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The Sacrifice Of Low Insurance Premiums May Be Uncovered Claims

The Sacrifice Of Low Insurance Premiums May Be Uncovered Claims

As a business insurance buyer, you should demand risk-reducing services as well as lower insurance premiums.  Lower insurance premiums don’t mean you have to sacrifice service for the lowest cost, but you need to know the necessary strategies and tips that could lead to a successful insurance purchase.

Soft Market

The insurance industry continues to be in a “soft market”.  You have an opportunity to consider service as well as price.  Unfortunately, agencies may not provide ancillary services that can really set them apart from other agencies.  Selecting the right insurance partner is vitally important, with reviewing the offerings that accompany the insurance placement.

Insurance services are not utilized to their fullest extent for two reasons.  First, you didn’t request assistance with loss programs, risk control, or claims management.  Second, agents and brokers don’t offer them, cutting services to keep expenses to a minimum.

The difference between $1,000, $10,000, or $100,000 in losses may come from services offered

When the insurance market turns or “hardens”, prices will jump significantly.  Service needs will increase as you look for ways to keep claims down to offset increasing premiums.  Putting little thought into risk or loss control measures before the market turns, can result in uncontrollable premium increases.  I recommend talking with your insurance professional about services related to risk control, claims management, appraisals, actuarial analysis, and risk audit.  In other words, get started with reducing the cost of risk before its too late.  Other services some brokers provide include, but may not be limited to:

  • Loss analysis
  • Risk Control surveys
  • Open claims reviews
  • Property assessments
  • Industrial Hygiene surveys
  • Fleet program audit and review
  • Safety program audit and reviews
  • DOT survey
  • Environmental assessments
  • OSHA audits and assistance
  • Ergonomic reviews

Low Price Insurance Policies-You Get What You Pay For

Limited service is one potential issue with cheap premiums.  Others include limited coverage or sub-limits, reducing the amount of insurance in place.  With lower limits, you risk contractual non-compliance with vendors, customers, or leases.  In short, don’t let the low price blind you from making the right choice of insurance carriers and jeopardizing active contracts.

Tips for making the right choice on price and service for insurance programs

  1. Request a marketing matrix that details the insurance carriers approached and the result, i.e., declined, accepted, etc.
  2. Review the exclusions attached to the insurance policy for key coverages that may be minimized or eliminated.
  3. Ask if sub-limits have been added to the policy if the premiums are well below other quotes.
  4. Consider the insurance company rating.  Check to see that it is A+ or better.
  5. Verify the information provided, ensuring lower numbers of payroll, property values, or revenues were not used.
  6. Check the deductible accompanying the quote to make sure you know what is expected in the event of a claim.

If the agency or broker does not offer these points and has the listed services, it may be time to look for an insurance brokerage that does.

Brian S. Smith, CIC, ARM

Cyber insurance market continues to expand – Business Insurance

Business Insurance Magazine reports:  Cyber insurance market continues to expand.  Business Insurance Companies are increasingly purchasing stand-alone policies rather than relying on professional liability, crime, property and general liability policies for…

Source: www.businessinsurance.com

Cyber insurance, again…Expansion of the market continues to get even better.  

Calling All Commercial Companies: “Become a Government Contractor and be Subject to Executive Orders Dictating Your Pay and Benefits Policies”

Calling All Commercial Companies: “Become a Government Contractor and be Subject to Executive Orders Dictating Your Pay and Benefits Policies”

In an Executive Orders (EO) issued on Labor Day, President Obama continued to display his willingness to manage the personnel policies of government contractors.

Source: info.redstonegci.com

More and more oversight and regulations place tremendous burden on government contractors, both big and small.  

Government Contracting Abroad: Beware Compliance Risks – The National Law Review

Government Contracting Abroad: Beware Compliance Risks – The National Law Review

On June 16, 2015, IAP Worldwide Services Inc., a private defense and government contracting company, agreed to pay $7.1 million to settle criminal charges of the U.S.

