Risk professionals have a language all their own. It is filled with acronyms, unique words and phrases, and even different meanings for some common words. To help translate this "insurance-ese," as I like to call it, IRMI first published the Glossary of Insurance and Risk Management Terms in 1978. I am delighted to announce that the 11th edition is now available, and I believe it to be the most up-to-date and comprehensive insurance glossary available.

The IRMI Glossary of Insurance and Risk Management Terms defines more than 3,100 property, casualty, life, and health insurance terms, as well as related risk management concepts. It also translates nearly 1,000 acronyms and abbreviations, from AAA (American Academy of Actuaries) to YRT (yearly renewable term), and includes a directory of state regulators and industry associations. This glossary is a great tool for both seasoned practitioners as well as newcomers to the business.

It would be a welcome holiday gift for top clients who could use it to relate to what you do and further understand what you say. Stamp your firm's name on the inside cover to remind readers of your firm every time they use it.

If you subscribe to IRMI publications in Sage or IRMI Online, you have access to the IRMI glossary. If you don't get it electronically or you would simply like a print version for your desk (or your client's or assistant's bookshelf), you can learn more about it and purchase a copy.

In the United States, we just enjoyed the Thanksgiving holiday. If you reside in this country, please accept the best wishes of all your friends at IRMI for a happy and safe holiday season. Regardless of your nationality, I sincerely thank you for subscribing to IRMI Update.

Have a great day.

Jack

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

Risk Tip

Meet with Underwriters to Get the Most from Your Marketing Efforts—Marketing your account involves the broker, risk manager, and underwriter working together to arrange a program that will meet your organization's risk financing goals. Face-to-face marketing will invariably yield the best results.

A meeting gives you the opportunity to sell your account. You have the unique knowledge to put your account and the organization's commitment to sound risk management principles in the most constructive framework. This can increase the underwriter's comfort level with your exposures while providing a clear understanding of your needs and expectations. It gives the underwriter the opportunity to ask questions and hear answers directly while you have the opportunity to judge the underwriter's level of commitment, eliminate unrealistic expectations, and work through potential issues.

Plan to maximize face time with the underwriter. Provide the underwriting submission well in advance, then be prepared and know the message you want to deliver. You can gain the underwriter's confidence and have a positive impact on the design and pricing of the program if you demonstrate a clear understanding of your organization and its issues, a good knowledge of the insurance industry, a commitment to sound risk management practices, and an open communication style.

After meeting with underwriters, you will have a general idea of market reaction that will allow you to share market feedback including any problems, potential coverage issues, and unexpected price increases with your management.

Drawn from Practical Risk Management, Topic A-5, Marketing a Large Account.

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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.

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New Expert Commentary

There are now nearly 1,000 risk management and insurance articles on IRMI.com. Below you'll find summaries of some recent additions with links to the articles.

More Changes for the Terrorism Risk Insurance Act (TRIA)?—James Macdonald looks at the differences between the proposed Senate and House bills, along with possible changes before enactment.
Captive Insurers Ask if the IRS Has Lost Its Mind—The recently proposed IRS regulations for single-parent captives are a step in the wrong direction. Don Riggin explains.
Insurance Law and Exclusion (m)—Steve Rawls discusses cases addressing the impaired property exclusion in the commercial general liability insurance policy.
"Reasonable" Defense Costs in Insurance Disputes—In independent counsel situations, who determines what costs are reasonable? Brent Cooper and Dana Harbin peruse state positions.
Epoxy Fumes Excluded by CGL Insurance—Kent Holland relates a case on the CGL total pollution exclusion and the definition of "pollutants."
Effective Transactional Risk Management—Daniel Wagner explains transactional risk and why it is an essential part of the risk management process in the international business arena.
Insurance Web 2.0—Andrew Berry examines the Web 2.0 phenomenon and explains what it means for the insurance industry.
Trade Secret Protection: Good Risk Management—Sanford Warren advises taking precautions, both offensive and defensive, to protect your trade secrets and those of others.

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Your View—Bidding an Insurance Program

IRMI Update 172 listed some guidelines for bidding an insurance program in a soft market. Readers were asked if they thought now is a good time to bid, if one agent/broker or several should approach the marketplace, and how often should an insured wait between seeking competitive proposals. Some of the responses received are shown below.

