Scott Simmonds

NonProfit Directors and Officers

2012-02-02T16:00:00.000-08:00

A reporter from the National Underwriter called me the other day to talk about directors and officers (D&O) insurance for nonprofits.

Here is the piece.

I enjoy talking with writers. I tend to look at the world a bit differently from other insurance people. I'm glad to give a different perspective.

The Simmonds Business Insurance Index™ February, 2012

2012-01-30T20:13:00.000-08:00

The Simmonds Business Insurance Index™
February, 2012

-Renewal Premiums: Slight Increase
-Renewal Coverages: Negotiate
-Buyer's Outlook Long-Term: Prices Increasing / Coverage Restrictions

Everything I see and read tells me I am right about the insurance market - there is a distinct move from buyer's market to seller's market.

The trade magazines and websites are filled with stories of losses and catastrophes that have befallen the industry. Insurance is a herd. The herd is looking to increase premiums. The insurers are convincing each other that now is the time.

Renew your policies by telling your agent to go ahead, and you will find that your premium has gone up. Have competition in the renewal process and you will see your premium stay level or drop. Insurers want to increase prices. However, they are not willing to lose good insureds to do so.

You are a "good" insured aren't you?

BancInsure Deal With AmTrust Financial Services

2012-01-29T05:01:00.000-08:00

I've been provided with a copy of a press release from BancInsure announcing an agreement with AmTrust Financial Services to acquire the renewal rights to BancInsure's book of business.

BancInsure has struggled of late. Its AM Best rating has dropped to a B as of a few weeks ago.

While I have not seen BancInsure as a real option for my clients for some time, I want to see robust competition for my bank client's business. I have reviewed BancInsure proposals on several banks recently. They just were not competitive - all things considered.

More-players is a good thing. I hope BancInsure continues on to provide competition to the other bank players. Banks win when there are many insurers chasing their business.

Gun Insurance

2012-01-27T08:25:00.000-08:00

Most home insurance policies include coverage for guns you have in your home.

Most will have a limit of $1,000 or $2,500 for theft of guns.

You can add specific coverage that extends the protection of guns beyond the above for an additional premium - called a "floater" or scheduled coverage.

You provide your agent with a list of the guns you own and the value for each. Policies usually cover guns at their market value at the time of the loss.

If you declare a value of $2,000 for a gun and it turns out the gun is worth $3,000, you only get $2,000 if it is stolen. If you declare $2,000 and it is only worth $1,000, you get $1,000.

Many floaters do not have any deductible.

I do not insure my guns specifically. I also have a large deductible on my home insurance policy. I take care of the small stuff and let the insurance company take care of the big stuff.

I also have an alarm, a house-sitter, lock my guns, and lock my doors.

The 2012 Bank Insurance Teleseminar Series

2012-01-24T22:26:00.000-08:00

Here is the complete schedule for my bank insurance teleseminars designed for banker who buy insurance for their banks.

February 14, 2012 - Executive Risk and D&O Update

April 10, 2012 - The Bank Insurance Bid Process

June 12, 2012 - Claims Management For Banks

August 14, 2012 - Workers Compensation 101 For Bankers

October 9, 2012 - The Bankers Bond

December 11, 2012 - Ebanking Insurance

Email Scott@ScottSimmonds.com to register.

Sessions start at 1:00 PM Eastern and run for about 45 minutes.

The sessions are reserved for bankers. Insurance agent who want to join must pay an advanced fee of $50. to attend any session.

For more info email me at Scott@ScottSimmonds.com.

Insuring Inflatable Pigs

2012-01-23T07:16:00.000-08:00

Engaged in the review of insurance for a bank...

Among other issues, I uncovered the fact that the bank has two inflatable pigs valued at $6,000 each. Currently insured for $5,000 each.

Inflatable Pig Coverage Gap: $1,000 Per Pig or 17% Under-Insured.

Another day of solid work for my clients!

(Wink!)

Work Comp Experience Mod and Changing Your Policy Dates

2012-01-18T20:05:00.001-08:00

The experience modification is a ratio of expected losses to actual losses by a particular employer.

