IRMI Update—Issue #70
An E-mail Newsletter for Risk and Insurance Professionals
ISSN: 1530-7948
August 12, 2003
In This Issue
Colleague,
In his annual review of the employment practices liability insurance (EPLI)
marketplace, Bob Bregman reports that there are now at least 40 markets for
this coverage. This line has experienced the firming of the general marketplace
with rising premiums and retentions and limitations on coverage terms. Nevertheless,
market penetration is increasing, especially with small and mid-size organizations.
This last observation really caught my attention. Having been around only
a decade or so, EPLI is a relatively new line of insurance. Large companies
were the first to buy it, either as stand-alone policies or as endorsements
to their D&O policies. Now that it is becoming much more common for small firms
to buy the cover, I guess it has entered the mainstream. This was reinforced
at a legal seminar I attended earlier this year when a lawyer surmised that
all companies should buy EPLI and that agents who didn't recommend it risked
facing E&O claims.
I'd like to know what you think about EPLI for small and mid-size companies.
Should most (or all) small and mid-size companies buy EPLI? Are they buying
it? Why should they buy it or not? Can you share a horror story about a small
firm that wished it had bought the cover? Do you have any suggestions for other
ways to manage the risk? [See reader comments.]
If you subscribe to EPLiC, look for a link to Bob's market report in your
next issue. If you don't subscribe, here is some information about the newsletter
along with a sample
issue.
Registrations are coming in fast for the 23rd IRMI Construction Risk Conference.
If you are on our mailing list, you should have received a brochure. If you
didn't get one, please contact us
with your name and complete address, and we'll drop one in the mail to you.
Alternatively, you can visit this web page
for an agenda, speaker biographies, or even to register.
If you or someone you know has developed an innovative construction risk
management program, it may qualify for the Gary E. Bird Horizon Award. Consider
nominating someone for this award. See this
web page for details.
Thanks for subscribing to IRMI Update and for recommending it to your colleagues.
Have a great day.
Jack
Jack P. Gibson
President
IRMI
IRMI Update reaches over
29,000 risk managers, insurance agents, brokers, adjusters, lawyers, and underwriters
who look forward to reading the tips and articles offered in each issue. Since
yours will be the only ad in this space, it will be seen and acted on by key
decision makers. For more information,
contact us or go to this
web page.
Set Up a Fraudulent Claims Prevention Program—Insurance
fraud is endemic in the United States and takes approximately $100 billion every
year from the industry. Avoiding, or reducing, the flow of cash due to fraud
requires the following.
- An effective, well-trained and funded Special Investigation Unit (SIU).
- A claims staff that is honored for detecting potential fraud and referring
it to the SIU for further investigation.
To maintain an effective SIU the following steps must be taken by the insurer:
- Employ sufficient SIU staff to investigate no less than 3 percent of
your claims since insurance fraud is involved in 3 to 10 percent of all
claims.
- Train your SIU personnel to read and understand insurance policies issued
by the insurer.
- Train your SIU personnel on the elements of the crime of insurance fraud
and what is necessary to cause a prosecution to begin.
- Train your SIU personnel on the information needed to use fraud as a
defense to a civil suit.
- Train your SIU personnel to be effective insurance investigators and
interviewers.
To keep your SIU busy it is imperative that every insurer train every claims
person to recognize potential insurance fraud. To do so, it is necessary that
they learn to recognize the "red flags" or indicators of insurance fraud. It
is also imperative that the claims personnel recognize that red flags are not
evidence sufficient to accuse someone of fraud but only enough to cause the
insurer to thoroughly investigate the claim to determine if there is evidence
to establish fraud. (Watch for my future Expert Commentary article listing and
discussing many of the red flags.)
If you are a risk manager or insurance buyer, you would be wise to ask your
insurer about its process for identifying and dealing with fraudulent claims.
If there is no process similar to this one, your loss experience is probably
being adversely affected.
By: Barry Zalma, Esq., CFE
Barry Zalma, Inc.
Culver City CA
E-Mail: zalma@zalma.com
www.zalma.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. We'll
give you credit for your contribution.
There are now 442 articles on IRMI.com, and many more are in production.
Below you'll find summaries of some recent additions with links to the articles.
Construction Defect Crisis
Produces Coverage-Restricting Endorsements—Insurers are making significant
changes to their policies in response to rising construction defect claims.
Ann Rudd Hickman takes a look at these changes, including those affecting known
loss, EIFS, mold, earth movement, residential construction, additional insureds,
and others.
50 Percent
Conference Discount Available—Contractors and project owners who
have not attended an IRMI Construction Risk Conference before can receive half
off the regular registration fee. Only direct employees of construction firms
and project owners are eligible. If you do not qualify for the discount but
know of someone who does (e.g., a staff member, friend, or client), you should
both consider attending November 17-20 in Chicago. Watch the
Conference Web site for more information
and agenda details.
Professional Liability
Help—The D&O, EPL, professional, and E&O liability insurance lines
have firmed along with the more traditional coverages. Do you know which coverage
provisions are indispensable and which insurers provide them? Do you need some
additional markets to look at a tough account? The coverage analyses, policy
comparison charts, and market directory in our three-volume reference,
Professional Liability Insurance, will
help you succeed in the changing marketplace.
Michigan Agents: Get Your CE
Online Before 9/1—The Michigan DOI is changing the monitoring requirements
for all self-study continuing education courses. Any course completed BEFORE
9/1/03 has a Closed Book Exam but does not require a monitor. Effective 9/1/03
exams must be MONITORED by a disinterested third party. The monitor can be any
impartial person who is not concerned with the result of the examination or
the success of the student. The monitor cannot be related (by family) to the
student. (Potential monitors include: Teachers, Librarians, Church Leaders,
Neighbors, etc.)
Check your state's requirements or place an order at any time by going to
this web site. Choose your courses from the "Course
Catalog" by selecting your state and license type.
Kenneth
Slavens has been writing on design professional liability legal trends
for IRMI.com since May 2000. He is a shareholder in the Saint Louis-based law
firm of Brown & James, P.C., where he specializes in construction and commercial
disputes, with an emphasis on the representation of design professionals. For
more information on Mr. Slavens, go to following links to see his full
biography and a
list of his articles.
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