The IRMI Research Analysts just concluded their work on our annual insurance market survey, published in the September issue of The Risk Report each year. A year ago, we saw the hard market begin to stabilize. This year, we concluded that the hard market is history.

This is not to say that we are in a soft market or even a prediction that the industry is moving toward a soft market. Underwriters are still underwriting, some insurance lines are still difficult, and certain types of businesses still have difficulty obtaining insurance—or can obtain it only at excruciatingly high prices. Nevertheless, many businesses are seeing flat renewals or even rate decreases, and, baring a mega-catastrophe, it appears that this trend will continue through next year.

This brings up the question of what actions policyholders should take to assure they benefit from the market shift. Here are some suggestions:

If your current insurer treated you unfairly during the hard market, is on questionable financial footing, or is not the best match for your risks, consider marketing your insurance program.
If you are uncomfortable with the amount of your retentions, you may be in a position to begin reducing them. Think twice about it, however, because the more you retain, the more control and options you will have in the future.
If you reduced your liability limits in the hard market, consider beginning the process of rebuilding them.
Do not focus solely on cost. Review your coverages and begin the process of whittling away the restrictions imposed during the hard market.
Don't take too much credit for any premium reductions you receive on this or future renewals unless you are willing to take the blame for increases in the next hard market.

So, what do you think? Is the hard market history? Are you seeing reductions in rates on renewals? What else should policyholders do to benefit from the changing marketplace? Please send your comments by completing the MyView online form.

Look for our complete line-by-line market report and forecast in your September issue of The Risk Report. If you don't currently subscribe, sign up now, and it will be your first issue. For more information, check the Products & Services section of IRMI.com

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Have a great day.

Jack

Jack P. Gibson
President
IRMI

Risk Tip

Reduce Claims by Instituting a Successful Safety Incentive Program—Our firm achieved an average 43 percent claim reduction for all our clients, compared to the previous year, by developing a program to reward employees for performing their jobs safely. By making all employees eligible to win cash and prizes, all employees became involved in the safety process. Here are some of the keys to the success of these programs:

Make the message safety. No games, just safe behavior.
Provide monthly awards. Keep the focus on safety by meeting and discussing accidents, near-misses, and safety every month. Celebrate injury-free months with as many employees attending, over as many shifts as possible, and deliver with lots of enthusiasm.
Make the rewards large enough to influence behavior. For employees that are inclined to act carelessly and violate safety procedures, a pizza party or $50 is not going to change their behavior. You must offer at least one award that is desirable and large enough to encourage behavior change. While you cannot afford to have every employee win every month, you can have every employee who acts safely qualify to win every month. Then use a drawing to provide the award to one of them. Workers comp costs are so high that they justify a meaningful award.
Encourage positive peer pressure. Getting all your employees to encourage each other to do the right thing and discourage unsafe or dishonest behavior is one of the cardinal rules for safe companies. If the rewards are meaningful, and there are positive benefits for teams and departments to all be safe, you can create an atmosphere of teamwork and an important second level of peer pressure. Those that want to do the right thing are given a reason to step up and exert influence on those who are not as careful or dedicated.

Finally, MANAGE the program! Stay involved and make changes to your program after both bad and good months. Stay visible, stay involved, and keep the program fresh and interesting. Add surprises, such as having the president attend and spontaneously add a couple $100 awards to names drawn from a hat. If you invest the time, effort, and money, the payoff can be ten-fold. A safer company tends to be a happier company, with better morale and productivity.

By: Joe Stevens
Bridge Consultants, Inc.
Marina del Ray, CA

Suggest a Risk Tip. 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 Joe.

New Expert Commentary

There are now 572 risk management and insurance articles on IRMI.com. Below you'll find summaries of some recent additions with links to the articles.

Some Cautionary Thoughts on Healthcare RRGS—Michael Mead takes a look at captive capitalization and domicile concerns midway through 2004, and discusses the need for standards for this growing industry.
Recent Case Law Applying the Subcontractor Exception—Pat Wielinski discusses two court rulings that could result in a substantial reduction in CGL coverage for many contractors, creating a coverage gap that will be extremely difficult to fill.
Visa Revalidation Process Terminated by the Department of State—The U.S. Department of State has ended business-related visa revalidation because it is unable to obtain the biometric identifiers all visas must contain as of October 26, 2004. Paul Siegel explains the problem.
Tales from the Field—Frank Lee explains how the Sales Preference Questionnaire can identify types of sales call reluctance and help salespeople overcome emotional roadblocks.
Absolute Confidentiality—Is It Wise?—Jeff Kichaven shows how current legislation and recent California case law mistakenly rely on absolute confidentiality as the key to mediation's effectiveness.

It's Time To Apply for the Risk Management Award

The September 6 deadline for applications for the Gary E. Bird Horizon Award is drawing near. This award is presented to a risk manager or safety manager who has implemented an innovative and successful risk management program for construction risks. If you have developed an innovative program, consider applying. For more information, see the Conference section of IRMI.com.

Check Out the CRC Agenda and Register Online

Join us at the 24th IRMI Construction Risk Conference in Orlando on November 8–11 and find out how to improve your insurance, surety, and risk management programs. Nowhere but at the IRMI Construction Risk Conference will you find such an offering of great ideas. We invite you to share this educational experience with us; network with more than 1,000 construction risk management, insurance, and surety experts; and enjoy beautiful, sunny Orlando. We are now accepting online registrations. To register, download the brochure, or view the agenda and speaker biographies, visit the Conference section of IRMI.com.

New Edition of The Additional Insured Book Now Available

IRMI is pleased to announce the fifth edition of its best-selling publication, The Additional Insured Book. It has been updated to reflect all the changes initiated by ISO and the latest court decisions handed down in the 4 years since the fourth edition was published. In particular, the new book addresses revised editions of a number of additional insured endorsements widely used in connection with contracting operations. These revised endorsements significantly reduce the protection available to additional insured project owners and general contractors and will have a major impact on insurance programs for construction projects throughout the United States. In all, the fifth edition of the popular book includes more than 450 pages of additional insured information and strategies with more than 240 case citations. For more information, visit the Products & Services section of IRMI.com.

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IRMI Update—Issue #95

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