IRMI Update—Issue #162

An E-mail Newsletter for Risk and Insurance Professionals
ISSN: 1530-7948
June 6, 2007

In This Issue

• Message from the Editor
• Risk Tip: Provide Pre-Bid Disclosure to Wrap-Up Participants
• What's New in Your IRMI Library
• New Expert Commentary
• Last Week To Register for IRMI Construction Benefits Conference
• Expert Commentator Profile: Gary Clayton
• How To Get IRMI Update E-mails

Message from the Editor

Colleague,

Unintended and unknown coverage gaps in insurance programs are usually bad things. However, coverage gaps can be the best friends of agents or brokers trying to make headway with a prospective customer. Finding a gap in a competitor's program is a sure-fire way to earn confidence while also reducing the prospect's level of trust in the incumbent agent or broker. This is why many agents and brokers will provide a free or low cost policy review service for prospects. Of course, this threat is also an added incentive for incumbent agents and brokers to assure they have "dotted all their I's and crossed their T's."

The keys to avoiding coverage gaps are:

1. Make certain you understand the account's business and the resulting exposures.

2. Know the coverage options available in the marketplace to insure the identified exposures.

3. Utilize a thorough and consistent process to assure the recommended insurance program matches the exposures.

4. Communicate the recommended program to the client, and document any decisions to deviate from the recommended program.

To help understand the account's business, review product brochures, Web sites, and company financial reports. Be sure to supplement this with detailed discussions. Knowledge of the available coverage options comes through continuing education and experience. The best way to institute a consistent process is probably through the use of questionnaires and checklists. Of course, the barrier to following through with this process is the time it takes (for both the producer and the customer), and this is a major reason that less than thorough efforts are so prevalent in the industry.

Do you use coverage reviews as a way to gain the confidence of prospective customers? If so, what's the worst gap you've found that led to a sale? How did you communicate it to the prospect? Do you use checklists and questionnaires as part of your process? Have IRMI's publications ever helped you identify, evaluate, communicate, or eliminate a dangerous coverage gap? Please submit your comments.

Thank you for subscribing to IRMI Update, and have a great day.

Jack

Jack P. Gibson, CPCU, CRIS, ARM
President
IRMI

Risk Tip

Provide Pre-Bid Disclosure to Wrap-Up Participants—We've recently seen proposals in two states for legislation to address issues concerning controlled insurance programs. A common thread in the proposals is a mandate for full disclosure of the program details to contractor participants prior to contract award. These initiatives, or others like them, may or may not be adopted, but in the meantime, they can serve as a reminder to wrap-up sponsors and broker/administrators of the importance of providing, to the fullest extent possible, the information contractors need to adequately assess their risks before submitting bids on a project covered by a controlled insurance program.

At minimum, the program summary should include the following information:

• Insurer names and name of broker and administrator
• Coverage description, restrictions, and cancellation provision
• Limits and aggregates, including reinstatement, applicability, and treatment of defense expenses
• Term and duration of ongoing operations coverage and completed operations extension
• Deductibles or SIRs and their applicability and allocation
• Details regarding other applicable penalties
• Anticipated number of participants, projects, dwellings or units to be covered by program
• Premium contribution amount or allocation method and amount or premium credit tracking method and close-out formula
• Safety requirements and claims reporting requirements
• Full copies of the program policies or specimen copies

By: Kathleen Creedon
Owner, Wrap Strategies
Middleboro, MA

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 Kathleen.

What's New in Your IRMI Library

We have recently updated a number of the reference manuals in the IRMI library and published new issues of The Risk Report and Captive Insurance Company Reports. To make sure you don't miss any of this new information take 30 seconds to scan the "What's New" summary page.

For IRMI Online and Print subscribers

For SilverPlume Sage subscribers

New Expert Commentary

There are now over 900 risk management and insurance articles on IRMI.com. Below you'll find summaries of some recent additions with links to the articles.

• 2007 RIMS Conference Attendees Focus on the Issues—Jack Gibson describes a relatively sedate and serious meeting, with all zeroed in on personal priorities: pandemic, globalization, ERM, softening market.
• Financial Institution Acquisitions of Insurance Agency Platforms—Jeff Balcombe explains recent trends and how integration strategies are being created and implemented, and beginning to prove successful.
• The Construction Foreman—Working without a Net—To succeed, foremen must lead the workforce as well as the process. Peter Furst says that few are given the proper leadership training to do so.
• Workers Compensation Issues and Trends 2007—Christine Fuge reports on the presentations given at the recent NCCI symposium regarding the WC market and the insurance industry as a whole.
• Balancing Risk Probability and Vulnerability—Mark Layton explains why too much emphasis on probability fails in the face of improbable risks.
• The Lawyer as an Insurance Claims Expert—Contrary to popular opinion, Barry Zalma says a lawyer can make a good expert witness in an insurance claims dispute.
• Privacy and Security Litigation and Enforcement—While little litigation has resulted over privacy breaches, this is sure to change, per Gary Clayton (see his profile below).
• Contingent Risk Capital—Creative risk managers seek a combination of risk financing and transfer techniques to best use their company's risk capital. Don Riggin explains.
• NY Court Refuses to Extend FLSA Enterprise Liability to Nonprofits—Paul Siegel explains why nonprofit employers should examine whether the FLSA's enterprise coverage exclusion applies to their organizations.
• Michigan Supreme Court Interprets "Advertisement"—Kevin Merriman relates a case holding no advertising injury where the insured shipped a product in a competitor's container.

Last Week To Register for IRMI Construction Benefits Conference

Attention Contractors and Benefits Professionals—spots remain for the IRMI Construction Benefits Conference, June 12-13. Learn proven tactics to control costs in health and welfare plans. See the agenda, industry expert speakers, and register.

Expert Commentator Profile: Gary Clayton

Gary Clayton has written 11 articles on risk management for privacy issues since he began writing for IRMI.com in 2003. As CEO of the Privacy Compliance Group, Inc., he has extensive experience with privacy and data management in the United States and in over 50 countries around the world. He has been actively involved with industry groups on issues involving the prevention of identity theft, consumer fraud and the protection of personal data. For more information on Mr. Clayton, see his full biography.

A list of all his IRMI.com articles can be found here.

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