A mod of 1.00 means you are average.

.90 means you are better than average - plus you save roughly 10% on your workers' compensation insurance.

A mod of 1.10 means you are worse than average - plus you pay roughly 10% more on your workers' compensation premium.

Many client like to move their policy expiration dates so that they come up for renewal on the same dates.

A, generally, good idea.

Except for workers' compensation..

When you change the date of your workers' compensation policy you get more time added to your experience mod calculation. I can't explain the math, but it almost always results in the experience mod going up (a bad thing for employers).

In short, don't change the date of your workers' compensation policy unless you want to see a upward blip on your premium.

Simmonds Business Insurance Index - January 2012

2012-01-03T04:16:00.000-08:00

The Simmonds Business Insurance Index™
January, 2012

-Renewal Premiums: Slight Increase
-Renewal Coverages: Negotiate
-Buyer's Outlook Long-Term: Prices Increasing / Coverage Restrictions

Holding fast with my index - no change this month.

I see the end of the buyer's market. My clients who renewed in December and on January first have faired pretty well. In half the renewals the premiums dropped for equivalent coverage - we were also able to negotiate terms after we had received the insurers final-final offer.

As I have said before, negotiate, negotiate, negotiate. You have to work for it.

Sometimes the negotiation is nothing more that waiting and saying something like, "Let me get back to you."

Bought a new car last week (end of the year). Emailed the dealer. Got a quote. Told the dealer I'd think about it. Half hour later I got a call back with a better offer. The next day, a better offer. Saturday the dealer called with an even better offer. Through the process I let the dealer know I had other options. Now I'm driving a new car.

Insurance negotiations is really no different. Know what you want. Have a strategy. Be willing to give up some stuff. Know what you will not compromise on. Keep asking. Don't show too many cards too quickly. Always leave them wondering. Make sure you have options that the agent and insurer are not sure of.

When Should Your Insurance Expire?

2011-12-29T17:51:00.000-08:00

I'm almost finished with my client's renewals for January 1, 2012. This is always a hectic time of year.

The most common renewal dates are the quarter changes - January 1, April 1, July1, and October 1.

I'm not sure most policy holders get the attention they deserve when they are one of 100 renewals an underwriter is handling (I exaggerate).

Pick a date off the quarter changes to get the most out of your renewal - it also gives your agent a breather.

Simmonds Business Insurance Index™ December, 2011

2011-12-02T14:36:00.001-08:00

The Simmonds Business Insurance Index™

December, 2011

-Renewal Premiums: Slight Increase

-Renewal Coverages: Negotiate

-Buyer's Outlook Long-Term: Prices Increasing / Coverage Restrictions

I'm a bit behind getting this posted.

I debated making a change. The trend is certainly negative (for buyers). Some of the agents I have been talking with are predicting revenue gains for 2012 based on premium increases -- and therefore commission income increases.

In the end, I decided to keep the index where it was for November.

The regular mantra applies - start working on your renewal early. Get your agent moving. If it has been more than five years since you got competitive bids, consider it now.

Fidelity Insurance vs Fiduciary Insurance

2011-11-25T06:38:00.000-08:00

I was asked recently about fidelity insurance. As I mentioned in a prior post, fidelity insurance is employee theft coverage; AKA employee dishonesty insurance.

Fiduciary coverage is very different.

Fiduciary coverage is liability protection against allegations that you have violated the federal law governing employee benefit plans - known as ERISA.

Fidelity is crime insurance - against the loss of assets stolen by an employee.

Fiduciary is liability insurance - protecting you from a lawsuit brought by an employee or an outsider.

To further confuse matters...

ERISA requires that the assets of an employee benefit plan (retirement fund, 401k, etc.) be protected by a fidelity bond.

So, any employer with a benefit plan needs two types of insurance.

First, there is fiduciary coverage to protect from a lawsuit alleging a violation of ERISA.

Second is a fidelity bond protecting the assets of the plan from theft and fraud.

Class dismissed.