Source: www.natlawreview.com

IAP Worldwide Services, Inc. – The Department of Justice’s first corporate FCPA enforcement action in 2015 to the tune of a $7.1 million fine.

What Foreign Contractors Need to Know When Contracting with the U.S. Government

What Foreign Contractors Need to Know When Contracting with the U.S. Government

Non-U.S. contractors have many misconceptions as to what rules and regulations they must comply with under U.S. Government contracts. The two most co

Source: info.redstonegci.com

Foreign Contractors Must Consider Many Aspects When Dealing With US Government – Solid Article By Redstone Consulting

Cyber Insurance vs. General Liability

Cyber Insurance vs. General Liability

One of the biggest data breaches of all time involved that of Sony Corp. The hackers stole confidential information from tens of millions of Sony PlayStation Ne (Cyber Insurance vs.

Brian S. Smith, CIC, ARM‘s insight:

Insurers all across the nation are wanting to put language in their policies that exclude coverage of losses stemming from data breaches, which include loss of credit card information. However, courts have the final say-so in just how far these exclusions can go.

See on www.examiner.com

Price AND Service with Insurance Programs?  You Betcha!

Price AND Service with Insurance Programs? You Betcha!

For the price sensitive client, now is the time to seek out services that actually differentiate between a good and a great commercial insurance broker.  With the insurance industry seeing a continued soft market, buyers have an excellent opportunity to consider services as well as price.
However many agents and brokers have few, if any, ancillary services that can really set them apart from their peers.  Reasons for this lack of service may be placed in two camps.
  • First, many buyers have not requested assistance with loss programs, risk control, or claims management to the level they may need as the market continues to offer competitive pricing to risks with even poor loss records.
  • Second, agents and brokers have kept expenses to a minimum with smaller staffs and fewer service offerings.  As premiums have decreased in the soft market, so too have offered services.
What does this mean to you, the commercial insurance buyer?  Well, a lot when the market hardens and price increases as does underwriting scrutiny.
Economic cycles are like the hurricanes.  It’s not a matter of if, but when.  The same holds true with soft and hard insurance markets.  I am not predicting the next hard market, but I am saying that those commercial insurance buyers that put little thought into the level of risk or loss records over the past several years, may find it difficult to or even impossible to offset the premium costs when the market turns.  Companies can begin the service cycle on hazard identification and loss reduction by using the offered services now, while the cost to do so is low.  Ask your broker or agent about the services related to risk control, claims management, appraisals, actuarial analysis, and risk audit to adjust current direction in anticipation of changing market and economic conditions.  Services that your broker or agent should be able to provide include, but may not be limited to:
⁃ Risk Control surveys
⁃ Loss analysis
⁃ Open claims reviews
⁃ Actuarial analysis
⁃ Risk profile
⁃ Property assessments
⁃ Industrial Hygiene surveys
⁃ Fleet program audit and review
⁃ Safety program audit and reviews
⁃ DOT survey
⁃ Environmental assessments
⁃ OSHA audits and assistance
⁃ Ergonomic reviews
Getting the lowest price doesn’t always translate into the highest insurance program quality.  Same with services.  You get what you pay for, or in this case, you get what you ask for…Now, go and ask.  You’ll be surprised on what a difference it makes to your program and the underwriting quality of your respective risk.
brian@briansmith.me
Insurance Coverage Considerations for Foreign Operations

