IRMI Update—Issue #95
An E-mail Newsletter for Risk and Insurance Professionals
ISSN: 1530-7948
August 24, 2004
In This Issue
Colleague,
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
Thank you for subscribing to IRMI Update.
Have a great day.
Jack
Jack P. Gibson
President
IRMI
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
www.bridgeconsultants.net
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.
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.
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.
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.
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.
A subscription to IRMI Update is absolutely free. Use the e-mail registration form to initiate or terminate
your subscription.