IRMI Update—Issue #39
An E-mail Newsletter for Risk and
Insurance Professionals
ISSN: 1530-7948
April 23, 2002
In This Issue
Colleague,
I was disappointed when the U.S. insurance industry, through
ISO, developed and filed a terrorism exclusion for attachment to
homeowners policies. On the other hand, I was proud of the National
Association of Insurance Commissioners when it issued a statement
concluding that such exclusions were not needed, implying that state
regulators need not approve them. We agree with the NAIC that these
exclusions are unnecessary for personal lines insurance, and we
think that the attempt to develop and use them further tarnishes
the industry's image.
Where is the truly catastrophic exposure? Existing exclusions
in homeowners policies rule out coverage for nuclear weapons or
radioactive contamination. That leaves contamination from a chemical
or biological attack, which though it might be extensive, doesn't
seem likely to be catastrophic to insurers of homes.
Most regulators appear to have decided not to allow the exclusion's
use in their states. However, the exclusions may now be used in
a handful of states. I hope the insurers in those states have decided
not to employ them. The hard commercial lines market is going to
cause more than enough animosity toward the industry. A knee-jerk
reaction to exclude terrorism in personal lines policies will only
make it worse.
Do you agree with me on this? Or do you think I've missed something
in coming to this conclusion? [See
reader comments.]
All the best,
Jack
Jack P. Gibson
President
IRMI
Make Sure Subrogation Recoveries are Applied
Properly. Your company (or client) has just had a property
loss—a motorist has negligently driven into your building and caused
$15,000 in damage. The damage is covered by the commercial property
policy, albeit subject to a $10,000 deductible.
The insurer pays $5,000, and pursues recovery against the motorist
via subrogation for the full amount of the loss. Unfortunately,
the motorist has purchased only $10,000 of auto property damage
liability insurance. Is the insurer entitled to keep the entire
$10,000 recovery? Is it entitled to only part of the recovery or
none of the recovery?
Most jurisdictions hold that the insured must be fully compensated
for any uninsured loss before the insurer may share in the proceeds
of the recovery. Therefore, assuming the company is located in one
of these "insured-whole" first jurisdictions, the company has a
right to the full $10,000 recovery in addition to the $5,000 already
paid by the insurer.
Ask your legal counsel if this doctrine applies in your state
and make sure that any subrogation recoveries obtained by your insurers
are applied properly.
By: Craig F. Stanovich, CPCU, CIC, AU
Stanovich Risk Managers, LLC
Holden, MA
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 give you credit for
your contribution.
There are now 282 articles on IRMI.com, and many more are in
production. Below you'll find summaries of some recent additions
with links to the articles.
-
Captive
Structures—There are many different structures
for a captive insurance company. Michael Mead discusses
the most common structures and their potential uses.
-
Roles and Responsibilities: A Delicate Balance—In
this article, Rolf Neuschaefer explores the roles
and responsibilities of the principal or client,
the surety, and the agent/broker in procuring corporate
surety bonds.
- Bouncing Back from Disaster:
The Plan's the Thing—In this article, Baron
Garcia explains how having a well-organized plan
is the surest way for those in the insurance industry
to pull through a disaster relatively unscathed.
-
Public
Policy & D&O Insurance—In his Drafting
and Interpreting Insurance Policies column, Ken
Wollner looks at a new California court case examining
D&O conduct exclusions.
As The Workers Compensation
World Turns—The acts of September 11 have led to new
underwriting exposures and concerns. The impact on workers compensation
rating, risk retention, coverage, and the market is addressed.
Mark W. Bridgers
To Keynote IRMI Construction Risk Conference. Mark Bridgers
will deliver one of two keynote addresses at the IRMI Construction
Risk Conference in San Diego. A consultant with FMI Corporation,
he works with owners or purchasers of construction contracting services
in the areas or organizational analysis, accounting and financial
issues, and strategy development. Previously Mark designed and implemented
reinsurance programs for sureties. He'll be sharing the podium with
Mark Reagan of Willis at the plenary session on November 12. The
theme of the 22nd IRMI Conference will be "Succeeding in a Difficult
Market." Plan to join us on November 11-14. For more information
about the Conference, visit this
website.
Celebrate 200,000
CE Courses With $5 Off! Please join us in congratulating
our CE partner, WebCE, on delivering its 200,000th CE course! The
Training and Education section of IRMI.com is powered by WebCE,
a nationwide e-learning company. With WebCE's help, we offer more
than 50 courses and most are available in all 48 states that allow
distance learning. We are happy to join WebCE's celebration by giving
you a $5 off Party Favor for your next purchase. You can redeem
this voucher online or by phone. Simply enter voucher number 11785
when you check out online or give it to the customer service representative
if you choose to phone (offer expires on September 30, 2002). To
order by phone, call 1-800-488-9308. To order online, go to this
Web page.
Workers Comp Self-Insurance
Help—With premiums increasing rapidly, many companies
want to evaluate the feasibility of self-insuring their workers
compensation programs. The prospect of performing this type of analysis
can be daunting, however. IRMI's Risk
Financing reference manual provides the information and tools
to compare self-insurance to the other funding options. It even
summarizes each state's requirements to qualify for workers compensation
self-insurance. When you are ready to redesign your risk financing
program, be sure you have the leading blueprint on hand, "Risk Financing."
For more information or to view the table of contents, visit our
website.
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