Tom Thompson, president of Reinsurance Results Inc., a vendor specializing in reinsurance recoverables, got the idea for starting his business when he was a broker at Sedgwick Re.
As part of each renewal process, Thompson performed in-depth analyses of his clients' or prospective clients' accounting and claims data.
"I began to notice reinsurance accounting and claim processing errors that periodically occurred with both prospective and client companies. Given the complexity of many reinsurance programs, the fact that processing errors were occurring was not that surprising." These errors led him to develop a business that specialized in the identification and recovery of reinsurance processing errors.
Being his own boss, he follows in the entrepreneurial footsteps of one of his sisters who owns a leading gymnastics academy in the Twin Cities, a brother who owns one of the country's premier destination management and corporate events planning companies, and another sister, Theresa Thompson Schugel, who runs a software subsidiary of one of the nation's leading reinsurance intermediaties.
Thompson pursued an advanced degree at night school in new venture management, and began Reinsurance Results Inc. on July 1, 1998.
One of his earliest attempts to market his company was in late 1998 when he approached Ron Boyd, president and CEO of Midwest Family Mutual, Minnetonka, Minn. "Tom Thompson suggested an accounting audit of our reinsurance program," Boyd recalled. "He assured me it would cost the company nothing unless he found overpayment of reinsurance premiums or underpaid recoveries."
But Boyd put Thompson off due to time constraints and the belief the company had "a reasonably tight control over its reinsurance program." But in June 1999, due to Thompson's persistence, he was engaged to conduct a financial audit of the mutual's reinsurance program. "To our surprise," Boyd said, "he found some sizable recoveries and he did the audit with a limited amount of our resources."
His experience with reinsurance had begun earlier, in 1985, when he was graduated from St. Thomas University, St. Paul, Minn. "My sister, Theresa, was working as a broker for E. W. Blanch Co. and encouraged me to interview with the company. I did and was hired as a reinsurance claims analyst," he recalled. From September 1989 to January 1990, he oversaw the transition of EWB's London-based reinsurance operations from EWB UK to Carter, Wilkes and Fane. Four years later, in 1994, he joined Sedgwick Re of Minneapolis as a sales and servicing broker.
Thompson, like many small entrepreneurs, says he's not in the business of chasing a fortune. He says he'd rather provide a good service for his clients.
He attributes his success to being a seasoned professional with a variety of business and reinsurance skills, and "a hound dog mentality for identifying unapplied reinsurance." He is involved in all phases of the review process, he says.
"He rolls up his sleeves and gets into the detail," says Paul Malay, director of reinsurance operations, St. Paul Travelers in St. Paul. "It's one thing to take a data dump and look for unusual anomalies. It is another to pull files and talk to adjusters and clerks to learn all there is about a policy. It has been very successful and profitable for the company."
"We would like to do the recovery process in-house with our own staff," Malay also says, "but with all the changes going on it is difficult to assign personnel to go through old policies to find recoveries. Calling in Tom is really an option of last resort."
Malay says the best-case scenario for St. Paul Travelers would be if Thompson does an audit and finds nothing, which would mean "we are doing a perfect job."
Thompson, a one-man operation, works from home. "I also tend to work at odd hours either very late at night or early in the morning, so working at home is conducive to the way I like to work." Being home also allows him to spend more time with his wife of 15 years, Susan, and their two children.
Though Thompson and his sister Theresa Thompson Schugel, CEO of Paragon, another reinsurance recovery vendor, are from the same family, there are times when they've competed for the same business.
"My company's approach to the recovery process differs from that used by Paragon and sometimes this is what slants the decision in my favor," Thompson says. "Other times it's more of a David-and-Goliath scenario, where Paragon's size and broker connections become the dominant factor in the buyer's decision making process."
Many brokers within the reinsurance community are aware of the relationship between Theresa and Tom.
"Consequently, I believe this actually hinders my opportunity to obtain new leads due to the possible perception that Theresa and I are in cahoots," he says. "The facts are just the opposite. Theresa and I discuss business very little and when we have in the past, it has always been on a specific project that Paragon feels may be a good fit for our offices to work on together. So far, none of the discussions have resulted in a partnering relationship with Paragon."
Despite working in the same industry and competing for clients, there's no sibling rivalry, he also says. "Theresa has always been a very supportive and giving older sibling," he says. "I have her to thank for assisting me at various stages of my career. She is also very good at whatever challenge she faces."
"Our brother-sister relationship remains intact," he also says. "Both companies are doing very well."
RONALD GIFT MULLINS, a former insurance editor for the Journal of Commerce, contributes regularly to Risk & Insurance®.
February 1, 2005
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