IRMI Update—Issue #7
An E-mail Newsletter for Risk and Insurance Professionals
ISSN: 1530-7948
December 19, 2000
In This Issue
Colleague,
I've always thought it ironic that the holiday season is also the busiest
time of the year for most risk and insurance professionals. You're supposed
to relax and spend time with your family while taking care of January 1 renewals.
Now that's a challenge!
With the changing marketplace, this is probably one of the most stressful
renewal seasons you've experienced in years. Nevertheless, it is important to
maintain some balance. Find a way to put your brain on hold and enjoy quality
time with friends and family.
As we at IRMI enjoy the holidays and prepare for an exciting new year, I'd
like you to know how much we appreciate your support and loyalty. We know that
IRMI would not be here without you, and we promise to work even harder next
year to bring you practical and insightful information that you can use in your
work.
Best wishes for happy holidays and a healthy and prosperous new year!
Jack
Jack P. Gibson
President
IRMI
We add new Expert Commentary to IRMI.com every week. There are now 93 articles
on IRMI.com, and many more are in production. Below you'll find summaries of
some recent additions with links to the articles.
-
The Employer/Employee
Relationship in Workers Compensation—In these changing business
times, it is often difficult to discern who the real employer is with regard
to the employer/employee relationship. The traditional employer/employee
relationship is being eroded as employers turn to temporary agency workers,
independent contractors, and leased employees to enhance their competitive
advantage. This article explains the common-law method of defining the employer/employee
relationship and provides cost saving tips for risk management.
-
Are You Ready for
Total Recall?—This first article in a new risk management column
addresses the various insurance coverages available for business interruption
resulting from a recall. Learn how the choices you make now can save your
company from a hard landing if it ever faces total recall.
-
Enterprise Risk
Management in the Financial Services Industry: From Concept to Management
Process—Learn how a five-step systematic management process-assessing
risks, articulating strategies, evaluating strategies from policyholders'
and owners' perspectives, and then refining them-represents the logical
flow of activities in developing ERM strategy.
-
The Most Difficult Salesperson
in the World—Do you know someone who argues incessantly over
trivial matters, is intent on winning every argument, and is a professed
"expert" in all subjects? This person may suffer from Oppositional Reflex
call reluctance. Learn how to recognize and deal with Oppositionals in this
fascinating article.
Jeff Masters Wins
WOW Award. Jeffrey D. Masters, Partner, Cox Castle & Nicholson, was
honored with the 11th Words of Wisdom award at the 20th IRMI Construction Risk
Conference in Atlanta. The Words of Wisdom (WOW) award, is presented by IRMI
to recognize outstanding speakers at the IRMI Construction Risk Conference.
Meet Jeff and the other award winners.
Employment practices liability has become a major loss exposure for U.S.
businesses. As a result, the employment practices liability insurance (EPLI)
marketplace was one of the fastest developing (and changing) markets in history.
New insurers enter the market and coverage changes are introduced almost weekly,
which creates quite a challenge for agents, brokers, and risk managers alike.
In an IRMI.com Expert Commentary article, Bud Lion even sites lack of EPLI product
knowledge as the major reason agents haven't been better marketers of EPLI coverage,
and he believes this is an agent E&O exposure. IRMI can help you meet the challenges
of this fast-changing area with
Employment Practices
Liability Consultant (EPLiC), our quarterly journal on EPL insurance,
law, and risk control. It even includes an online market directory that can
be accessed only by subscribers. Download a recent issue from IRMI.com today.
Also read Bud Lion's comments on the need to train producers on EPLI coverage
in his article, Twenty-Seven
Common Procedural Mistakes that Lead to E&O Claims (see reason #24).
We received many thought-provoking responses to Jack's editorial concerning
the possible loss of focus on risk control during the soft market. (See the Message from
the Editor in Update #6.) Here are some highlights.
- I've always found that the Safety people put a much greater dollar value
on safety than was reflected in the insurance premiums for several reasons:
- It takes a few years for the effect of a good safety record to work
its way into a meaningful premium reduction.
- Major injury/death cases receive a lot of negative publicity but
do not affect premium as much as frequency.
- Safety people tend to link safety with savings in a direct manner
when the linkage is not really so direct.
- Most of the large E&C companies have large SIR programs that can
be leveled out to keep rates uniform.
The risk managers and safety people are generally at odds on the savings,
with the safety people claiming that their efforts are not properly rewarded--they
create the savings and the risk manager gives it away to insurers. They
also tend to be more empirical and emphasize statistics to justify their
efforts and expenses, while by comparison, the risk manager is the opposite
by explaining that the savings will show in later years and be spread over
several years.
—Risk Manager
- I don't believe the soft market reduced the focus or concerns for effective
risk management; however, I believe the hardening of the market will have
quite an impact. I have already heard "I have done everything you and your
insurance company have asked regarding loss control and safety; but you
want to raise my rates. Why should I do everything right and control my
losses if you are going to increase rates anyway?" We all know how to answer
this complaint, but insurance agents and brokers will take more of these
verbal lashings as a result of the "hard" market.
—Independent Agent
- We see a plethora of failures in a number of areas: inadequate training
of workers, lack of periodic refresher sessions on safety in the workplace/site,
poor maintenance of equipment, poor design and maintenance of fire suppression
systems, poor record keeping, safety audits that should be performed routinely
but do not appear to be, insufficient emphasis by employers or site inspectors
on possible hazards whether it is related to equipment operation or chemicals,
etc.
The other comment I think is appropriate is that you'll find that most
businesses that have "slacked" on risk control have not been serviced properly
by their brokers. I think it is our responsibility to consult with our clients
not only in program design, but also the risk control aspect. Most brokers
are not doing a very good job of steering the client to this important piece.
—Forensic Claims Consultant
- Our commercial owners appreciate our concern and input in this area
[safety] and it is an "added benefit" to working with our firm. I have a
number of clients who did "shop" renewals and found a lower cost basis but
stayed with us because of the "added benefit" we brought to the table.
—Independent Agent
- The municipal marketplace has cut back safety budgets dramatically.
With less taxes coming in, they (city managers) are looking for ways to
cut immediate expense so they cut safety training and enforcement. They
hope they get away with it but, if they do not, then no one questions insurance
premium increases.
—Risk Manager
- In today's society, people are more focused on their family and understand
"what is at stake" when going to work. If companies do not invest in a program
that keeps their employees safe I believe that the employee will seek other
employment that offers some kind of program.
—Risk Manager
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