Fidelity vs Employee Dishonesty

2011-11-23T18:30:00.001-08:00

Client Question - What's the difference between fidelity insurance and employee dishonesty insurance?

Answer - The terms are synonymous. The following all mean the same thing:

Employee Crime Insurance
Employee Theft Insurance
Fidelity Insurance
Fidelity Bond
Employee Dishonesty Insurance
Employee Dishonesty Bond
Crime Fidelity Insurance
Crime Fidelity Bond

Civil Money Penalties Insurance & Banks

2011-11-16T14:57:00.001-08:00

Lots of heat (and little light) lately in the discussion of civil money penalties insurance within bank directors' and officers' insurance.

I talked with a client today on the issue and promised a letter he could send to his attorney. (Names changed...)

~~~~~~~~~~~

Bill and Steve,

We discussed the issue of civil money penalties today.

Your current policy provides $100k per director and $1m for the total of all claims.

Attached is a letter sent out by the LA Bankers' Association. Many have called this overkill.

Here is the question I posed to a senior Travelers underwriter last week on this topic: "I'm interested in (your) comments on the civil money penalties discussion going on in the industry. It appears that Travelers is including coverage and has no provision to charge directors. Insight appreciated."

Her response: "Yes – good question. We are getting lots of questions on this from our Community Bank Agents on how to advise their clients on whether or not to purchase this coverage (which Travelers offers via Endorsement #CB103). Travelers’ position is that it has been the long standing position of the industry (including Travelers) to make D&O Civil Money Penalties Coverage available to our clients. We believe that there continues to be a reasonable basis under the law to support the permissibility of this coverage. We want to remind our clients that Travelers is not in a position to provide insureds with legal advice. The client will have to make a determination for themselves, in consultation with their own legal counsel on whether to purchase or retain this coverage. Even without endorsement CB103, the bank will still have the benefit of defense coverage (subject to any applicable policy terms, conditions, & exclusions) for claims seeking civil money penalties under the Travelers Policy."

Good sidestep - but realistic advice - given the fluidity of the regulatory world.

Cincinnati Insurance has taken the approach that civil money penalties is a real problem and is removing the coverage from all their renewals. A bit paternalistic for my taste.

Zurich has each director pay their own premium for the insurance coverage - an approach they have maintained for years. This means that the bank is not buying the insurance, the directors are.

FinSecure takes the same attitude - many of their top people are former Zurich employees.

The ABA says that their policy includes the coverage as part of the insurance program. It can not be removed, the banks are not at fault for the coverage that is in the policy. I call this the Prego approach - "It's in there!"

Kansas Bankers Surety years ago took the stance that the coverage is not in keeping with their perception of public policy. A senior KBS person predicted this exact storm. That said, this is an insurance company who will only sell banks defense cost coverage on employment claims and have no professional liability protection in their contracts other than lender liability. They are convinced that insurers who sell more coverage are heathens out to scam bankers with useless insurance coverage. I'm not a fan. Though their executives are up for a lively discussion.

You might forward this whole email to your attorney (allowing you to sidestep). I am glad to discuss further.

Regards,

Scott

Scott Simmonds, CPCU, ARM, CMC

Insurance Assurance Consulting

The Unbiased Bank Insurance Guy™

Consulting On, But Never Selling, Insurance

20 Sofia Road, Saco, ME 04072-9017

Phone: 207-284-0085 Fax: 801-991-4027

Web: www.BankInsuranceConsultant.com

Email: Scott@ScottSimmonds.com

Blog: www.InsuranceAssuranceBlog.com

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Insurance Reference Gold

2011-11-13T14:15:00.001-08:00

This post is for insurance folks...

In June 2009 I posted a comment about Ray Burnham's Insurance Dictionary. It is a resource I use often. I keep it handy for quick reference. After more than two years there are a few coffee stains and dog-eared pages. I said it before, and it is still true; this dictionary should be on every insurance pro's bookshelf.

Ray contacted me today. His note reminded me of the great contribution Ray has made to the insurance world. The Burnham System of study aids helped me through my CPCU courses and my ARM designation. His dictionary is just as valuable.

