IRMI Update—Issue #58
An E-mail Newsletter for Risk and Insurance Professionals
ISSN: 1530-7948
February 4, 2003
In This Issue
Colleague,
This year IRMI proudly celebrates its 25th birthday. The company was founded
in 1978 primarily to educate risk managers, agents/brokers, and other insurance
professionals through seminars. However, our risk and insurance publications
were also popular and, by the mid 1980s, we had evolved into a publishing company
that also sponsored an annual construction risk/insurance conference and an
occasional seminar.
Today IRMI publishes the most comprehensive (and, we think, practical) risk
and insurance library of any publisher that we know of. The 23,000+ page library
is now available in print, CD-ROM, and on the Internet, and it is used by thousands
of risk professionals serving all industries. IRMI has grown from twelve people
when I joined it in 1982 to 44 employees today, all of us working out of our
Dallas office.
Our primary goal has always been to help people do a better job of managing
risk by giving them reliable and practical information. While our business has
enjoyed many successes, what makes us proudest is hearing from customers how
we have helped them achieve their business or risk management goals over the
years.
If our publications, seminars, or conferences have somehow helped you succeed
in your career, we'd love to hear about it. I'll share your notes with our staff
and perhaps we'll post them in IRMI.com for all to see. [See reader comments.]
Many thanks for your confidence and support over the past 25 years!
All the best,
Jack
Jack P. Gibson
President
IRMI
How To Evaluate Captive Alternatives—The hard
market has people looking for innovative solutions. However, a bad decision
can cost much more than your premiums are increasing! The IRMI "Captive Insurance
Solutions for the Middle Market" seminar will explain how captives work and
how to determine whether they are right for your company (or your clients).
The focus will be on solutions for mid-size accounts and will cover both group
captive and rental (protected cell) captive alternatives. Designed for busy
executives (only 2 days out of the office and 1 night in a hotel), this seminar
will equip you to make the right decision. Call (800) 827-4242 to reserve your
place.
Winter Driving Safety—Install good winter tires
with ample tread. Keep a windshield scraper, a small broom or brush, and a small
shovel for ice and snow removal in your car. Maintain at least a half tank of
gas. Listen to the radio or call the state highway patrol for the latest road
conditions. Dress warmly, wear layers of loose-fitting, layered, lightweight
clothing. Carry a supply of high energy snacks and several bottles of water
in the passenger compartment of your vehicle.
By: Jack McMichael
Director, Risk Management
Wawa, Inc.
Wawa, PA
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 381 articles on IRMI.com, and many more are in production.
Below you'll find summaries of some recent additions with links to the articles.
Order a CE Course
This Month and Save $5—It's a new year and a great time to get your
continuing education (CE) out of the way. Normally, our self-study CE courses
are offered at the incredible price of $49.95. Now, receive an additional $5
off your CE order when you order before March 15. Go to the Training & CE site. Choose your courses
from the course catalog and at checkout, enter the voucher number 38115 when
prompted. Or order by phone by calling (800) 488-9308. Give the representative
the voucher number and tell them you are an affiliate of IRMI. (CE credits are
not available in New Jersey or Wisconsin.)
Ron
Prichard has been contributing to IRMI.com's Expert Commentary from
its inception. At 12 articles, he is one of the more prolific writers, and his
articles on construction safety are always popular. Ron currently serves as
a consultant to a diverse mix of businesses, where he helps them better manage
the wide variety of risks posed by their operations, competition, and environment.
In addition, Dr. Prichard provides litigation support and expert testimony for
resolution of claims and disputes. He is a frequent speaker on construction
and safety topics, and is involved in many related organizations. Click
here for a list of his articles. To learn more about Ron and his consulting
operations, see his biography.
In IRMI Update #57, Jack Gibson looked at
how insurer ratings have been plummeting for the past year. He asked readers
what they were seeing and how they were handling it. Below are a few of the
responses we received.
- Continue to watch the ratings, request a cut through and at the same
time obtain a quotation from an A-rated carrier. Advise your client of all
actions taken, i.e., monitoring the ratings, ordering the cut-through endorsement
and also present the alternative quotation, letting the client make the
final decision with all the information presented.
—Louise D. Neigel, CIC, Pilgrim Insurance, Lyndhurst,
NJ
- One important item in the event of a downgrade that is often overlooked:
many of your clients are in a "breach of contract" for leases and many other
contracts (especially for contactors) because they have specific requirements
as to the "rating" of a company. Your insured may need to react quickly
to correct this breach. If your insured elects to wait and see, they may
be putting themselves at risk for more than they were aware.
As agents, it is out duty to advise our clients of the many ramifications
in the event of a downgrading. Change insurers now, obtain a cut through
(and many times this can only be done on a case-by-case basis), breach of
contract, etc.
—Billie Selvidge, ARM, Armstrong Robitaille Insurance
Services, Commercial Lines Account Executive
- This is a difficult issue. Currently, we have a bid out for an essential
and risky function. The only bidder, probably the only capable contractor
in our area, has a "major insurer" whose rating has dropped to B+ as of
last look at AM Best.
I had a discussion with the vendor's broker. He sounded frustrated because
the nationwide firm (of which our local bidder is a very small part) is
not receptive to his advice to change carriers before 7/1/03 renewal.
What we finally decided to do was to accept the current coverage, but
to keep the option to re-bid the product if the carrier is not replaced
with an A-rated carrier at renewal. Not an ideal solution, but it seemed
the best available under the circumstances. I'd like to know about other
solutions.
—Terri McFarland, Risk Manager, Fairbanks North Star
Borough, Fairbanks, Alaska
- After 30 years as a broker it has been my experience that when a carrier
is downgraded to below a B+ [and even B++] that they virtually never regain
an "A" category rating. I believe it is incumbent on a broker to advise
clients at each renewal what the financial picture and trends are of all
the carriers with whom client business is being placed. It is part of our
fiduciary responsibility to the client, in my humble opinion.
Loyalty to a carrier can be easily misplaced if the broker puts his/her
loyalty to a particular insurance company ahead of duty to the client. It
is not the broker's responsibility to a carrier to keep his/her good business
with that company if the carrier can't keep its own house in order. The
reality should be that a broker represents the client's interests rather
than "representing" the insurance carrier.
The nostalgic notion among "old timers" in this industry that insurance
companies really care personally for a broker or a particular client is
so out of date as to be verging on the absurd. Insurance companies care
about themselves ... their own bottom line ... their own market image ...
period ... unless you are an AON or a Marsh.
The reason for this harsh point of view is that there are no real underwriters
left any more. Everything is done by "raters" and computers and no one ever
really wants to make a decision. If it doesn't fit a predetermined slot,
then an account can't be written with many carriers because no one has the
authority to make a decision and override the "system." Therefore, why would
anyone want to put their job on the line and really care about an insured?
—Thomas W. Davis, CIC, Davis American, Ltd.
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