IRMI Update—Issue #77
An E-mail Newsletter for Risk and Insurance Professionals
ISSN: 1530-7948
November 18, 2003
In This Issue
Colleague,
We've been hearing a lot lately about the danger of impending insurer insolvencies.
Stewart Economics was recently commissioned by the Council of Insurance Agents
and Brokers (CIAB) to study insurer insolvency, and their report, "Managing Insurer Solvency 2003," is sobering.
One of their conclusions is that, "A lot of exits are coming. They will not
come all at once, but they will come sooner or later. They will not all be by
acknowledged insolvency. Some will be called restructuring or merger or strategic
repositioning or discontinued operations or outsourcing of claims administration.
But by any name they will be exits in the face of impending failure."
My purpose in raising this issue is not to delve into causes or potential
preventative actions that regulators or insurance company managements might
take. Instead, I wonder what actions agents, brokers, and insurance buyers should
take to minimize the impact of what the Stewarts seem to think is inevitable.
Sure, you check the S&P rating and the A.M. Best rating, but what else can you
do? Are business executives willing to pay a higher premium to obtain their
insurance from the most financially fit insurers? If you are an agent/broker
and an insurer seems to be going down hill, do you stick with it or do you move
all your accounts elsewhere? If you are risk manager, do you accept short rate
cancellation costs to move mid-term? Is this something to worry about and try
to manage, or should we just hope it doesn't happen to our company or our clients?
[See reader comments].
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Here in the United States, we're headed into the Thanksgiving Holiday next
week. There is certainly no better time than now for me to express our appreciation
for the trust and confidence you place in IRMI by subscribing to our publications.
Thank you very much.
Have a great day.
Jack
Jack P. Gibson
President
IRMI
Choose Your One Broker Carefully—My advice
to any risk manager would be to choose your broker carefully. Since most large
brokers represent the same insurers, there is no reason for two, three, or four
brokers to even be involved in a renewal situation. It only muddies the water,
confuses the underwriters, wastes your time that could be devoted to other risk
management issues, and doesn't guarantee the best outcome.
My advice is to look at what each broker can offer your business in terms
of:
- What they bring to the table in terms of services
- What is their industry reputation?
- What are their credentials?
- Check client references.
- Get a list of insurers represented and their firm’s loss ratios with
them.
- How much experience do they have handling accounts similar to yours?
Rather than competitively bidding your insurance program among a number of
agents and brokers, I recommend you make your decision on the broker, and then
let the broker have control of marketing your account.
By: Gene Seago, CST
Merritt & McKenzie, Inc.
Atlanta, GA
E-mail: gsseago@merrittmckenzie.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 475 articles on IRMI.com, and many more are in production.
Below you'll find summaries of some recent additions with links to the articles.
Classification Cross Reference Updated—IRMI's popular Classification
Cross Reference has been updated and is now available in print and electronic
form. The new twelfth edition has been updated to reflect classification code
changes in the last few years and expanded to include more entries and additional
refinement of the cross references. The handy book cross indexes NCCI, ISO,
NAICS, SIC, and seven independent workers compensation state classification
codes. It is an invaluable tool for underwriters, premium auditors, CSRs, and
rating technicians.
Time is Running
Out to Get 2003 CE—If you're still scrambling to fulfill your continuing
education (CE) requirement for 2003, IRMI has the answer with online courses
that are easy to take and informative as well. One new course is IRMI Commercial
Auto Insurance, which provides an introduction to commercial auto insurance,
focusing on the standard coverage forms developed for this line by Insurance
Services Office, Inc. (ISO). It examines some of the motor vehicle statutes,
the public policy issues behind them, and their effect on various types of commercial
auto coverages. For more information or to order one of these or other CE self-study
courses, see the Training and Education section of IRMI.com.
Rolf Neuschaefer contributes articles on surety bonding tips and tactics for IRMI.com, and has
done so since March 2001. Mr. Neuschaefer has been active in the surety bond
business for over 30 years, serving in various underwriting and management positions
in five different Aetna field offices. He retired as field vice president from
Aetna/Travelers after 28 years of service and joined the Robert E. Harris Insurance
Agency, Inc., where his focus has been on contractor bonding and insurance.
For more information on Mr. Neuschaefer, see his full biography and a list of his articles.
Over 1,200 Attend 23rd IRMI Construction Risk Conference—Over
1,200 attendees are meeting in Chicago today for the 23rd Construction Risk
Conference. The volatile market has hit the industry hard, and they are learning
about available options and networking with others in the same boat. With help
from sponsors such as AIG, CNA, Zurich, Liberty Mutual, Marsh, and others, IRMI
offers an experience that is as enjoyable as well as educational. In our next
issue of IRMI Update we'll announce this year's Gary E. Bird Horizon Award and
Words of Wisdom Award winners. We'll also give you links to the conference speakers'
handouts. In the meantime, learn more about the conference, how to become a
sponsor, and future dates and locations on our Web site.
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