Here is his site.

Upcoming Bank Insurance Teleseminar

2011-11-08T11:17:00.000-08:00

Bank Insurance Teleseminar 12/13/11 1:00 Eastern

"Kidnap, Ransom, and the Finer Points of the Bankers Bond"

Details and Register At: http://www.scottsimmonds.com/teleseminars/

Free to Bankers...

Bank Insurer Ratings

2011-10-30T12:36:00.000-07:00

I work with a variety of insurers in my efforts for my bank clients. I review coverage, help with claims, and manage bids for community banks.

Here are the latest ratings by AM Best and Weiss Ratings for a sample of the insurers who work with banks.


.		Q3 2011
.		A.M. Best Rating	Weiss Ratings
.	ABA Insurance Services - Everest Re Group Ltd	A+ XV	C
.	BancInsure Inc	B++ VI	C
.	Chubb Group of Insurance Co	A++ XV	B
.	Cincinnati Insurance Co	A+ XV	A-
.	FinSecure - StarNet Insurance Company - W. R. Berkley	A+ XV	C
.	Kansas Bankers Surety - Berkshire Hathaway Ins Group	A++ VII	B
.	OneBeacon Ins Co - White Mountains Ins Group	A XI	B-
.	Travelers Group of Ins Co	A+ XV	B
.	Zurich Financial Services Ltd	A+ XV	C
.

Simmonds Business Insurance Index™

2011-10-27T04:58:00.000-07:00

The Simmonds Business Insurance Index™

November, 2011

--Renewal Premiums - Slight Increases

--Renewal Coverages - Negotiate - But Be Ready To Lose

--Buyer's Outlook - Long-Term: Prices Increasing / Coverage Restrictions

The soft market is coming to an end. Underwriters are asking questions. Insurers are restricting writings in areas. Coverages that were easy to get are requiring tough conversations and negotiations.

I had an underwriter refuse to offer crime limits over $25,000 to a wood products company the other day! Six months ago we could have probably negotiated for $100,000 at no additional premium.

Carriers are reluctant to offer renewal quotes early because they are afraid to miss an increase in the market premium. There is breath-holding going on about the January reinsurance renewals.

This will not be pretty.

Limitless Insurance For Banks

2011-10-26T17:46:00.000-07:00

Sent to the ABA Journal:

To The Editor:

For well over 100 years, the insurance industry in America has done an exceptional job of offering protection to America's community banks. As the banking industry changed, so did the insurance protection offered to financial institutions. As technology changed, bank insurance changed to meet the new exposures.

It's time for the banking insurance world to take the next step.

As an insurance consultant to community banks, the most frequent questions I'm asked is, “How much coverage should we buy?”

It is an unanswerable question. No bank can be totally confident that the amount of insurance they have purchased will be adequate to meet future claims. The risk of running out of insurance is an exposure often considered by bank executives. Is $1,000,000 enough? How about $5,000,000? Is it possible that we could be sued for $20,000,000? Is a bond limit of $5,000,000 adequate?

You may as well ask, "How high is up?"

Currently, all insurance policies for banks have limits. Each policy describes the maximum dollar amount that will be paid by the insurer for covered claims. Every bank in America could potentially run out of insurance.

Of course few, if any, will. However, there is a risk for every bank. More than a few bank CEOs and CROs stay up at night worrying about such risks.

Fortunately, this is a risk that can be easily borne by the insurance industry because of the law of large numbers. With many banks insured, few will have claims. Fewer still will have big claims. Few (if any) will run out of insurance.

I dare say that removing the risk of running out of insurance is a value that bankers will pay for. The time has come for insurance companies to offer insurance contracts without limits of coverage.

Certainly, some banks will continue to select an amount of insurance on their bond and their Directors’ & Officers’ insurance. Other banks, however, will recognize the value of an insurance policy where the threat of running out of insurance is zero.

Think of the benefit to your directors, officers, and stockholders of the bank knowing that they cannot run out of insurance protection. Would a bank pay an extra 20% for this feature? (I would recommend it.) Is it still valuable at 25%, or 30%, or 50% more? Individual banks would get to decide.

Insurers too can decide. Some will scoff at my idea. Some will offer it only to their very best clients. Ah, the wonders of a free market.

Those insurers who take my suggestion stand to gain in premium and client loyalty. Those who don't can continue on as they do now - hopefully losing market-share to the innovators.

