Managing Insurance Issues in the relocation process

 What to do if - your transferee tells you the family needs to stay in the home for a while after title transfer to the RMC (relocation management company)

1. Most RMC insurance policies for relocation-related properties assume the property is not occupied

2. You must notify the RMC insurer of the transferee's extended stay, and the estimated time, to avoid any claim related issues during the extra time

3. The transferee's homeowner's policy may not remain in force as they don't own the property any longer; however, it may be a good idea for them to buy renters coverage

4. The RMC's insurance policy on the home will NOT cover the transferee's person property.

Taking these steps protect the transferee and the relocation company.

Survey of Risk Types

We deal with risk issues all of the time, even if we don't think of them with that label. Here are some worth noting: - Insurable Risks: property, liability, flood, title - Property Management: taking care of a vacant home in a northern climate - Information management, especially GDPR and related issues - Computers: data security, network infrastructure - Political Risk: relocating to a country with some political instability - Economic/market/interest rate: outside forces affect your customers, capital and cash - Loss on Sale: for both the homeowner and the employer post-buyout - Maritime Risk: the inherent risk of moving HHGs on the Seven Seas and briny Oceans - Credit Risk: Can your invoices be paid in timely fashion? - Regulatory: especially in the home sale arena, but also taxation issues abound - Betty Grable Risk: legs, throwing arms, etc (OK, probably not a relocation issue per se) - Legal: are your contracts, SLAs, addenda documented, tracked and enforceable? Each requires attention, at the outset and ongoing. Quantify them where you can and apply at least an ounce of prevention and planning to minimize or avoid. Which have I missed?

Risk factors for international assignees

For certain assignments, special attention should be paid to risks of living in the region or country to which employees are sent. Cultural challenges, family issues, and living conditions are usually given a high priority.

But it is wise to brief assignees on other factors in some assignment locations: special health needs that can be handled in host country, what to do if you get arrested, risk to children to and from school, presence of paramilitary & mercenaries, risk of kidnapping or abduction, political instability.
Consult the CIA and Department of State lists of regions/nations offering danger, and be very aware of locations of US embassy and consulates in the host country.

Risk Considerations Overlap Sales Process

Periodic sales review sessions are important for any company, especially when the sales cycle is long.  A good deal of time and expense are invested in persuading corporate clients to move their relocation business.  This is true whether or not an RFP process is undertaken. 

A threshold question worth considering:  is this prospect and the business that a service relationship would generate really worth it?  Hard to know unless there are margin and expense goals that guide the decision.  And it is incumbent on the sales team to understand what a prospect will require, the support needed - service delivery, support activities, reporting, compliance - to deliver on a set of SLAs. 

During sales review sessions, there is a natural strategic tension.  Sales pros are motivated to bring new clients into the company.  Operations people want to make certain service promises can be delivered within reasonableness.  Compliance officers are alert to expectations of the client to comply with rules and regulations, especially in our GDPR world.

Leaders need to use sales review sessions to consider all of the key elements that will inform team members of what the prospect will expect.  In this way, they can understand the impact on service delivery teams and the financial resources of the company. 

RFP challenges

Avoid those pesky RFPs, and all the effort that current clients may put you through, not to mention the risk of losing the business!

1. Keep close track of contract renewal dates and service delivery results

2. Begin managing the process at least 6 months in advance of the date

3. Publish metrics which measure your performance against SLAs

4. Engage your client in a detailed process review to identify gaps

5. Restate the overall benefits of the partnership to your client

We can help ...

Are White Papers Obsolete?

In this age of 300 word blog posts and 280 character tweets, some worry that the venerable white paper is a thing of the past.  Will people take the time to read 1500 words that experts assemble into highly informative and useful documents?

Here's the thing:  it's hard to cram into the shorter posts the valuable analysis and detail which the best white papers deliver.  The accompanying charts and graphs - useful for visual learners - fit much better into a long format.  In these challenging times, we ought not limit our sources used to gain mastery in relocation management.  So here are some suggestions:

1.   Deliver white papers with a short summary of the salient points of the document.
2.   Tailor the summary to the known issues your client faces.
3.   Consider offering a webinar to present the content, and key lessons.
4.   Offer a podcast of the document for those who prefer this alternative delivery method.

