IRMI Update—Issue #77
An E-mail Newsletter for Risk and
Insurance Professionals
ISSN: 1530-7948
November 18, 2003
In This Issue
Colleague,
We've been hearing a lot lately about the danger of impending
insurer insolvencies. Stewart Economics was recently commissioned
by the Council of Insurance Agents and Brokers (CIAB) to study insurer
insolvency, and their report, "Managing
Insurer Solvency 2003," is sobering.
One of their conclusions is that, "A lot of exits are coming.
They will not come all at once, but they will come sooner or later.
They will not all be by acknowledged insolvency. Some will be called
restructuring or merger or strategic repositioning or discontinued
operations or outsourcing of claims administration. But by any name
they will be exits in the face of impending failure."
My purpose in raising this issue is not to delve into causes
or potential preventative actions that regulators or insurance company
managements might take. Instead, I wonder what actions agents, brokers,
and insurance buyers should take to minimize the impact of what
the Stewarts seem to think is inevitable. Sure, you check the S&P
rating and the A.M. Best rating, but what else can you do? Are business
executives willing to pay a higher premium to obtain their insurance
from the most financially fit insurers? If you are an agent/broker
and an insurer seems to be going down hill, do you stick with it
or do you move all your accounts elsewhere? If you are risk manager,
do you accept short rate cancellation costs to move mid-term? Is
this something to worry about and try to manage, or should we just
hope it doesn't happen to our company or our clients? [See
reader comments].
The IRMI Update readership continues to grow, largely due to
subscribers who forward the issues to their colleagues with recommendations
to subscribe. If you are one of the many readers who have recommended
IRMI Update to others, I am very grateful. If you haven't done this
yet, please consider doing so. As you know, anyone can sign up by
going to our website.
Here in the United States, we're headed into the Thanksgiving
Holiday next week. There is certainly no better time than now for
me to express our appreciation for the trust and confidence you
place in IRMI by subscribing to our publications. Thank you very
much.
Have a great day.
Jack
Jack P. Gibson
President
IRMI
Choose Your One Broker Carefully—My
advice to any risk manager would be to choose your broker carefully.
Since most large brokers represent the same insurers, there is no
reason for two, three, or four brokers to even be involved in a
renewal situation. It only muddies the water, confuses the underwriters,
wastes your time that could be devoted to other risk management
issues, and doesn't guarantee the best outcome.
My advice is to look at what each broker can offer your business
in terms of:
- What they bring to the table in terms of services
- What is their industry reputation?
- What are their credentials?
- Check client references.
- Get a list of insurers represented and their
firm’s loss ratios with them.
- How much experience do they have handling accounts
similar to yours?
Rather than competitively bidding your insurance program among
a number of agents and brokers, I recommend you make your decision
on the broker, and then let the broker have control of marketing
your account.
By: Gene Seago, CST
Merritt & McKenzie, Inc.
Atlanta, GA
E-mail:
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 475 articles on IRMI.com, and many more are in
production. Below you'll find summaries of some recent additions
with links to the articles.
Classification
Cross Reference Updated—IRMI's popular
Classification Cross Reference
has been updated and is now available in print and electronic form.
The new twelfth edition has been updated to reflect classification
code changes in the last few years and expanded to include more
entries and additional refinement of the cross references. The handy
book cross indexes NCCI, ISO, NAICS, SIC, and seven independent
workers compensation state classification codes. It is an invaluable
tool for underwriters, premium auditors, CSRs, and rating technicians.
Time is Running
Out to Get 2003 CE—If you're still scrambling to fulfill
your continuing education (CE) requirement for 2003, IRMI has the
answer with online courses that are easy to take and informative
as well. One new course is IRMI Commercial Auto Insurance, which
provides an introduction to commercial auto insurance, focusing
on the standard coverage forms developed for this line by Insurance
Services Office, Inc. (ISO). It examines some of the motor vehicle
statutes, the public policy issues behind them, and their effect
on various types of commercial auto coverages. For more information
or to order one of these or other CE self-study courses, see the
Training and Education section of
IRMI.com.
Rolf Neuschaefer
contributes articles on surety bonding tips and tactics for IRMI.com,
and has done so since March 2001. Mr. Neuschaefer has been active
in the surety bond business for over 30 years, serving in various
underwriting and management positions in five different Aetna field
offices. He retired as field vice president from Aetna/Travelers
after 28 years of service and joined the Robert E. Harris Insurance
Agency, Inc., where his focus has been on contractor bonding and
insurance. For more information on Mr. Neuschaefer, see his full
biography and a
list of his articles.
Over 1,200 Attend 23rd IRMI Construction
Risk Conference—Over 1,200 attendees are meeting in Chicago
today for the 23rd Construction Risk Conference. The volatile market
has hit the industry hard, and they are learning about available
options and networking with others in the same boat. With help from
sponsors such as AIG, CNA, Zurich, Liberty Mutual, Marsh, and others,
IRMI offers an experience that is as enjoyable as well as educational.
In our next issue of IRMI Update we'll announce this year's Gary
E. Bird Horizon Award and Words of Wisdom Award winners. We'll also
give you links to the conference speakers' handouts. In the meantime,
learn more about the conference, how to become a sponsor, and future
dates and locations on our
website.
A subscription to IRMI Update is absolutely free. Use the
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