Insurance Coverage Considerations for Foreign Operations

Many companies may be operating or considering the notion of operating in a foreign country.  With this statement comes one major question…
What insurance policies should your company consider with these “Foreign Exposures”?
Domestic commercial insurance policies have defined territorial parameters of coverage.  Ensuring your current program will extend into your areas or anticipated areas of operation is critical to asset and liability protection. For the purpose of this blog, I will discuss (4) four of the areas that may be considered when moving your operations or employees into a territory that may not be covered under your current insurance policy.
• Foreign Voluntary Workers’ Compensation – If employees are to be located in an foreign country for an extended period of time, verify with your insurance carrier the parameters of coverage under existing workers’ compensation policies.  If needed, a foreign voluntary workers’ compensation program may be in order.  This type of insurance picks up the gap presented with an extended stay to a foreign country not covered under standard domestic policies.  Allowing for the injured or ill worker to receive benefits as originally designated by their state of residency by having in place a Foreign Voluntary Workers’ Compensation program.
• Defense Base Act Insurance – Companies providing services to the US Government may be required to provide Defense Base Act insurance to their workers.  DBA is a mandated coverage intended to provide US workers and third country nationals with insurance while working on a military installation outside the United States, or on behalf of the US Government under contract.
• World Wide Medical insurance – Employees located in third world countries or on remote foreign assignment, may have limited access to proper medical care.  World wide medical insurance will enable the worker to secure medical attention as well as evacuation to a facility that can best treat the injury or illness.  Costs associated with medical care are covered by this program to a specified limit.  Access to organized transportation from one region to another is also provided.
• Kidnap, ransom, and extortion – Corporate employees traveling to foreign countries may experience the threat of Kidnap. Critical to the release and safe return of the worker(s) are professional negotiation services as well as ransom or extortion monies being made available.  Having in place a plan of negotiation and payment may be part of the corporate safety program and should be conducted only by professionals.  This coverage offers companies the flexibility and access to professional services and high limits to funds on a worldwide basis.
brian@briansmith.me

Insurance coverage comparisons are “sour apples”.

One of the most common requests an insurance broker receives is to provide and “apples-to-apples” review and quote of a commercial insurance program.  Problem is, many insurance brokers or agents do and fail miserably in the end because there is no such thing.  For years, many commercial insurance buyers have  viewed program selection as a bid and commodity purchase that warrants little attention as long as the price is “good”.  For many buyers this worked, at least until a claim occurred.  Then it rests with a lot of individuals from legal to finance that are tasked with figuring out what is covered, up to what level or limit, and when will the loss be paid, if at all. Thus the “apples-to-apples” scenario falls flat with regard to effectiveness.
No two businesses are alike, and no two insurance policies are or should, for that matter, be alike.  Each organization has its own type of inherent risk associated with its operations; so too should it have its own customized insurance policies.  When a comparison is requested, it should be based on corporate goals, operational shifts, changing economies, growth plans, and contingent risks; not just price.  Here are a few areas a commercial insurance client should consider in addition to price:
⁃ In addition to insurance premium, our corporate additional spend for the total cost of risk is…?  Do you know that additional cost?
⁃ When were my properties last appraised?
⁃ Are the values appropriate?
⁃ How is the retention structured?
⁃ Can my retention be increased or decreased?
⁃ Have my exposures changed and if so, is my agent or broker aware of them?
⁃ What does my claim history represent?
⁃ Is the claim trend higher or lower over the past three years and why?
⁃ What services may be necessary to reduce my claims and or cost of claims?
⁃ How are the claims being managed?
⁃ Is the claims management effective?
⁃ Has the experience modification factor been reviewed for accuracy?
⁃ What regulatory shifts have occurred since the last renewal?
⁃ Will those regulatory shifts have an impact on my program?
⁃ Can my collateral be reduced on my self insured program?
⁃ How long has my program been in place and what do I know about the limits, conditions, and coverages of the program?
⁃ Does our program have exclusions or conditions that would jeopardize business operations if a claim were to occur and not be covered?
⁃ How familiar is our staff with claims reporting?
⁃ Is our safety and loss control program up to date and free of potential OSHA violations?
And last but, not least, can my agent or broker provide our organization with the needed expertise and resources necessary to assist and service these and other areas of risk that have yet to be mentioned?  With so many aspects related to the overall protection of a companies assets on the line, it only makes sense to move past the price element and look squarely into the eyes of your organizational exposures, employing the methods necessary in reducing the overall risk.