The Insurance Assurance Blog

Uncovered Claims

2013-01-30T09:58:00.002-05:00

I have been talking with a banker. He emails the following:

"Most of our renewals are in the fall. I may give you a call prior to those renewals to talk."

My reply:

"Always glad to talk. Renewals are best managed when started 120 days ahead. Of course a coverage review catches uninsured/underinsured areas at any time - perhaps just before a loss."

The holes in your insurance do not wait for renewal. Claims occur whenever...

Coverage problems are discovered either when a claim isn't covered or when someone discover the coverage gap.

I'm asked when is the best time to review insurance coverage.

My answer is, "just before an uncovered claim."

Moving Day!

2011-11-05T08:30:00.002-04:00

To update the functionality of this blog I have moved it to...

http://scottsimmonds.blogspot.com/

Please visit me there and subscribe to my posts.

Best,
Scott

Bank Insurer Ratings

2011-10-30T15:36:00.002-04:00

I work with a variety of insurers in my efforts for my bank clients. I review coverage, help with claims, and manage bids for community banks.

Here are the latest ratings by AM Best and Weiss Ratings for a sample of the insurers who work with banks.


.		Q3 2011
.		A.M. Best Rating	Weiss Ratings
.	ABA Insurance Services - Everest Re Group Ltd	A+ XV	C
.	BancInsure Inc	B++ VI	C
.	Chubb Group of Insurance Companies	A++ XV	B
.	Cincinnati Insurance Companies	A+ XV	A-
.	FinSecure - StarNet Insurance Company - W. R. Berkley Group	A+ XV	C
.	Kansas Bankers Surety - Berkshire Hathaway Insurance Group	A++ VII	B
.	OneBeacon Insurance Company - White Mountains Insurance Group	A XI	B-
.	Travelers Group of Insurance Companies	A+ XV	B
.	Zurich Financial Services Ltd	A+ XV	C
.
.

Simmonds Business Insurance Index™

2011-10-27T07:58:00.001-04:00

The Simmonds Business Insurance Index™
November, 2011

Renewal Premiums - Slight Increases
Renewal Coverages - Negotiate - But Be Ready To Lose
Buyer's Outlook - Long-Term: Prices Increasing / Coverage Restrictions

The soft market is coming to an end. Underwriters are asking questions. Insurers are restricting writings in areas. Coverages that were easy to get are requiring tough conversations and negotiations.

I had an underwriter refuse to offer crime limits over $25,000 to a wood products company the other day! Six months ago we could have probably negotiated for $100,000 at no additional premium.

Carriers are reluctant to offer renewal quotes early because they are afraid to miss an increase in the market premium. There is breath-holding going on about the January reinsurance renewals.

This will not be pretty.

Limitless Insurance For Banks

2011-10-26T20:46:00.001-04:00

Sent to the ABA Journal:

To The Editor:

For well over 100 years, the insurance industry in America has done an exceptional job of offering protection to America's community banks. As the banking industry changed, so did the insurance protection offered to financial institutions. As technology changed, bank insurance changed to meet the new exposures.

It's time for the banking insurance world to take the next step.

As an insurance consultant to community banks, the most frequent questions I'm asked is, “How much coverage should we buy?”

It is an unanswerable question. No bank can be totally confident that the amount of insurance they have purchased will be adequate to meet future claims. The risk of running out of insurance is an exposure often considered by bank executives. Is $1,000,000 enough? How about $5,000,000? Is it possible that we could be sued for $20,000,000? Is a bond limit of $5,000,000 adequate?

You may as well ask, "How high is up?"

Currently, all insurance policies for banks have limits. Each policy describes the maximum dollar amount that will be paid by the insurer for covered claims. Every bank in America could potentially run out of insurance.

Of course few, if any, will. However, there is a risk for every bank. More than a few bank CEOs and CROs stay up at night worrying about such risks.

Fortunately, this is a risk that can be easily borne by the insurance industry because of the law of large numbers. With many banks insured, few will have claims. Fewer still will have big claims. Few (if any) will run out of insurance.

I dare say that removing the risk of running out of insurance is a value that bankers will pay for. The time has come for insurance companies to offer insurance contracts without limits of coverage.