To make the best use of your audience's time, present insights and new ideas, rather than going over old ground.  You have a better chance of grabbing their attention.

America’s “Rust Belt” Offers Excellent Lifestyle Options

A few words of praise about America’s older industrial cities: they sometimes receive a bad rap from the press, and unfortunately from some relocation folks. But it’s important to understand that places like Pittsburgh, Cincinnati and Milwaukee offer many attractive lifestyle options from downtown lofts in lively neighborhoods to leafy suburbs. There are usually excellent cultural amenities, professional sports teams, great architecture, waterfronts, park systems, interesting ethnic mix and food variety, university communities, and excellent health care institutions.

Tycoons in America’s gilded age amassed great wealth in the decades following the Civil War through the 1920s. They devoted their energies and fortunes to building institutions for their cities, whether through a sense of civic pride or to earn the praise of citizens and government entities. They funded fine buildings and concert music halls, and invested in artwork that was gifted to local museums and institutes. Almost every city of the great industrial age boasts a quality symphony orchestra, with Cleveland’s orchestra ranked among the world’s best, on a par with renowned New York, Chicago, Boston, and Philadelphia symphonies.

Another legacy of cities’ prime years of industrial might is good schools – including private, parochial, and special schools such as high schools for the arts. Commutes by automobile are not nearly as challenging as places like LA and Washington DC, and frequently they offer good public transportation. Most of all, they offer good real estate value – for both home purchasers and renters. Costs are far lower than coastal cities or mega-metros, and often the renter enjoys lots of space and the charms of vintage buildings, from traditional Greek revival to striking early modernist structures. So if you’re destined for an assignment in America’s “rust belt” you can look forward to a quality lifestyle with a variety of options.

GDPR insurance review

In a recent presentation, the need to be sure your general liability insurance matches GDPR risks was emphasized.  There is no standard form or model for the industry that informs those who write commercial coverage.  That is likely to come as we advance into the world of GDPR, and of its spread throughout the world.

In the meantime, ask your insurance gurus to carefully review the exclusions in your current liability coverage for cyber events.  In addition, confirm if there is coverage in place for these matters:  privacy regulator actions, privacy breaches, violations of privacy laws and regulations, fines & penalties, the necessary $ limits. 

Coverage will likely also affect and promote certain processes and activities.  Think of these as underwriting strictures that allow the insurer to judge the risk according to how much diligence is being applied to GDPR risk related activities.  For example, DPIA results and actions to cure shortcomings.

A good time to call your insurance broker and complete this step in GDPR management.

The Prodigal Assignee

Imagine you have sent your talented Gen Y to a new city with a tidy lump sum check in their pocket (or on a prepaid VISA card, please!)  Maybe their only other move in life was back and forth to college with Dad and Mom’s help.  Now they are loosed on the world with important tasks to complete to get to their great new role on the golden career ladder.

But they aren’t sure where to turn for help, for services.  How do they get oriented to the new city?  What are the rental practices they need to understand?  Furniture? New driver’s license? Etc etc

Too often these future masters of the universe run out of money, and come back to their employer with hand out.  Do they get another stipend or are they really on their own?

Give them the tools at the front-end.  Complete analysis of reputable service providers.  Use your leverage to get them a better deal.  Remember, they are moving to help your company succeed.  

Compliance - keeping our promises

Much energy has been devoted to GDPR compliance; we have all learned that it’s now a GDPR world.  While we’re all exhaling a bit after the sprint to May 25, let’s not forget the day-day mundane need for contract management.  We promise in our agreements to comply with all laws, and so we should. Our clients - employers, relocation mgmt companies, suppliers - all expect promises to be kept.  Therefore, we need to keep a sharp eye on program activity and performance and align it with the promises made.

New customers with special needs, customer-specific pricing, customized services all are part and parcel of the flexible nature of relocation.  In each case we need to document and track as time goes by.  This is particularly true of agreements with “most favored pricing” clauses.  And don’t forget those regulatory changes that hit you know where!

