IRMI Update—Issue #4
An E-mail Newsletter for Risk and Insurance Professionals
ISSN: 1530-7948
October 17, 2000
In This Issue
Colleague,
At last May's annual Risk and Insurance Management Society (RIMS) conference,
a European gentleman asked our panel whether U.S. agents and brokers would review
contracts to analyze the risk and insurance implications for clients. I answered
that many agents and brokers do provide such services.
However, a fellow panelist (an attorney) was quick to caution any agents
or brokers in the audience that they would substantially increase their errors
and omissions loss exposure by providing these types of services. He implied
that these types of services should not be offered for this reason.
Well, I just don't agree with his conclusion. Yes, such services may increase
the E&O exposure as compared to doing nothing more than selling policies. However,
insurance distribution transactions can be completed in an ever-growing number
of ways. Agents and brokers who fail to provide demonstrable value added beyond
the transaction will indeed have reduced E&O exposures, but the real reason
for the exposure reduction will be that they are writing less business!
In my opinion, agents and brokers must bring these types of "value added
services" to the table to prosper in a dramatically changing insurance environment.
Such services can provide a competitive edge over other firms, causing clients
to consider something other than price when choosing their insurance advisers.
They also enable the charging of fees rather than (or in addition to) commissions.
Providing this type of service presents a wonderful opportunity for those
organizations that embrace these concepts and excel at implementing them. The
risk management process should then be applied to handle the resulting E&O exposures.
Account teams must be well trained, they must be given the resources necessary
to provide a professional level of service, and standard procedures must be
implemented to assure a quality work product. It's just good business.
Have a great day!
Jack
Jack P. Gibson
President
IRMI
We established several objectives for IRMI Update when we designed this service:
- We wanted to provide you with fresh and useful concepts and stimulating
ideas,
- We wanted to keep IRMI Update relatively short, and
- We did not want to publish it so frequently that you would get tired
of receiving it.
We now find it difficult to meet all of these goals. We have so many ideas
for giving you fresh and useful information, that it is difficult to both keep
the newsletter short and publish it only once a month! So, we decided to ask
our readers. Would you prefer to receive either two or four short issues of
IRMI Update each month or stay with a single somewhat longer one?
Please cast your vote to tell us whether you would prefer for the distribution
schedule for IRMI Update to remain monthly or move to a twice monthly or weekly
schedule. Thanks for your input! [To see how readers voted, go to IRMI Update #5.]
Get a Professional Fee Endorsement. Is your
property policy endorsed to cover professional fees your firm incurs in settling
claims? This endorsement, which you may already have in your policy, covers
the costs expensed by your company to engage outside consultants to assess and
adjust your covered property loss. If you don't have this coverage, you need
it. Typical wording for this coverage is as follows:
This policy is extended to include expenses incurred by the Insured,
or by the Insured's representatives (Auditors, Accountants, Architects,
Engineers, Lawyers) for preparing and certifying details of a claim resulting
from a loss which would be payable under this policy.
This language or coverage insures the policyholder that the cost of retaining
outside engineering and accounting personnel to prepare a property and/or business
interruption claim is fully recoverable from the insurer. Although this coverage
has been available for quite some time, not all insured's are aware of it.
Engaging property loss professionals to handle your claim will ensure that
you maximize your recovery, expedite the settlement of the claim, and minimize
the disruption to your personnel.
By: Ken Kosinski
President
RECON LLC
Norwalk, CT
mailto:KAKRECON@aol.com
Suggest a Risk Tip. Future issues of IRMI Update will include more risk tips from our readers. Send
us a practical tip (less than 300 words) for identifying and managing risks,
buying insurance, managing claims, or filling gaps in insurance coverages.
In the past month, you may have noticed that IRMI.com has a new look. We've
switched our standard Web font from Arial to Verdana. Verdana is an increasingly
popular font to use for Web sites. It is a sans serif font, like Arial, but
wider, so it is easier for people to read. Below is an example:
Arial: International Risk Management Institute, Inc.
Verdana: International Risk Management Institute, Inc.