Certainly, some banks will continue to select an amount of insurance on their bond and their Directors’ & Officers’ insurance. Other banks, however, will recognize the value of an insurance policy where the threat of running out of insurance is zero.

Think of the benefit to your directors, officers, and stockholders of the bank knowing that they cannot run out of insurance protection. Would a bank pay an extra 20% for this feature? (I would recommend it.) Is it still valuable at 25%, or 30%, or 50% more? Individual banks would get to decide.

Insurers too can decide. Some will scoff at my idea. Some will offer it only to their very best clients. Ah, the wonders of a free market.

Those insurers who take my suggestion stand to gain in premium and client loyalty. Those who don't can continue on as they do now - hopefully losing market-share to the innovators.

May I be so bold as to suggest that you point your insurance agent to this letter. Ask your insurer to consider the idea. Perhaps this will start a discussion to the further improvement of the insurance protection purchased by community banks in America.

Scott Simmonds
Insurance Assurance Consulting

The Condo Renewal Blues

2011-09-22T10:01:00.000-04:00

Got a call this morning from the manager of a residential condo complex here in Maine.

Last year's premium was $12,000. Traveler's non-renewed the policy, as it is "coastal." The manager worked with the current agent; several board members tried to help by going to other agents. This left the insured with multiple agents all going to the same insurers, multiple quotes from multiple insurers, several from the same insurance company, but different premiums.

The current policy expires in eight days.

The manager is frustrated, confused, and looking at a higher premium (I won't tell you how high, as agents are still working on this and may read my blog). Big mess. Nobody is happy; not the manager, not the board, not the agents, not the underwriters.

I offered a solution that often works: go to a direct writer who has not been in the game yet.

I don't know if this will solve the problem. I sent them to an agent for Nationwide who has done good work for other clients.

Sometimes the solution to a problem is a very hard right.

It does not untangle the rat's nest. It throws it out. As I said, a hard right.

Now, to the preventative:

Renewals must be managed by the insurance buyer. Nobody looks after your business like you do. Take it on and hold your agent accountable. Set dates and expectations.

If you are going to get competitive bids, that process needs to be managed, too.

There can only be one captain of the boat. The condo above had too many people contacting agents with no coordination.

You must assign insurers to agents. Find out which insurer each participating agent wants to use. Assign insurers to the agents based on the requests of the agents. Someday I hope that insurers will provide quotes to multiple agents. Until then, we must assign insurers.

If I hear how this works out, I'll let you know.

Work Comp Classifications

2011-09-21T00:03:00.000-04:00

From a reader...

Scott:

In presenting our insurance coverage information to a board this afternoon, I was questioned by an HR professional, who sits on one of our boards, regarding our WC classification of employees. Almost 100% of our employees (except couriers/custodial) are classed as 8810 Clerical. I reviewed this in-depth with our agent at the last renewal and the conclusion was to continue this blanket classification of most all employees. The board member is suggesting that perhaps our commercial loan officers should be classed as “Outside Sales” – 8742.

What are your thoughts regarding addressing this again, and what are our risks in the event that the insurer feels we have mis-classed a group of employees?

Thanks,

My reply...

Glad to help.

I don't see this as a risk. It is, however, something I would have pointed out had you retained me to help with the standard lines of insurance - nudge!

Two issues...

First, cash flow. It is possible that sometime in the future an insurance company auditor will adjust the most recent policy and the current policy premiums. That might mean about 70 cents per $100 (depending on your policy's rates) in payroll for those who should be classified as sales.

My second issue is less often discussed. You have an experience modification as a part of your workers' compensation premium calculation. It is a ratio of expected losses to actual losses. An experience mod of 1.00 is average. 0.85 means your losses are below average. 1.25 means your losses are higher than average.

As you are putting payroll in a low rate / low hazard code (clerical) your mod is probably a point higher. Even if you have low losses, misclassification pushes the mod up - though only slightly, as the relative payrolls are low.

While a higher mod (.01 or so, if that) does increase your premium, you are saving net on premium with employees rated in lower codes.

That said, classification is the insurer's responsibility - unless you are lying to the auditor, and that's fraud. If the insurance company makes a mistake, it is their mistake.

