everything else. Now these, these partnerships in our industry are critical and Adam, I mean, you're, leading the charge on this, but understanding that Javadar David Schultz, the other attorneys that are

Adam Parks (15:31.492)

I like that.

Adam Parks (15:35.171)

David Williams (15:57.643)

part of ACA, our partners of agencies to be able to do what we do. And I think that the quicker that people can take that mindset of, yes, these guys do make money off this industry, but they also really, really care about this industry. And they're trying to help us navigate the best we can so that we're all better off for working as partners with agencies, with attorneys.

Adam Parks (16:03.556)

Sure.

Adam Parks (16:16.196)

sure.

David Williams (16:26.623)

with the insurance company, with the marketing, you know, with branding art, with the people that understand like what we need as agencies. I mean, you don't have to recreate the will of this stuff, but you do have to know the people that are experts in whatever it is that you need. And I think that's one of the biggest benefits of our association is being able to meet those people and understand like, you're not out there. You don't need to be out there by yourself. There are people, no matter your agency size, that are willing to help.

Adam Parks (16:53.027)

Yeah.

David Williams (16:56.491)

work with you to really try to do what you're doing. And you'll sleep a whole heck of a lot better at night if you know that you're covered, you know there's good attorneys that should get that hat on your back, and you know that there's people in the industry that are willing to fight for you. mean, that just, we have enough day -to -day opportunities for stress as agencies, just like everybody else does. I just couldn't, I mean, really, really encourage people to look for those people that are...

that are in this with us to help move our industry forward.

David schuktz (17:29.967)

You know

Adam Parks (17:30.19)

Well, the coordinated effort of organizing what to fight, when to fight it and where probably could have helped us avoid some of the problems that we faced over the last five years. I'm not going to throw out the name of that particular case, but we all know it. Right. And I think it's about being organized and having an understanding or at least having that resource pool to pull from. If you find yourself in that situation where bad case laws about to be created. Right. Maybe it's time to reach out to your friends. And I think the consolidation of those efforts and while doing it will also reducing risk premiums. I mean, I can imagine that the attorneys want to participate in this because of course there's opportunity there, but there are also opportunity to help their existing clients reduce their cost structure related to insurance. So, I mean, for me, I feel like it's kind of a helping hand, but one hand always washes the other in a good relationship, right? It's got to be mutually beneficial for everybody or it doesn't make sense.

David Williams (18:21.345)

exactly.

John Bedard (18:22.918)

Yeah, Adam, we would be remiss not to also mention to your viewers that, you know, ACA's got a program for collectors. ACA also has a program for asset buyers, too. And so, you know, the insurance program earlier this year just rolled out an insurance program focused specifically on asset purchasers and debt buyers. That program also has unique elements designed to reduce risk and reduce premium.

Adam Parks (18:31.704)

Okay.

John Bedard (18:52.698)

and to meet the needs of the debt buying industry as well. so now that we're talking about insurance through ACA, I think we would be remiss not to mention that to our listeners.

Adam Parks (19:03.554)

Are there any other segments of our audience that might be interested in taking a look at some of the programs ACA has to offer? I the debt collectors and debt buyers are going to be the majority of the audience, but are there other areas that people should be exploring?

John Bedard (19:17.404)

you know the cyber in terms of verticals cyber is the next one and so which is you know sort of the up -and -comer i mean that was like here now and we're all dealing with sort of what's going on in cyber world and we're seeing it very actively and so but there's a program also available through ACA to meet your cyber needs as well

Adam Parks (19:17.604)

It's really focused on this cyber. Yeah. Okay.

Adam Parks (19:26.595)

Yeah.

Adam Parks (19:37.038)

meet the cyber needs. Excellent.

David Williams (19:38.249)

And I will say too, when regulator friends are looking at our companies, they're looking at the people that we use too. So they're looking at our attorney network that we utilize. They're looking at maybe our marketing company. All of that is being looked at. So, you know, maybe you're an attorney listening to this. You need to make sure that your insurance and your cyber and all of that is where it needs to be because that's, you know, they're looking at all of that and we need to make sure we've got all that buttoned up.

Adam Parks (19:45.144)

Adam Parks (20:07.756)

all service providers, right? Our vendor management programs are part of our CMS. It's all one big happy family of documentation. Boy, am I glad I don't write that stuff anymore. Well, gentlemen, I really do appreciate you coming on and educating me on the ACA insurance programs today, why it's special and why it is specifically designed for the debt collection industry. But gentlemen, thank you so much. I really do appreciate your expertise.

David Williams (20:12.949)

Yeah.

John Bedard (20:37.906)

Thank you, Adam.

David Williams (20:38.047)

Thanks for having us.

Adam Parks (20:39.47)

For those of you that are watching, you have additional questions you'd like to ask, you can leave those in the comments on LinkedIn and YouTube. We'll be responding to those or you can, if you have additional topics you'd like to see us discuss, you can leave those in the comments below as well. We'll also be including a link over to the ACA Insurance Program so you can explore some of this information for yourselves and see if this is the right fit for your business. But until next time, we'll see you all again soon. Thanks everybody.