An Interview With Randy Tipton

Randy J. Tipton is vice president of strategic planning for the Universal Insurance Facilities Ltd., making her the person most responsible for setting the direction and focus of the company's insurance programs. Ms. Tipton formerly served as vice president of MiniCo. Inc., where she was responsible for overseeing all insurance operations. With more than 20 years of underwriting, marketing and management experience to call upon, she has acquired an unsurpassed combination of skills and industry knowledge that has set the stage for new opportunities to better serve Universal's customers.

In 1994, Universal Insurance Facilities Ltd. surprised the self-storage industry with the introduction of its ground-breaking Self-Storage Insurance Program. At the time, facility owners were in need of another specialized business insurance policy geared to protect them from the risks inherent in running a self-storage operation. Universal's program, which provides property and liability coverages self-storage owners need in a single, affordable package, has been an unqualified success, and has served as a blueprint for many of the company's subsequent insurance offerings. We recently spoke with Randy Tipton about the company's program and its plans for the future.

How did you wind up in the self-storage insurance industry?

Interesting question. In the 1980s, I worked for 10 years at one of the nation's largest insurance companies. During this time, my responsibilities were continually evolving, and I found that I was having less and less personal contact with our insureds, which was the aspect of my job that I most enjoyed. I finally decided that it was time to leave the corporate environment and get back to my agency roots. And it was also around this time--I think the year was 1989--that I gradually started to become aware of the self-storage industry's need for a higher level of insurance expertise than it was currently getting. So that's where I decided to focus my attention. And the rest is, as they say, history.

So you're saying that the need for customer contact is important to you?

Absolutely. Working directly with our insureds is what I enjoy most. It really is the best part of my day.

How has the industry changed since you first entered into it?

Oh, the industry has changed in so many ways over the past 10 years--facilities are built so much better today, and facility owners have become much more sophisticated than in the old days. And there's been such a big change in the financial world as it relates to the self-storage industry. Remember, back in 1990, most lending institutions were far more reluctant to loan money to facility owners than they are today. Back then, the typical facility owner had one or two properties--they were basically mom-and-pop operations. But the advent of alternative financing and the "PacMan" mindset by large corporations to acquire more and more self-storage properties quickly changed all that. Today, even the smallest properties utilize sophisticated computerized accounting methods, are constructed much better, implement electronic security safeguards and, in general, have a much more professional outlook than they did in the beginning.

Are self-storage owners/operators becoming more knowledgeable about their insurance needs?

Yes, I think that most of them are, thanks to industry publications like Inside Self-Storage. I don't want this to sound self-serving, but our staff gets dozens of calls each month from facility owners who read "Insurance Corner" and have follow-up questions and concerns on the topics we cover. For example, a while back we ran a two-part article on "sale and disposal legal liability" that generated a tremendous response from new and prospective facility owners. I mean, these people are extremely well informed and looking for very specific answers to some very in-depth questions. And we're getting more and more general inquiries from prospective facility owners who have made a point of seeking out a specialty agency to meet their needs. Of course there are industry trade shows and seminars that help educate facility owners about insurance, as well as specialty agents that are always available to answer their specific questions. So yes, I think it's obvious that facility owners are becoming quite knowledgeable about their insurance needs.

What are self-storage owners' biggest fears in terms of protecting themselves against potential disasters?

Well, coastal property owners are certainly concerned about hurricane and wind damage, and of course Texas facility owners worry about damage caused by hail. And I guess most everyone is concerned about liability in general--in other words, your typical business liability as well as liability to cover the exposures that are unique to the self-storage industry. If I had to name the single greatest fear of all, though, it would be the fear that your property is not properly protected--wondering if you had the right coverage for your needs, if it is sufficient to cover any losses you sustain to get your doors open again in the event of disaster. That is, after all, what insurance is really all about--financial security and peace of mind.

At what point in the development-to-grand-opening process should an owner determine his insurance needs and settle upon an agent?

We're seeing a large percentage of facility owners getting involved in the very earliest phases of the development process, since careful planning can save them a lot of money down the road. The really savvy ones run dozens of possible locations, construction methods and security systems past us to see which combination offers the greatest amount of present and future savings. This kind of planning benefits us as well as the facility owner, since we can help advise him or her on how to implement measures that can help avoid losses and reduce insurance premiums in the first place.

Is there a wide variety of policies and diversity of costs? How does a facility owner decide that he's getting the best form of insurance for the best price?