There is no risk to claims not being paid. There is no risk of a fine or any penalty.

I normally counsel my clients to sit tight. If the auditor changes class, then pay the additional premium.

Work comp is like baseball - the other team has to tell the umpire you missed the base. It is not golf where you are expected to rat on yourself.

Let me know if you have questions. I am glad to talk about a review of the standard lines of insurance for your bank.

Slip and Fall Accidents, Insurance Coverage, and Procedures

2011-09-19T10:54:00.001-04:00

Your general liability insurance covers you for your liability that comes from accidents involving bodily injury and property damage. The most common bodily injury event by the general public (not employees) is "slip and fall."

Someone slips and falls in your parking lot or in your lobby.

You should have a policy for handling such events that is well known by your employees, and that includes:

-Make the person comfortable.

-Be courteous and helpful.

-Allow the injured person to decide whether or not they need medical attention (unless they are unable to communicate as the injuries are so serious).

-Get the person's name.

-Get witness names.

-Do not fill out a form in front of the injured person.

-Record the incident and keep a record of the event including the conditions that were present. Get pictures after the fact. The report should include comments made by the injured person about the event ("I only had two beers with lunch," is something that needs to be in the report).

-Never admit fault.

-Never berate or reprimand employees in the presence of the injured person.

-Never share a copy of any report with the injured person or his attorney.

Such events do not need to be reported to your insurance company unless the injuries are so serious that an ambulance is called to the scene. If the injured party calls you about medical bills (or his attorney contacts you), then report the claim.

It should go without saying that if your lobby is slippery every time it rains, you need to consider a different floor covering. Putting a "slippery when wet" sign out is NOT risk management. It is admitting there is a problem and that you have not fixed it.

So-called medical payments insurance is also a part of most general liability insurance policies. More on that in a future post.

Bad Insurance Agents

2011-09-15T14:40:00.001-04:00

OK, I am catching up on my reading of the insurance information service, FC&S (National Underwriter Company).

A few minutes ago I blogged about bad adjusters. Now its my turn to take a swipe at agents.

Here is the question asked:

A hit-and-run driver hit a car, which in turn was pushed into a building. The building and the personal property inside were damaged. The car was covered by uninsured motorists insurance, and the insurance company is paying for the car. However, the auto insurer will not pay for the building and personal property damage, stating that "as the driver was not in the car at the time of the accident and therefore we [the insurer] are not liable, the hit-and-run driver is." The car caused the direct physical damage to the building, the hit-and-run driver did not hit or even touch the building. Wouldn't the car insurance be responsible for the damages as the car hit the building, not withstanding it was unoccupied?

AHHHHHHHHHHH!

The agent is asking about LIABILITY coverage. Liability insurance responds when the insured is responsible for the damage or injuries caused.

Why would anyone think that a parked car is responsible for damage caused by another car? Basically the agent is taking the position that there was an accident and the insurance should pay.

No.

There has to be liability before a liability policy will pay. Insurance 101, day one - maybe hour two.

Of course if some lunatic court says that the parked car is responsible for the accident, then matters change. The insurance policy does not have a lunatic court exclusion (that I have ever seen).

Bad Claims Adjusters

2011-09-15T14:07:00.002-04:00

Bad claims adjusters are a plague on all our houses.

Insurance adjusters are to be the front line of the insurance transaction - the part of the transaction that we all buy insurance for - claims service.

Here is a letter sent to the insurance information service, FC&S (National Underwriter Company):

"I am working on a complaint that involves whether the auto liability should pay for damages to a third party. The insured states that her adopted son, age fifteen and holding a driver's permit only, took the family car without permission and was involved in an accident. The adjuster is denying coverage, stating that the car was taken without the parents' permission. My feeling is that the child had access to the keys, which are the liability of the parents, so they should be liable for the damages that were caused. I would like to know what your thoughts are."

There is nothing, I repeat, NOTHING, in any auto policy I have ever seen that requires that a person have permission to drive a car in order for the insured to be covered for an accident.

This is basic stuff that any adjuster should know.

