IRMI Update—Issue #7

An E-mail Newsletter for Risk and Insurance Professionals
ISSN: 1530-7948
December 19, 2000

In This Issue

Message from the Editor

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

New Expert Commentary

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.

20th IRMI Construction Risk Conference

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.

IRMI Products & Services

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).

Your View—Risk Control in the Soft Market

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.

  1. It takes a few years for the effect of a good safety record to work its way into a meaningful premium reduction.
  2. Major injury/death cases receive a lot of negative publicity but do not affect premium as much as frequency.
  3. Safety people tend to link safety with savings in a direct manner when the linkage is not really so direct.
  4. 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

—Independent Agent

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

Independent Agent

—Risk Manager

—Risk Manager

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