May I be so bold as to suggest that you point your insurance agent to this letter. Ask your insurer to consider the idea. Perhaps this will start a discussion to the further improvement of the insurance protection purchased by community banks in America.

Scott Simmonds

Insurance Assurance Consulting

The Condo Renewal Blues

2011-09-22T07:01:00.000-07:00

Got a call this morning from the manager of a residential condo complex here in Maine.

Last year's premium was $12,000. Traveler's non-renewed the policy, as it is "coastal." The manager worked with the current agent; several board members tried to help by going to other agents. This left the insured with multiple agents all going to the same insurers, multiple quotes from multiple insurers, several from the same insurance company, but different premiums.

The current policy expires in eight days.

The manager is frustrated, confused, and looking at a higher premium (I won't tell you how high, as agents are still working on this and may read my blog). Big mess. Nobody is happy; not the manager, not the board, not the agents, not the underwriters.

I offered a solution that often works: go to a direct writer who has not been in the game yet.

I don't know if this will solve the problem. I sent them to an agent for Nationwide who has done good work for other clients.

Sometimes the solution to a problem is a very hard right.

It does not untangle the rat's nest. It throws it out. As I said, a hard right.

Now, to the preventative:

Renewals must be managed by the insurance buyer. Nobody looks after your business like you do. Take it on and hold your agent accountable. Set dates and expectations.

If you are going to get competitive bids, that process needs to be managed, too.

There can only be one captain of the boat. The condo above had too many people contacting agents with no coordination.

You must assign insurers to agents. Find out which insurer each participating agent wants to use. Assign insurers to the agents based on the requests of the agents. Someday I hope that insurers will provide quotes to multiple agents. Until then, we must assign insurers.

If I hear how this works out, I'll let you know.

Work Comp Classifications

2011-09-20T21:03:00.000-07:00

From a reader...

Scott:

In presenting our insurance coverage information to a board this afternoon, I was questioned by an HR professional, who sits on one of our boards, regarding our WC classification of employees. Almost 100% of our employees (except couriers/custodial) are classed as 8810 Clerical. I reviewed this in-depth with our agent at the last renewal and the conclusion was to continue this blanket classification of most all employees. The board member is suggesting that perhaps our commercial loan officers should be classed as “Outside Sales” – 8742.

What are your thoughts regarding addressing this again, and what are our risks in the event that the insurer feels we have mis-classed a group of employees?

Thanks,

My reply...

Glad to help.

I don't see this as a risk. It is, however, something I would have pointed out had you retained me to help with the standard lines of insurance - nudge!

Two issues...

First, cash flow. It is possible that sometime in the future an insurance company auditor will adjust the most recent policy and the current policy premiums. That might mean about 70 cents per $100 (depending on your policy's rates) in payroll for those who should be classified as sales.

My second issue is less often discussed. You have an experience modification as a part of your workers' compensation premium calculation. It is a ratio of expected losses to actual losses. An experience mod of 1.00 is average. 0.85 means your losses are below average. 1.25 means your losses are higher than average.

As you are putting payroll in a low rate / low hazard code (clerical) your mod is probably a point higher. Even if you have low losses, misclassification pushes the mod up - though only slightly, as the relative payrolls are low.

While a higher mod (.01 or so, if that) does increase your premium, you are saving net on premium with employees rated in lower codes.

That said, classification is the insurer's responsibility - unless you are lying to the auditor, and that's fraud. If the insurance company makes a mistake, it is their mistake.

There is no risk to claims not being paid. There is no risk of a fine or any penalty.

I normally counsel my clients to sit tight. If the auditor changes class, then pay the additional premium.

Work comp is like baseball - the other team has to tell the umpire you missed the base. It is not golf where you are expected to rat on yourself.

Let me know if you have questions. I am glad to talk about a review of the standard lines of insurance for your bank.

Slip and Fall Accidents, Insurance Coverage, and Procedures

2011-09-19T07:54:00.000-07:00