Contract management is part of client service management.  Look often, be alert to impending renewal dates and added services that were promised at a client review.  Remember too that evergreen contracts are not always a good idea.

Diagnostics to Identify and Cure Risk

A periodic review of program home sale management may be useful.  Taking a selection of closed transactions through the process in place, compared to the process actually followed turns stones over into the sunlight.  For example, on a group of 100 files, find out how often brokers outside of standard were used and compare to inventory results. 

What if on the 100 files, 25% were outside of standard, resulting in 20% increase in home sale loss and  carry cost?  The aggregate result would lead to, once corrected, a substantial refinement in service results and program performance.

The exercise will likely reveal risk mitigation opportunities, whether due to process errors or changes in needs.  Process changes may be needed, systems or forms or reports may be added, policy changes may be identified, insurance coverage issues uncovered.  (inspections, CLUE, etc)  We can help.

All kinds of risk to manage

Relocation industry pros must manage many kinds of risk in handling mobility.  The newest issue on the list is GDPR and the proliferation of state rules - like the recent California law.

Here are a few other matters which require attention and process foundation to fully serve corporate clients: loss on sale from real estate, tax and expense management, computer, regulatory, property management, IT and business continuity, and insurable risk covered via liability insurance.

In today's rumbling world, we need to be very mindful of the risks presented by assignments in foreign countries.  We need to help employers profile candidates to see if they match the location.  Political risk - from unstable societies or internal conflict - requires special attention.  Also disease and epidemics and the ability of the host country to provide medical care. 

Take a wide view of the risks associated with mobility management.  A failed move may lead to loss of a key executive, an expensive proposition in any case

Fourth of July

So what was the world like in 1776?  Why were the American Revolution and Declaration of Independence so remarkable after all?

Europe was dominated by empires, ruled by kings, emperors and sultans.  The great powers were Great Britain, France, Austria, Russia, Prussia, and Turkey.  Most were ruled by absolute monarchs, beholden to no elected assembly who could curb their power and authority.

Democracy was, to some extent, a historical curiosity.  The Athenians (Greeks) had installed democratic government that ultimately failed; so too the Romans.  The Italian city-states had short-lived republics, but each had fallen either into despotism or had been overrun by the armies of France.  The Pope in Rome was not only a spiritual authority, he controlled territory and fielded armies. 

China and Japan were closed societies and mostly unknown to Europeans.  Descendents of Genghis Khan were losing their grip on India.  The African interior was almost totally unexplored.  Australia had just been discovered and would be colonized by convict immigrants.  North and South America were vast wildernesses with only the coasts and great river valleys settled.

People believed in demons and witches; deep, dark woods were terrifying.  Travel was very dangerous after dark, only candles and torches provided light.  Medicine was crude by our standards - intentional bleeding of the patient was a common treatment for all kinds of ailments.

Yet, it was also an era of great men and women.  Mozart, Beethoven and Napoleon were alive.  Catherine the Great ruled Russia.  Edmund Burke, the Scottish philosophers Adam Smith and David Hume, and Immanuel Kant, the influential German philosopher, were in their prime.

To our good fortune Jefferson and Madison, Adams, Franklin, and Hamilton can also be counted among the great.  But in the imagination of the age, George Washington, was the indispensable man.  It was his leadership and example as commander-in-chief, and later at the Constitutional Convention, that inspired the revolutionary generation. 

Where did our founders look for inspiration?  Well, to lessons of history about the rise and fall of nations.  They especially studied Greek and Roman history, for the ancients’ triumphs and failures.  They read and studied the influential Greek philosophers Plato and Aristotle who wrote so often about politics. 

In the crucial years of the 1770s and 1780s, Montesquieu's Spirit of the Laws helped guide those who would have to create a new government if the revolution was a success.  During the Constitutional Convention and the lively debate over ratification that followed, Montesquieu was a crucial authority on republics.

So, in a world of empires and absolute monarchs, at the edge of a vast continent, our forebears set out to overthrow the authority of Europe’s most powerful nation. 

