IRMI Update—Issue #22
An E-mail Newsletter for Risk and Insurance Professionals
ISSN: 1530-7948
August 7, 2001
In This Issue
Colleague,
Reader responses to my July 24 editorial made me realize that this is going
to be a long hot summer. The insurance marketplace is heating up with rising
frustration levels. You can read a sampling of the responses at the end of this
newsletter and many more in the article on IRMI.com.
We will run our insurance market poll on the home page until Friday. Please
add your experience to the more than 325 people who have already participated
at www.IRMI.com.
Thank you for subscribing to IRMI Update. I hope you find this issue interesting
and helpful. Best wishes navigating the rough waters of this changing insurance
marketplace.
Jack
Jack P. Gibson
President
IRMI
We've recently received a large number of requests from agents, brokers,
and insurers for permission to add a link from their Web sites to IRMI.com,
and we thought it would be helpful to let you know our policy. Anyone may link
from a company Web site into any part of IRMI.com without requesting our specific
permission as long as their Web site does not enclose IRMI.com within frames
or otherwise mask our identity. So, if you feel IRMI.com is worthy of sharing
with visitors to your Web site, feel free to link to it!
Use Hiring Policies To Reduce Fleet Risks—Given
the high costs of a fleet vehicle accident (as much as $14,000 by some industry
estimates), organizations that place fleet drivers on the road are always seeking
ways to reduce their accident rates. One highly effective strategy is to develop
and follow hiring policies that promote fleet driver safety. Before hiring employees
who are required to drive as part of their jobs, be sure to take these steps:
Develop a written hiring policy for driver safety. The policy should spell
out the criteria under which a candidate will NOT be hired, including the number
of moving violations, accidents, or other incidents that would disqualify a
candidate. It should also outline the number of violations or other incidents
the driver will be permitted while employed with the company, as well as the
penalties for exceeding those figures. Many companies also include policies
on use of the company vehicle by an employee's spouse or driver-age children.
Discuss the policy during the interview process. You'll save time and money
by eliminating non-viable candidates early. You'll also emphasize the company's
position on driver safety at the outset, which helps to build and sustain a
fleet driver safety culture within the company.
Obtain driving records before extending job offers. Make it a practice to
check a candidate's motor vehicle record as part of the interview and evaluation
process. But be sure to obtain the driver's written consent first.
By: Phil Moser
National Sales Manager, Advanced Driver Training Services, Inc.
King of Prussia, PA
E-mail:
www.palmercay.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
acknowledge your contribution as we did for Phil.
We add new Expert Commentary to IRMI.com every week. There are now 191 articles
on IRMI.com, and many more are in production. Below you'll find summaries of
some recent additions with links to the articles.
-
Modeling the Reality
of Risk: The Cornerstone of Enterprise Risk Management—A major
reason managers are frustrated with their progress on ERM is because they
don't have adequate risk modeling tools. Learn why standard statistical
models don't work well for operational risks, but structural models do.
-
All Guarantees
Are Not Created Equal—In construction, the obvious alternative
to the owner/lender assuming the performance risk is to secure some form
of guarantee. This article examines some of the alternatives and highlights
differences between them.
-
Surety Bond Penalty
Waivers in Takeover Situations—Can an obligee recover from the
surety all of its excess costs incurred due to a takeover? Does a performing
surety waive its limited liability under the bond simply by taking over
the principal's work? See how California courts answer.
-
Fiduciary Liability
Basics—Those having anything to do with pension, savings, profit-sharing,
employee benefit, and health/welfare plans are liable to the beneficiaries
for any breach of their fiduciary duties. This article examines this liability
and possible ways to handle the exposure.
Zurich
U.S. CEO John Amore To Address Conference—Tuesday morning's General
Session will focus on the future of construction risk management and insurance.
Our keynote speaker, John J. Amore, Chief Executive Officer, Zurich U.S., will
provide his perspective on "best practices" for insurance companies, with specific
emphasis on the needs of those involved in construction. Additionally, our conference
cochairmen, Bill McIntyre and Jack Gibson, will share their insights into the
challenges and changes they foresee for the construction and insurance industries.