Your general liability insurance covers you for your liability that comes from accidents involving bodily injury and property damage. The most common bodily injury event by the general public (not employees) is "slip and fall."

Someone slips and falls in your parking lot or in your lobby.

You should have a policy for handling such events that is well known by your employees, and that includes:

-Make the person comfortable.

-Be courteous and helpful.

-Allow the injured person to decide whether or not they need medical attention (unless they are unable to communicate as the injuries are so serious).

-Get the person's name.

-Get witness names.

-Do not fill out a form in front of the injured person.

-Record the incident and keep a record of the event including the conditions that were present. Get pictures after the fact. The report should include comments made by the injured person about the event ("I only had two beers with lunch," is something that needs to be in the report).

-Never admit fault.

-Never berate or reprimand employees in the presence of the injured person.

-Never share a copy of any report with the injured person or his attorney.

Such events do not need to be reported to your insurance company unless the injuries are so serious that an ambulance is called to the scene. If the injured party calls you about medical bills (or his attorney contacts you), then report the claim.

It should go without saying that if your lobby is slippery every time it rains, you need to consider a different floor covering. Putting a "slippery when wet" sign out is NOT risk management. It is admitting there is a problem and that you have not fixed it.

So-called medical payments insurance is also a part of most general liability insurance policies. More on that in a future post.

Bad Insurance Agents

2011-09-15T11:40:00.000-07:00

OK, I am catching up on my reading of the insurance information service, FC&S (National Underwriter Company).

A few minutes ago I blogged about bad adjusters. Now its my turn to take a swipe at agents.

Here is the question asked:

A hit-and-run driver hit a car, which in turn was pushed into a building. The building and the personal property inside were damaged. The car was covered by uninsured motorists insurance, and the insurance company is paying for the car. However, the auto insurer will not pay for the building and personal property damage, stating that "as the driver was not in the car at the time of the accident and therefore we [the insurer] are not liable, the hit-and-run driver is." The car caused the direct physical damage to the building, the hit-and-run driver did not hit or even touch the building. Wouldn't the car insurance be responsible for the damages as the car hit the building, not withstanding it was unoccupied?

AHHHHHHHHHHH!

The agent is asking about LIABILITY coverage. Liability insurance responds when the insured is responsible for the damage or injuries caused.

Why would anyone think that a parked car is responsible for damage caused by another car? Basically the agent is taking the position that there was an accident and the insurance should pay.

No.

There has to be liability before a liability policy will pay. Insurance 101, day one - maybe hour two.

Of course if some lunatic court says that the parked car is responsible for the accident, then matters change. The insurance policy does not have a lunatic court exclusion (that I have ever seen).

Bad Claims Adjusters

2011-09-15T11:07:00.000-07:00

Bad claims adjusters are a plague on all our houses.

Insurance adjusters are to be the front line of the insurance transaction - the part of the transaction that we all buy insurance for - claims service.

Here is a letter sent to the insurance information service, FC&S (National Underwriter Company):

"I am working on a complaint that involves whether the auto liability should pay for damages to a third party. The insured states that her adopted son, age fifteen and holding a driver's permit only, took the family car without permission and was involved in an accident. The adjuster is denying coverage, stating that the car was taken without the parents' permission. My feeling is that the child had access to the keys, which are the liability of the parents, so they should be liable for the damages that were caused. I would like to know what your thoughts are."

There is nothing, I repeat, NOTHING, in any auto policy I have ever seen that requires that a person have permission to drive a car in order for the insured to be covered for an accident.

This is basic stuff that any adjuster should know.

The auto insurance policy, like any other liability policy, protects the insured from lawsuit. The fact that the car is taken (or stolen) does not impact coverage for the INSURED.

