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

Permission To Link to IRMI.com

We've recently received a large number of requests from agents, brokers, and insurers for permission to add a link from their websites to IRMI.com, and we thought it would be helpful to let you know our policy. Anyone may link from a company website into any part of IRMI.com without requesting our specific permission as long as their website 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 website, feel free to link to it!

Risk Tip

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.

New Expert Commentary

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.

IRMI Construction Risk Conference

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.

IRMI Products & Services

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.

Your View—Firming Market Challenges

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!"

How To Subscribe or Unsubscribe

A subscription to IRMI Update is absolutely free. Use the e-mail registration form to initiate or terminate your subscription.

IRMI Update—Issue #22

In This Issue

Print Preview Unavailable