IRMI Update—Issue #91
An E-mail Newsletter for Risk and Insurance Professionals
ISSN: 1530-7948
June 29, 2004
In This Issue
Colleague,
Allianz Global Risks US Insurance Company conducted a survey of brokers and
risk managers in the spring of this year to determine their levels of satisfaction
with the services being provided by commercial property insurers. Are you surprised
to learn that property insurers fared poorly in the survey? Poor service has
caused 90 percent of property insurance brokers to recommend that a client switch
insurers, while 46 percent of property insurance buyers have switched insurers
due to poor service levels.
Some of the chief complaints were lack of communication during the submission
process, poor timeliness and accuracy in policy issuance, a lack of client industry
knowledge, and infrequent underwriter contact. Allianz CEO Kevin R. Callahan
summed it up pretty well when he said, "The poor level of service being provided
by commercial insurance carriers is unacceptable. In just about any other industry,
companies would go out of business if they conducted themselves this way."
When I started in this business some 25 years ago, I was appalled to discover
these same deficiencies, and it disturbs me even more that insurers have been
unable or unwilling to correct them. The senseless litigation over what policy
form applies to the World Trade Center loss is a sterling example of the problems
that arise from such lackluster service. Allianz intends to differentiate itself
by exceeding customers' service expectations. That won't be hard to do in this
industry, and I hope they lead everyone to new levels.
So what do you think? Have you ever changed insurers (or recommended a client
change) because of poor service? Would you move to an insurer who excelled at
these service levels even if it charged a marginally higher premium? Are insurers
as a whole improving? [See reader comments].
On another note, I hope you are giving serious consideration to attending
one of our Tech-eRisk 2004 seminars in August. Media, e-commerce, technology,
and privacy risks are not well addressed by many risk management and insurance
programs, and this seminar will help you avoid embarrassing gaps in your (or
your clients') insurance and risk management programs. For details drop by the
seminars section of IRMI.com.
Thank you for the trust you place in IRMI. Have a great day.
Jack
Jack P. Gibson
President
IRMI
Don’t let claims on the first/last day of the policy
period get double counted—Some claim databases charge double for losses
that fall on the last day of an expiring policy period when that same date is
shown as the first day of the renewal policy. The standard industry approach
for policy periods is to use the same date for both the expiration of one policy
and inception of the other and specify that the switch over occurs at 12:01
on that date. For whatever reason some claims databases are not time sensitive
as to exact time of day the claim occurred. This can result in allocating the
claim to both the expiring policy’s year and the new year (which will generally
be the proper year). For example, I just found where a major insurer assigned
$229,000 in losses to 2 policy years and double charged for these losses under
a retrospectively rated plan. Of course this is most problematic with loss-sensitive
programs but is also troublesome when the insurance is on a guaranteed cost
plan as it can affect the insured’s future costs or even its ability to obtain
coverage. When reviewing loss reports carefully check any claims that fall on
the inception/expiration dates to assure they are included in only one year,
and ask the insurer to correct them if they are double counted. Some insureds
even modify their policies to set the expiration at 11:59:59PM on one day and
the inception at 12:00AM on the next day to avoid the possibility of this problem.
In most cases, however, this will require a manuscript endorsement, and underwriters
may be reluctant to provide it.
By: R.W. Stephens II
President
Insurance Risk Management Advisors
ray.stephens@irmadvisors.com
Suggest a Risk Tip. 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
acknowledge your contribution as we did for Ray.
There are now 554 risk management and insurance articles on IRMI.com. Below
you'll find summaries of some recent additions with links to the articles.
IRMI's newest seminar, "Tech-eRisk 2004: Risk Management and Insurance Solutions
for Technology, Media, and E-business Exposures," will help you manage and properly
insure the potentially catastrophic technology, media, and e-business risks
faced by companies in any industry—technology, publishing, broadcasting, or
"brick-and-mortar" manufacturing, retailing, or service. Our two expert speakers
will walk you through the loss exposures, what traditional insurance does (and
does not) cover, and what to look for in special e-business or media insurance
policies. They will also address contractual risk transfer techniques and enterprise
risk management for these exposures.
Dates and locations are August 4-5 in Las Vegas; August 17-18 in Boston;
and August 25-26 in Chicago. To register or learn more, see the seminars section
or call (800) 827-4242 and ask for the seminar coordinator.
The ninth edition of IRMI's popular Glossary defines 2,800 key insurance and risk management terms in plain English with
a focus on practical application. This popular reference gives you quick answers
to questions involving unfamiliar terminology used in insurance specifications
and proposals, risk management reports, and other written documents you receive.
It also provides directories of important organizations and regulatory offices
and contains more than 860 frequently used abbreviations and acronyms. For more
information or to order your copy, go to the products section of IRMI.com.
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