The auto insurance policy, like any other liability policy, protects the insured from lawsuit. The fact that the car is taken (or stolen) does not impact coverage for the INSURED.

Think of the grief the insured is going through over this whole event, then they learn that some bone-headed adjuster is saying "no" to coverage.

Stress times ten.

I hear regularly from insurance buyers who are fighting claims that should be clearly covered by a policy. Yet adjusters, by ignorance (let's assume its that and not bad faith) cause insureds lost time and often sleep.

Insurers, get rid of incompetent adjusters. Adjusters, read the policies you are adjusting coverage for. Read insurance books and study the business.

Obviously there are good adjusters out there. We need more of you. We also need you to step forward when you see bad actors in your midst. Get them out of our business.

The Simmonds Business Insurance Index™ - September

2011-08-28T20:33:00.003-04:00

I think I am seeing signs that the commercial insurance market is changing. I know I'm seeing it in the world of bank insurance. Underwriters are asking questions they have not asked in some time. Insurers are declining to quote risks that have a bit of "hair" on them.

There still is plenty of capacity and competition in the commercial insurance marketplace. I am leaving the index unchanged from last month.

Renewal Premiums: Flat To Slight Increase
Renewal Coverages: Negotiate
Buyer's Outlook Long-Term: Prices Increasing

It is still a good time to get competitive quotes on your renewals. Get started early; at least 90 days prior to expiration. If you bid last year or the year before, ask your underwriter for premiums early - tell them you won't bid if they commit 60 days before renewal with aggressive pricing.

More on Market Changes

2011-08-15T21:31:00.000-04:00

Yes, Virginia, there is a Santa Clause. He is about to turn into Scrooge, though.

I recently wrote that I am seeing signs that the market is starting to leave the "buyer's market" part of the insurance cycle.

Here's some more...

The editors of the John Liner Letter put out a memo recently with the following:

"In a market already wracked by over $15.5 billion in weather-related insured losses in the United States, many feel that a heavy hurricane season could tip the industry into a hard market. Property insurers will be seeking rate increases for some risks as catastrophe losses continue to erode insurer profits. Insurers are also turning toward an updated Atlantic hurricane model that includes predictions of higher inland wind damage, which could indicate that current pricing and underwriting standards may not be adequate."

They then point out that the industry enjoys a healthy $565 billion dollar surplus. I have been saying all along that it is the surplus that keeps us in a buyer's market - supply and demand - lots of insurance capacity without high demand.

Predictions of horrible weather abound. Insurers will use that as their reason to try and increase prices. I'm not sure what you see. However, here the local weatherman cannot predict the weather next week. I don't know how anyone can predict it for next month - or three months.

The key here for insurance buyers is three-fold:

1) Be a desirable risk - If your business has low losses and is well managed and thriving, insurers will flock to you.

2) Be a demanding risk - Set expectations for service from your agent and insurer. Hold them to your standards.

3) Negotiate - All aspects of every insurance policy are negotiable - coverage, price, and service. You must be in a position of strength. Know what you are asking for. Know the insurance marketplace. Know what you can ask for. Practice great negotiation skills.

The John Liner memo mentioned above counsels preparedness and loss prevention. Absolutely true. There is more though. There is always more. You must have knowledge on your side.

Simmonds Business Insurance Index - Market Changing

2011-07-31T05:17:00.002-04:00

For the first time in a long time, I am predicting a hardening in the insurance market. That is reflected in the changes I am making in the Simmonds Business Insurance Index:

The Simmonds Business Insurance Index™

August, 2011

Renewal Premiums

Flat To Slight Increase

Renewal Coverages

Negotiate

Buyer's Outlook

Long-Term:
Prices Increasing

I think the insurance marketplace is starting to change. Over the next 12 months we are going to see higher premiums and restrictions on coverage.

Over the past month I have seen underwriters decline accounts they would have drooled over six months ago. My August and July renewals were/are more intense in the negotiations than in recent memory.

I'm getting more aggressive questions from insurers, and I'm starting to see a general attitude of, "We are not really interested in being competitive if it means we can't have the price we want."

At the same time, there are flashes of the soft market. One recent renewal had one insurer 40% below last year.