These sessions promise insightful ideas and strategies for those new to the
industry as well as those who have spent their entire careers there.
This is just 1 of 4 all-day seminars and 19 sessions and workshops to be
presented at the 21st IRMI Construction Risk Conference. We are now taking online
registrations. Visit the Conference agenda for details
about all the sessions and the presenters. To register, just complete the registration form or call
(800) 827-4242.
New Personal Exposure
Survey Questionnaire from IRMI—The first supplement to the new IRMI Personal Risk Management and Insurance reference manual included a unique exposure survey questionnaire to help assure
proper coverages are put in place for affluent clients. Subscribers are even
given access to Word files that may be downloaded over the Internet to make
the survey questionnaire easy to use. Call (800) 827-4242 or click on the headline
to visit this Web page and learn more about this new reference manual.
Both anger and frustration over the firming insurance market were evident
in the responses to Jack's July 24 editorial.
For those who have not yet gone through their 2001 renewal, two pieces of advice
came through loud and clear: (1) start your renewal process at least 60 to 90
days in advance, and (2) provide your underwriters with a complete submission.
Here is a sampling of edited excerpts from the reader responses we received.
For a more in-depth summary and conclusions as well as messages from many more
readers, see The Marketplace
Heats Up!
- I agree that we are not in a hard market. Are we ever going to get into
one? I hope not.
—Damian Testa, President
Kaye Insurance Associates, New York
- Yes, we are in a hard market—pricing increases, reduction in coverage,
more stringent underwriting—if we're "not in a hard market yet," I'd hate
to see what's in store! We're finding the hardest hit classes presently
are trucking, construction, logging/lumbering, heavy property accounts.
—Jackie K. Anderberg, Assistant Vice President
KPD Insurance, Inc., Medford, Oregon
- What will receive favorable consideration are accounts that are submitted
by the controlling agent/broker, with substantial lead time, supported by
a detailed narrative account history, list of past jobs, financial data,
currently valued loss runs and an indication of payment terms flexibility.
—Bill Robert, Regional Underwriting Manager
St. Paul Construction, Mid-Atlantic Region, Baltimore, MD
- In other words, if the agent is not going to the trouble of trying to
sell me the account, I will not quote it for them. We will decline the price-shoppers
in favor of those accounts that are relationship and service sensitive and
will always work those risks first.
—Robert W. Gilhool, CPCU, CIC, Senior Marketing Underwriter
Amerisure Companies
- I'd concur with your observation. The phrase I like best is "No COPE,
no hope." The other issue is lead-time. Obviously the more, the better,
especially if a loss control visit is needed. I'm sure we've declined accounts
because the lead-time just wasn't there.
—Bob Medeiros, Property Practice Leader, Corporate Underwriting
Royal & SunAlliance, Charlotte, NC
- With the cutbacks in training in the last 15 years and "computer underwriting,"
the actual underwriting art has practically become extinct. If our industry
is to get back to making an "underwriting profit" and restoring "underwriting
integrity," we must get back to the basics of proper underwriting and dumping
the "cash flow/market share underwriting mentality."
—James S. Kahn, CPCU, ARM, Risk Manager
Lackawanna Casualty Company, Wilkes-Barre, PA
- When a carrier has underwritten the exposure for 8 to 10 years, and
there are multiple lines involved; overall account loss ratio and profitability
should and must still be viewed in the underwriting process and not some
guide or the new buzz word, "it does not fit our risk appetite." It did
yesterday, and guess what? They (the carriers) will be asking for the same
business within the next year or two, but it will be too late as a bulk
of these "key accounts" are going by way of associations or other group-type
programs. (Wow, what a novel idea, huh!!!)
—Stephen Puntasecca, CPCU, President
Charles F. Heidt Inc.
- Underwriters today are less skilled in "underwriting" than their brethren
in the mid-1980s. This creates other challenges. For those insureds that
are not well prepared to properly explain their risk profile. Well, this
is not going to be pleasant!
—Sonny Chan, Director of Risk Management
Blyth, Inc., Greenwich, CT
For many more messages from readers, see The Marketplace Heats
Up!
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