IRMI Update—Issue #153
An E-mail Newsletter for Risk and Insurance Professionals
ISSN: 1530-7948
January 24, 2007
In This Issue
Message from the Editor
Colleague,
"When clients buy insurance, they basically have two questions—what did I
buy? And if have a claim, when I am going to get paid?" This was the underlying
premise of Joe Plumeri's keynote speech last fall at the IRMI Construction Risk
Conference. The chairman and CEO of Willis Group Holdings went on to discuss
the inherent industry delays encountered in issuing policies and paying claims,
and how, when he was a newcomer to the business, he was astounded that insurance
buyers would accept this status quo.
These delays are largely due to age-old processes that insurers are too slow
in changing, which proper use of technology could accomplish. Additionally,
he blamed slow claim payments on a lack of emphasis by insurers: "We've pushed
claims payment, the very reason for insurance, to the backroom—or in some cases
outsourced it to someone else—when it has to be a core competency and a differentiator."
Joe is right. Risk managers and insurance buyers have accepted these industry
inefficiencies far too long. As long as insurance purchasing decisions are price
driven, with little or no attention to service follow-through, they will continue.
It is time to consider insurers' claims and policy issuance track records when
choosing the insurer with which you will place your program. Additionally, seek
out innovative compensation plans that give incentives to your broker and insurer
to provide good service. Lastly, do an annual evaluation of the services you
receive, and give your insurers and brokers a report card. If they consistently
miss the mark, fire them.
So what suggestion would you offer to risk managers, brokers, and insurers
to expedite policy issuance or claim payments? Have you seen or used incentive
programs as part of your broker's compensation package? Do you use an annual
goal-setting and evaluation process with insurers and brokers that you can summarize
for our readers? What else should the industry do to address these problems?
Please [See reader responses.]
A written version of Joe Plumeri's speech could never project the energy
and passion of his live delivery. Nevertheless, it hits the bull's eye with
respect to some industry problems and is worth a quick read. You will find it here.
Thank you for subscribing to IRMI Update.
All the best,
Jack
Jack P. Gibson, CPCU, CRIS, ARM
President
IRMI
Risk Tip
MVRs as a Risk Management Tool—If an employee
was in an accident while on company business and created bodily injury to someone
else, do you think the lawsuit would be worse if your driver had multiple traffic
violations on his record or maybe zero or one? Believe it or not, it might not
matter, depending on how proactive you were before allowing that person behind
the wheel. Time is money, so it's easy to want to get a body behind a wheel
and on the road to start making profit. Before doing so, you should proactively
risk manage who you put there. A lot of businesses rely on the insurance company
to let them know if a driver is acceptable or not. Don't rely on the insurer,
rather, set up your own guidelines of acceptability. I've seen insurance companies
be too stringent, almost handcuffing the business. I've also seen them be too
lax.
If you put standards in place, and they are effective, you give yourself
negotiating power later on with insurers, which can prove valuable. One idea
I've used in the past that was very effective was to have the employee order
their own MVR from the state every 6 months and give it to the employer to review
and reimburse. It forces the employee to take an active role and consciously
think about it—kind of like a report card. As in any risk management endeavor,
employee activity works better than passivity. Below are a few other things
to consider:
- Have the employee sign an MVR consent form.
- Make the MVR a condition of employment, and check it before hire.
- Have a process to check MVRs however often you want them run.
- Set your standards for acceptability.
Remember, the auto exposure presents the greatest potential for catastrophic
loss for a majority of businesses.
By: Marty Orlowski
Sales & Marketing, The
McNish Group, Inc.
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. Submit your tips. We'll
acknowledge your contribution as we did for Marty.
New Expert Commentary
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