Between 1775 and 1776, armed conflict with Britain broke out, and still there was wide disagreement on independence.  Many remained loyal to Britain.  It was not only the long odds of defeating Britain that caused uncertainty.  Declaring independence was treason, punishable by hanging. 

Yet, our founders took the momentous step and announced their independence from Britain boldly to the world: “all men are created equal”, “life, liberty and the pursuit of happiness”, governments “deriving their just powers from the consent of the governed”. 

For this new nation, the United States of America, sovereignty would reside in the citizen, not in kings and aristocrats.  To this Declaration of Independence 56 men signed their names and pledged “to each other our Lives, our Fortunes and our sacred Honor”.

Something to think about this July 4^th.

NYC rental prices top $4000 per month

In recently published rental data, several neighborhoods of Manhattan turned in average rents of over $4000 per month for a 2 BR apartment.  The prices moderate as one travels into and beyond Morningside Heights.  But Midtown and, especially, Downtown still experience high demand, low vacancy and increasing prices.  All the major analysts expect the trend to continue through 2016.

And this, in spite of the fact that a 15% brokers fee is still charged by apartment finders - and that's 15% of the annual rental cost.

There are less expensive options in Brooklyn, Queens and the New Jersey towns just across the Hudson from Manhattan.  As in other parts of the country, increased building of new rental units cannot keep pace with demand.  The New York City economy is robust and the lure of the big city draws people from all over the world.

Memorial Day

Monday we celebrate the holiday set aside to honor those who died fighting in America’s wars.  It was first established as Decoration Day during and after our Civil War, a conflict that claimed 620,000 lives in the North and South.  May 30 was chosen for remembrance because it was a peaceful day – not the anniversary of any battle.

We should recall the impetus for such a day of remembrance.  In 1861, at the outbreak of war between North and South, our nation’s population was only 30 million.  If we experienced casualties today at the rate we did in our Civil War, there would be 6 million American dead.  So you can imagine the crushing weight of grief and the impact on society of such carnage. 

Decoration Day became Memorial Day in many places over the decades.  After World War II, May 30 became Memorial Day all over the nation.  By law it was moved officially in 1967 to the last Monday in May to make a long holiday weekend, and symbolic beginning of summer.

So nations learn how to cope, and how to honor those who sacrificed so greatly.  Our Memorial Day growing up was our most solemn and moving celebration, especially with nearly all the men in town having served in World War II.  Taps and prayers at the cemetery, decorations on graves of the fallen, comforting of those who felt the sting of loss – these helped us heal and move on without forgetting.

History provides the perspective we need to carry lessons with us, and pass them on to our children.  But Memorial Day is not merely a history lesson; it is a life lesson.  Wars take a terrible toll.  We should honor all of our veterans, who remember those that died as fellow soldiers in the crucible of battle.

 

 

Give Us theTools

The news keeps coming on.  Occupancy is staying high.  Millenials are renting, and that takes a big chuck out of the first-time homebuyer market.  Boomers are downsizing into apartments.  New household creations from new job holders leans heavily toward renting.  Even record delivery of new inventory only slightly dents the tight market.

So now that we've established a trend, likely to hold for a long while, it's time to adjust and deploy the tools we need.  Give assignees a head start with market insights.  Allow them to profile markets to focus on lifestyle preferences.  Help them with upfront funding when they have banking access issues. Get useful, actionable market data on both departure and destination markets.

Don't believe the heavy emphasis on the young & mobile using technology; everybody used tech and it has to be on the mobile phone.

It's a new normal - flip side relocation world. 

US Rental Market Continues to be Robust

Apartment metrics in the first quarter of 2015 demonstrated that things are still going strong, according to Axiometrics early release figures. The 4.9% annual effective rent growth rate is the highest since the third quarter of 2011 and the highest first-quarter rate since 2006

Among metros, Northern California again dominated the annual effective rent growth list of the top 50 apartment markets, determined by number of units. As was the case in the fourth quarter, that region had four of the top five metros on the chart. The only change among the top five was that No. 2 San Francisco and No. 4 San Jose swapped places from the fourth quarter.