As the marketplace toughens, it will be more important than ever to have a renewal plan and to negotiate coverage and premiums with insurers.

Agents and insurers have been looking for a hard market for some time - years now. Their incomes will be going up. Workloads too. To the insurance buyers out there I say, "Make them earn it."

NonProfits-Where and Why Buy D&O

2011-07-25T21:22:00.002-04:00

Letter from someone who found me on the internet...

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

July 25, 2011

Dear Scott,

I just read your article here:

http://www2.guidestar.org/rxa/news/articles/2004/nonprofit-directors-and-officers-insurance-the-good-the-bad-and-the-ugly.aspx?articleId=839 and wonder if you might answer a few questions for me.

I am a director of a newly formed citizens' group, a non-profit corporation in the state of xx. We are not a 501c(3), although we may become one in the future. We expect to approve our Bylaws at the board meeting tomorrow, and we do have an indemnification clause...

We have been told that, although it is unlikely, there is a small risk that we will be sued, and that to be able to afford to defend ourselves in this unlikely event, we should get directors' and officers' insurance. You wrote in your article:

"Volunteer service is no defense for improper acts. Many states, however, provide immunity from prosecution if the actions arise out of voluntary service in a nonprofit. Remember that these laws are at the state level, and that they vary from state to state. State law cannot provide immunity from federal statues such as ERISA, the Americans with Disabilities Act, or Civil Rights laws."

We are in xx. How do I find out if we really need this coverage or not? Can you point me to a description of the coverage that would be most applicable in our situation? Further, do you know of insurers who perhaps specialize in our type of needs?

Thanks for your prompt response,

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

My reply...

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

SB,

Your indemnification clause is only as good as the assets that stand behind it. Without insurance, you are asking your directors to risk their personal assets.

Any good local commercial insurance agent can help you. Talk with your board members and supporters - find one who runs a successful business, and ask them to refer you to their insurance agent.

A local attorney can help you with the laws in your state. Personally, I cannot imagine serving on a board of directors without D&O insurance. The premiums are usually $1,000 or so for a small group. Why should so many board members risk so much for so little?

Best of luck.

Regards,

Scott

United States Longshoremen and Harbor Workers' Act - USL&H

2011-07-12T09:03:00.000-04:00

The United States Longshoremen and Harbor Workers' Act (AKA USL&H) is a federal law that provides benefits to workers who were injured in certain occupations having to do with dock workers and other maritime jobs.

Twenty years ago we worried about incidental workers on docks - florists and pizza delivery people for example - who would go onto docks or ships occasionally but whose job was not really maritime. The law then (as I recall) was changed so that the current rules exclude from coverage:

(A) individuals employed exclusively to perform office clerical, secretarial, security, or data processing work;

(B) individuals employed by a club, camp, recreational operation, restaurant, museum, or retail outlet;

(C) individuals employed by a marina and who are not engaged in construction, replacement, or expansion of such marina (except for routine maintenance);

(D) individuals who (i) are employed by suppliers, transporters, or vendors, (ii) are temporarily doing business on the premises of an employer described in paragraph (4), and (iii) are not engaged in work normally performed by employees of that employer under this Act;

(E) aquaculture workers;

(F) individuals employed to build, repair, or dismantle any recreational vessel under sixty-five feet in length;

(G) a master or member of a crew of any vessel; or

(H) any person engaged by a master to load or unload or repair any small vessel under eighteen tons net;

if individuals described in clauses (A) through (F) are subject to coverage under a State workers' compensation law.

So, based on the above, a florist delivering flowers to a dock-worker is not eligible for USL&H benefits (though they are eligible for state workers' compensation benefits).

I was recently talking with a agent who insisted that his bank clients needed USL&H coverage in case a loan officer wandered onto a dock and got hurt. As I argued, he brought up the fact that the premium was about $300 on a bank that spends over $100,000 a year on insurance.

The wind went right out of my sails.

However, should the bank even spend $300 on this? If there is never a claim, the bank spent $3,000 over ten years. If there is a claim, I hope a judge would hand an attorney his head for even trying to subvert what I think is pretty clear language (above). However, lawyers are creative and judges continue to astound.

What's the right answer?