We hope this change improves the readability and user-friendliness of IRMI.com.
If you have trouble reading text in Web sites, you can also increase the
text size on your screen by enlarging the text size on your browser. For example,
if you use Internet Explorer, you can click on "View" then "Text Size" then
"Largest" to significantly increase the text size. Netscape and most other browsers
also have this capability.
We add new Expert Commentary to IRMI.com every week. There are now over 70
articles in the archives, and many more are in production. Below you'll find
summaries of some recent additions with links to the articles.
-
E-Supply—Opportunity
and Risk—Supply chains powered by the Internet are changing organizational
structures and business practices. While these changes have resulted in
new manufacturing opportunities, they have also brought about increased
risk and new insurance challenges. This article addresses these issues.
-
Understanding and
Managing Change—Understanding the cycle of change and how it
may be facilitated to achieve individual and organizational goals is the
key to change management. This article begins a series explaining the phases
of the cycle and how to manage its challenges.
-
Risk Management
for Your Web Site—Is your firm's Web site truly secure? This
article explains how to identify the risks, quantify their impact, and balance
the economic opportunities with the cost of necessary countermeasures to
keep your Web site safe and secure.
-
Jurisdiction in Workers
Compensation Cases—When it comes to workers compensation benefits,
some states are much more generous than others. Learn how jurisdiction is
determined, what problems can arise when more than one state is involved,
and risk management tips for saving time and money.
-
Lenders and Environmental
Liability—Unknown environmental problems are a far greater source
of loss to lenders than fire, vandalism, theft, or title risks. This article
examines the importance of environmental liability for all financial institutions
and investors that hold or invest in loans where real estate is used as
collateral.
-
Nonunion Employees
Gain Right to Representation during Investigatory Interviews—This
article discusses a recent National Labor Relations Board decision holding
that nonunion employees have the right to representation during an interview
that might lead to disciplinary action and its potential impact on the workplace.
-
Contractor Qualification—The
first step in a sound construction risk management program is the selection
of a qualified contractor. This article provides a methodical process of
evaluating and comparing contractor qualifications.
Technology Trends and Risk
Control—Modern onboard and electronic technology creates a tremendous
amount of information that can benefit employers and employees alike—and costs
are coming down. This article describes these new automobile/fleet devices,
including satellite systems, cellular technology/phones, trip recorders, electronic
logbooks, collision and rollover warning systems, lane guidance systems, fatigue
detectors, and antitheft technology.
The New ISO Commercial
Crime Program Hits the Streets—Recently, the joint ISO/SAA commercial
crime program was replaced with separate ISO and SAA programs. This article
summarizes the new ISO crime program, focusing on key differences between the
old ISO/SAA forms and the new 2000 edition ISO commercial crime forms.
With less than a month to go, the workshops for the 20th IRMI Construction Risk Conference are filling fast, and the early registration discount will soon be a thing of
the past (you must register by October 23). If you are planning to attend, please
sign up as soon as possible—by phone or online—to be assured of your workshop
selections and the lowest possible fee. View the agenda to find out
what you'll be missing if you don't join us in Atlanta. Keep in mind that CE credit is available
in most states.
New Edition of IRMI CGL and Umbrella Guide Published. The IRMI CGL and Umbrella Insurance Guide,
a 230-page analysis of general and excess liability coverages, has been updated
and expanded in a second edition published this month. The Guide contains an overview of the current
(1998) version of the ISO commercial general liability coverage form, including
the 1999 modification of the policy's insuring agreement. Recent coverage developments,
such as those affecting application of the "known loss" rule, allocation of
defense expenses, and pollution cleanup costs, are given extensive treatment
in the new edition. Also discussed are the most widely written miscellaneous
general liability coverages, such as protective liability, liquor liability,
and stand-alone products liability. Typical excess and umbrella liability coverage
provisions are also explained, along with advice on coordinating primary and
excess coverage layers. The IRMI CGL and Umbrella
Insurance Guide is designed to serve as a reliable "quick" reference
for insurance professionals, as well as an introductory text on commercial liability
insurance for newcomers to the industry.
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