U.S. apartment vacancy rate fell to 4.1 percent in the first quarter, from 4.2 percent in the fourth, while new construction declined to its lowest level since the first quarter of 2013, according to the real estate research firm Reis.

Solid job growth, single-family home affordability and the continuing trend of people choosing to rent instead of buy all contributed to the first-quarter metrics.  Wall Street Journal

The average renter paid $1,114 per month in the first quarter of 2015, $6 more than in the fourth quarter of 2014, a quarter-to-quarter effective rent growth rate of 0.5%, which matches the same rate recorded in the first quarter of 2014.

 According to REIS, New York remained the most expensive market in the country with effective rents registering $3,200 per month, a 45 percent premium to San Francisco, which remained the second-most expensive market,

Single-family rental properties have been around for a very long time, but they have become a hot commodity only in the past few years. According to the U.S. Census Bureau, the number of rental homes reached an all-time high of 14.9 million homes in 2013 (the latest data available), an increase of almost 3.0 million rental homes since the end of the Great Recession in 2009.

1918 German Assault on the Western Front

On March 21, 1918 the German army launched its massive offensive against the British and French.  With 500,000 troops from the Russian front, freed by the treaty with the new Bolshevik government, Germany intended to land a knockout punch against France, capture Paris, and win World War I.

German artillery fired a million shells against the front in just the first 3 hours.  German troops advanced rapidly and the German commander was able to get his enormous field guns close enough to begin shelling Paris itself.

But French resistance stiffened, and held once again at the Marne River.  German troops outran their supply lines and were so hungry that they stopped advancing to ransack the huge food supplies in the town of Albert.  The attack planned by the Germans to take the important city of Amiens was stalled.  And, much to the German commander Ludendorf's dismay, 250,000 American troops had arrived to replenish the French and British forces exhausted by nearly 4 years of bloodletting.

At Belleau Wood, the Americans withstood a furious German assault and saved a key point in the allied line from being overrun.  And at the Marne, the American 3rd Infantry division stood alongside the French and stopped the main German offensive in its tracks.  Today, if you visit Fort Stewart you will see the nickname given by French commanders to the unit, "Rock of the Marne".

After the failure of the German offensive, the allies launched their own offensive and drove Germans back consistently until on the 11th day of the 11th month, 1918, the guns fell silent.

Rental Market Still Strong

The Rental Market still presents rising rents and low vacancy to those seeking apartment living.  Even though about a quarter million new units were delivered in 2014, rents continue to rise and vacancy remains around 5%.  2015 is projected to add another 250,000 new apartment units to the US market, with especially high deliveries in the Texas markets

So what's keeping the pressure on rates and vacancies?  Demand - from young folks that move out of parents homes, from boomers downsizing and prefer rentals, and pent up demand from job seekers now able to form households.  The creation of new households will outstrip even aggressive building of new units and will continue absorb the single family home rentals available.  Investors are committing enough new money to demonstrate their long term optimism on the rental market.

In some cities affordability drives people to rent, even where average rents are high.  Two notable examples are New York and San Francisco where monthly rent above $3000 is still half what a mortgage payment could be.  Further, that is generally true of the west coast and the Washington DC to Boston corridor, with some exceptions.

New Inventory Coming Online

Well the apartment industry is finally catching up to the expansion of rental households.  Many thousands of properties are coming online in major cities, and that should take the edge off of the continuous rise in rental costs.  Units coming online offer very fine finishes and amenities plus workout rooms and plush social commons.  Although the slow down in the demand/supply ratio will help, pressure from normally first-time home buyers opting to rent, and boomers trading (disappointing) home ownership for the freedom of renting mean that prices will slow but not stabilize.

The multi-family housing industry is also tackling the eruption of demand in oil fracking - usually remote - towns, especially in North Dakota.  Development has accelerated as the activity (boom!) drives more and more workers to small towns in northwest North Dakota and eastern Montana, plus the Ohio/PA border area.

New York just defies all the odds as average rental costs approach $4000 per month.  And that's for a smallish unit with ordinary amenities.  It's still expensive just to get the apartment with broker fees at about 15% of the annual rental expenditure.  Still, it is New York and one of the world's great mega-cities!