With regard to policies, each will have some similarities to others as well as differences, which will of course affect costs. That's why it makes sense to work with a specialty agency. For example, we can run a coverage comparison for a customer that will quickly show him how his policy stacks up against ours. And since we specialize in insuring self-storage facilities, we're aware of what kinds of discounts are available for facility owners and can advise them on what kinds of steps they can take to minimize claims. As far as how a facility owner can decide if he or she is getting the best insurance for the best price, the answer comes down to trust. If a facility operator feels secure in their dealings with a specialty agent--someone focused on his industry who knows what his client's unique exposures are and how to get them the protection they need--they should feel confident that their insurance needs are being adequately met.

Can you tell us a little bit about how your program got started?

Our goal from the very beginning was to make it easy for self-storage owners to insure their facilities by offering a comprehensive yet affordable insurance package. One of the most difficult jobs facing every self-storage owner has always been the need to secure adequate insurance coverage. Besides protecting your buildings and equipment against fire, wind and vandalism, you also need to insure the safety of your tenants' property. Plus, you need to protect yourself against liability suits filed by tenants injured while on your premises, and tenants' property damage lawsuits. You also need to protect your income against any business interruptions that occur after a loss. Our program makes it easy for facility operators to get a complete, current and comprehensive insurance coverage.

There's been a lot of interest in Universal's program--not only by self-storage owners, but by competing agencies. What is it about your program that has so captured the competition's attention?

I can think of several reasons. First of all, our program has filled a significant void in the marketplace. Our specialized industry focus and strategic direction have certainly been advantages. But if I were to name just one reason for our success, I would have to say that it has been the quality of our staff. Their experience and professionalism have given us an edge in service and responsiveness that our customers really appreciate. Our coverages and rates are outstanding, but our service has gotten us where we are today.

So your agents are self-storage specialists?

All of our agents and underwriters are extremely knowledgeable about the self-storage industry. Each of them can speak candidly about real-life insurance requirements and advise self-storage owners on how their interests can best be served. Plus, if you are on a limited budget, our agents will analyze your needs and help you invest your insurance dollars where they will do the most good.

What size self-storage operations do you typically insure?

Every size imaginable. We have customers from all across the nation, ranging from 50- to 60-unit operations to major franchises with thousands of units spread over a hundred locations. But no matter how large or small any of our customer's facilities may be, I've found that they are all serious business owners who are very serious about insuring their success, and have invested in quality coverage to protect their financial futures.

What's the most frustrating problem you've come up against?

There is one problem that is personally very frustrating for me that has to do with comparing costs when a self-storage owner requests an insurance quote. Our program is underwritten by Ranger Insurance, which is a commercial property and casualty company specializing in insuring selected business operations; the company writes more than $200 million in premium in 14 specialized markets in 50 states. Ranger has earned one of the highest possible rating from A.M. Best, the leading insurance rating service. Yet, despite the huge dollar amounts tied up in their operations, some self-storage owners try to save a few dollars on their annual premium by insuring with a company that has a "so-so" rating, or cut back on coverages for a short-term savings. It can be very difficult to sell quality, but in the event of a claim, our customers are very glad that their policies are underwritten by Ranger.

Do you offer any discounts or incentives for your customers?

We can offer discounts to members of the Self Storage Association, and our agents also can provide premium credits to facilities on a case-by-case basis, according to the kind of security system they have in place, if they have a manager on-site, and so on.

Depending on location, the self-storage industry can be very seasonal. How does this affect your business?

Well, we are able to offer financing on all qualified premiums. This allows our customers to spread their payments over the course of the policy year to suit their cash flow.

What do you see in the future for Universal?

Obviously, to keep growing, in order to fulfill our commitment to our customers for better service, better coverages and better rates. We've invested heavily in the past year in automation, tripled our staff and moved to a new, larger office location, all to better serve the needs of our insureds. And we're always looking at new technologies to improve our effectiveness. For example, we now have the capability to provide instant quotes on different coverages, and have established a Web site on the Internet that has proved very popular with self-storage owners.

What do you see in the future for the self-storage industry?

The self-storage industry has achieved considerable growth over the past several years and is currently in a very stable and profit-generating phase. Occupancies are on the rise and rental rates are rising with them. Consumers are leasing units for longer periods of time and moving to larger units, and more and more self-storage facilities are being built to take advantage of new opportunities. The future of the self-storage industry definitely looks bright.

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