My Military

2011-06-21T09:44:00.003-04:00

We have two sons in the service - 1 Army, 1 Navy.

Got a call today from Army Son that he is back on US soil from 11 months in the desert. The sun is brighter today. The air is crisper. My wife is smiling.

Now, back to our regular programing...

Dishonest Employees and Crime Insurance

2011-06-17T09:53:00.001-04:00

I have posted about this in the past.

Most crime policies exclude acts by an employee who is known to have committed a past dishonest act. That exclusion removes coverage when a manager knows that an employee has stolen a pencil, and then six years later is found to have stolen $200,000.

Goofy!

Here is the wording from a Travelers' crime policy I am reviewing. Much better!

This Crime Policy terminates as to any Employee:

a. as soon as the Insured's partner, any of the Insured's Management Staff Members, or any Employee with managerial or supervisory responsibility not in collusion with the Employee becomes aware of any dishonest or fraudulent employment related act involving an amount in excess of $10,000; or

b. 60 days after the Insured's partner, any of the Insured's Management Staff Members or any Employee with managerial or supervisory responsibility not in collusion with the Employee becomes aware of any dishonest or fraudulent non-employment related act; either of which acts were committed by such Employee in the Insured's service, during the term of employment by the Insured or prior to employment by the Insured, provided such dishonest or fraudulent non-employment related act involved Money, Securities, or Other Property in an amount in excess of $10,000.

Crime Insurance - No Coverage For Owners

2011-06-17T09:40:00.003-04:00

Here is an exclusion I see quite often in employee dishonesty and crime policies:

"This Crime Policy will not apply to loss resulting directly or indirectly from any fraudulent, dishonest, or criminal act committed by the Insured, the Insured's natural person partners, any LLC Member or Officer-Shareholder, whether acting alone or in collusion with others."

This means no coverage for theft by an owner.

Imagine there are five owners, and one steals. Most insureds would expect there to be coverage.

Nope!

Policy Form Number Decoding

2011-06-05T11:11:00.000-04:00

It dawned on me that the un-initiated in insurance traditions don't know the rhyme or reason to insurance policy form numbers.

A policy form listed as "CG0001 1001" means that it is a commercial general liability form - CG - the form number is 0001 and the edit date is 10/2001.

Here are some of the prefix codes most commonly used by insurers in the ISO (Insurance Service Office) system of policy forms.

HO Homeowners
BOP Business Owners
PP Private Passenger Auto
CP Commercial Property
CA Commercial Auto
DP Dwelling Property
CG Commercial General Liability
IM Inland Marine
DP Dwelling Property
CU Commercial Umbrella
CR Crime

LA Insurance Commissioner Makes Flood Announcement

2011-05-19T12:18:00.002-04:00

I got this today. Quite a helpful reminder to insurance agents...

To: All Louisiana Producers
From: Commissioner Donelon
Re: Spring Flood Update

As the spring flood has moved into Louisiana, I am asking your assistance in communicating important information regarding the National Flood Insurance
Program (NFIP) to the citizens of Louisiana.

Please alert your clients with flood coverage that the NFIP may reimburse residents up to $1000 for preventative measures taken such as sandbags, supplies, and labor for property removed to safety. Insured property must be stored in a fully enclosed building and is covered for 45 consecutive days from the date it began being moved there. Residents should keep all receipts in order to receive reimbursement, and submit them to their claims adjuster. In preparation of filing a flood insurance claim, residents should have their insurance policy, inventory of their contents, all receipts, and photos of damaged items (if possible).

Please feel free to direct individuals with flood insurance questions to the NFIP at 1-866-751-3989 or other insurance questions to the Louisiana Department of Insurance (LDI) at 1-800-259-5300. Thank you for your assistance.

With best wishes and kindest personal regards, I remain

Very truly yours,
James J. Donelon
Commissioner of Insurance

Renewal Results

2011-05-14T08:30:00.001-04:00

A midwest bank came to me with concerns about their upcoming renewal. Their insurer was not enthusiastic, and their agent seemed resigned.

The bank's current insurance premiums were $88,000 for the bond, directors' and officers,' and cyber liability.