From my experience, choosing your agent or broker ahead of time and having one firm go to the marketplace on your behalf rather than using a competitive insurance proposal process with multiple brokers, will not yield the best results.

Interviewing and selecting 2 to 3 agents/brokers and equitably allocating qualified insurance markets to each participant is the approach we prefer and regularly employ on behalf of our clients. The participating agents/brokers should be selected based on their servicing capabilities, insurance markets represented, and experience with similar risks. Depending on the nature of the risk involved and the insurance market conditions, policyholders may need to limit the participants to one or two agents/brokers and, perhaps, one direct writing insurer. Proposals are then judged based upon the scope of coverage, pricing and the insurer's services.

From my perspective, a process conducted in this manner will afford the greatest level of competition and the greatest amount of insurance company participation thereby providing the policyholder with the best choices.

—Charles Cox, President, Aldrich & Cox, Inc., Orchard Park, NY
In a soft market like the current one, I think the client is best served using one broker to obtain multiple insurer bids, rather than having multiple brokers in the marketplace on their behalf. As a marketer, one of the first questions an underwriter asks me upon receipt of my submission is, "Do you control the account?" From their standpoint, this lends credibility to their opportunity to potentially win the business, especially in the current environment where double-digit reductions are common. But more important, this may come as a shock, but underwriters do talk and keep records of submissions from past years. If upon receipt of a submission, an underwriter finds that they've received a client's submissions from several different brokers each of the past few years, it goes to the bottom of their pile. Especially as a client's insurance program becomes more complex, the best practice is for the client to select a broker they trust, and to invest their chosen broker with the authority and responsibility to get the job done best.

—Robert Meder, Vice President, Hilb Rogal & Hobbs of New York, LLC, New York
Your comments are valid. There is also a danger to bidding during a soft market due to Insurance Company underpricing, which may result in double-digit percentage increases at the first renewal. You may sacrifice a solid relationship with your current insurer just to have to weather it out with a new insurer once the market turns upward.

—John Clark, Vice President, Paull Associates, Wheeling, VA
In my 15+ years as Director of Safety & Risk Management at a Fortune 200 consumer products company, I bid out many insurance programs, using both 1 broker and multiple brokers. In my experience, for programs where it is possible to use multiple brokers and assign each a set of markets, the process produces superior results to using just 1 broker to market coverage. What is gained is several different perspectives on program design and coverage terms & conditions that a single broker is not usually capable of providing.

—Fred Travis, Principal, Risk Management Consulting, Labadie, MO
Jack, I'm not a huge fan of the rebidding scheme. If you're on the ball and understand the marketplace and its ability to assume risk, then you know whether you're placement is competitive.

No question that going out to either prove your program, or to actually look for a competitive bid is all very well and good, but the more dynamic and difficult the risk is, the more underwriters are going to want to see substantial amounts of information (even in this marketplace). I've always believed that a submission should be sufficiently broad in every aspect that the underwriter ends up literally either saying yes or no.

That puts the onus on the broker/agent to be sure that they know more than the underwriter, and perhaps from a risk standpoint a lot more than the insured.

—Peter Polstein, Somers, NY
I've found that a step toward a fair and successful process in program bidding is to invite underwriters to your operations. Meeting and interviewing of key personnel at field locations, touring facilities, and an introduction to the field office record-keeping procedures gives underwriters a sense of comfort. They appreciate the "hands-on" approach and get a very good sense of the extent of control the insured has over his operations. Making them an indirect part of an operation leads to a seamless process. Potential underwriters also enjoy an invitation to the field, however, I've been known to limit their time there.

—Joan Lynch, Consultant/Advisor, JM Risk Services, Houston

Every 3 years is just about right for a bid/re-broke. That is unless there have been major changes in my company, the market or underwriters. I would never use a broker to run my bid. I prepare and run my own. I have the expertise and experience. I would not preclude brokers from bidding, but I find that even the biggest brokers disappoint with lack of flair in designing a suitable program. I often wonder just how long brokers (and some insurers) will continue to exist using their existing business models—I would far rather chose specialist consultants for specific issues when I need them. Brokers continue to disappoint me as they rarely live up to their own hype!

—Peter Latham, Director of Risk Management, CIC Middle East, Jeddah

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IRMI Update—Issue #173

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