I poked and prodded the agent, who agreed to alternative quotes from another insurer. The initial renewal quote was $97,000 from the current insurer. I knew we could do better.

After negotiations, combined with gnashing of teeth and stomping about, the final quote was $65,900 with coverage far in excess of what the bank had before. The bond was increased from $2.5 million to $4 million. The D&O was increased from $2 million to $4 million. Coverage was streamlined, and the insurer was pushed to provide a three year policy. Many policy conditions were moved from benefiting the insurer to benefiting the bank.

A lackluster renewal with a higher premium was turned into a $23,000 premium reduction with exceptional insurance enhancements.

This is the work I do. I promise valuable results for all my clients.

Workers' Compensation Classifications - Using The Clerical Code

2011-05-11T16:41:00.000-04:00

Reader Question

Hi Mr. Simmonds,

I have a random question, which I'm not sure if you can answer or not. Our organization is a non profit that does pre-school, after school, and summer camp programs as well as helps out the community with a local food pantry.

We recently received our workmen comp. bill, and they now have the entire staff listed as code 8868 Daycare Provider. The broker claims the auditor used a classification that reads, "a day care operation must include clerical" and cannot be broken out seperately. Previously we had the office / clerical staff (located in a completely separate building) listed under it's own classification. From reading your material online, we (clerical / admin) should be coded as 8810. I would gather it would be the same as an organization such as the Boys & Girls Club. Am I wrong here?

My Reply:

I suggest you ask the agent for a copy of the complete definition of the classification the auditor is using - sometimes called the SCOPES definition.

That will tell you if you can use the clerical code or not. There are some codes that do not allow the standard exceptions of clerical, drivers, and sales.

Best of luck.

Agents Who Play It "Safe," Failing Their Clients

2011-04-29T16:46:00.004-04:00

A letter to the editor I just sent to an insurance publication...

I am reviewing insurance for a client. The agent's renewal review for
last year includes a statement that they never recommend limits of
coverage.

Really?

What exactly is your job then? Are you a clerk for the insurance
companies? "Here is what we can offer. Buy what you want." It's the
big-box approach to insurance service! Why exactly do people buy
insurance from you?

This comes from the world of errors-and-omissions-loss-prevention, a
pervasive cult that insists that everything an agent does must foil
the perverse suit-happy public.

Take no risks - offer no advice, is the mantra.

Horse-hockey! Insurance buyers need informed advice and counsel. The
world of insurance is complicated and complex. It is the agent's job
to stand up and advise the client. Why else would they need you?

While you are at it - remove the stupid message from your voicemail.
"Coverage cannot be bound or amended using a voice mail system." Show
me one case where a customer successfully sued an agent because a
voicemail message included a coverage change, and I will donate $100
to the Red Cross in your name.

Pablum for the mindless insurance lemming.

Liberalization

2011-04-26T19:02:00.000-04:00

According to Ray Burnham's most excellent insurance dictionary...

"Liberalization clause - automatically broadens the coverage of all policies if a policy revision that would broaden coverage without additional premium is adopted during the policy period; is designed to prevent mass cancellations and rewrites; does not apply to new programs, e.g. the 1984 HO forms replacing the 1997 HO forms."

I do a great deal of work for banks. The insurance policies being sold now are a great deal broader that those sold even a year ago. Many banks are currently insured by three year policies for their bond's and directors' and officers' insurance. That can mean that their insurance is, in some ways, antiquated.

Nobody seems to be calling for liberalization - I think I'll start.

Buyer's Insurance Market Continues

2011-04-18T18:50:00.001-04:00

Without any hints as to whom I am speaking of (agents read this blog too - I will not mention the industries or the regions), I just received several proposals on bid projects.

The renewals are being offered at about 20% below last year's premium with significantly better coverage. The competing carriers (multiple agents) are offering quotes at 40% off of the current premium - again, with much better coverage.

The accounts I am speaking of have an average premium of over $200,000 and have not been to bid in about five years.

I say again... If you have not bid your insurance in the past three years using multiple agents and multiple insurance companies, you are probably paying too much and not getting all the coverage you can/should have.

There are reasons not to bid your insurance. That decision, however, has a cost - in coverage and in premium.