Think of the grief the insured is going through over this whole event, then they learn that some bone-headed adjuster is saying "no" to coverage.

Stress times ten.

I hear regularly from insurance buyers who are fighting claims that should be clearly covered by a policy. Yet adjusters, by ignorance (let's assume its that and not bad faith) cause insureds lost time and often sleep.

Insurers, get rid of incompetent adjusters. Adjusters, read the policies you are adjusting coverage for. Read insurance books and study the business.

Obviously there are good adjusters out there. We need more of you. We also need you to step forward when you see bad actors in your midst. Get them out of our business.

The Simmonds Business Insurance Index™ - September

2011-08-28T17:33:00.000-07:00

I think I am seeing signs that the commercial insurance market is changing. I know I'm seeing it in the world of bank insurance. Underwriters are asking questions they have not asked in some time. Insurers are declining to quote risks that have a bit of "hair" on them.

There still is plenty of capacity and competition in the commercial insurance marketplace. I am leaving the index unchanged from last month.

--Renewal Premiums: Flat To Slight Increase

--Renewal Coverages: Negotiate

--Buyer's Outlook Long-Term: Prices Increasing

It is still a good time to get competitive quotes on your renewals. Get started early; at least 90 days prior to expiration. If you bid last year or the year before, ask your underwriter for premiums early - tell them you won't bid if they commit 60 days before renewal with aggressive pricing.

More on Market Changes

2011-08-15T18:31:00.000-07:00

Yes, Virginia, there is a Santa Clause. He is about to turn into Scrooge, though.

I recently wrote that I am seeing signs that the market is starting to leave the "buyer's market" part of the insurance cycle.

Here's some more...

The editors of the John Liner Letter put out a memo recently with the following:

"In a market already wracked by over $15.5 billion in weather-related insured losses in the United States, many feel that a heavy hurricane season could tip the industry into a hard market. Property insurers will be seeking rate increases for some risks as catastrophe losses continue to erode insurer profits. Insurers are also turning toward an updated Atlantic hurricane model that includes predictions of higher inland wind damage, which could indicate that current pricing and underwriting standards may not be adequate."

They then point out that the industry enjoys a healthy $565 billion dollar surplus. I have been saying all along that it is the surplus that keeps us in a buyer's market - supply and demand - lots of insurance capacity without high demand.

Predictions of horrible weather abound. Insurers will use that as their reason to try and increase prices. I'm not sure what you see. However, here the local weatherman cannot predict the weather next week. I don't know how anyone can predict it for next month - or three months.

The key here for insurance buyers is three-fold:

1) Be a desirable risk - If your business has low losses and is well managed and thriving, insurers will flock to you.

2) Be a demanding risk - Set expectations for service from your agent and insurer. Hold them to your standards.

3) Negotiate - All aspects of every insurance policy are negotiable - coverage, price, and service. You must be in a position of strength. Know what you are asking for. Know the insurance marketplace. Know what you can ask for. Practice great negotiation skills.

The John Liner memo mentioned above counsels preparedness and loss prevention. Absolutely true. There is more though. There is always more. You must have knowledge on your side.

Simmonds Business Insurance Index - Market Changing

2011-07-31T02:17:00.000-07:00

For the first time in a long time, I am predicting a hardening in the insurance market. That is reflected in the changes I am making in the Simmonds Business Insurance Index:

The Simmonds Business Insurance Index™

August, 2011

Renewal Premiums

Flat To Slight Increase

Renewal Coverages

Negotiate

Buyer's Outlook

Long-Term:

Prices Increasing

I think the insurance marketplace is starting to change. Over the next 12 months we are going to see higher premiums and restrictions on coverage.

Over the past month I have seen underwriters decline accounts they would have drooled over six months ago. My August and July renewals were/are more intense in the negotiations than in recent memory.

I'm getting more aggressive questions from insurers, and I'm starting to see a general attitude of, "We are not really interested in being competitive if it means we can't have the price we want."

At the same time, there are flashes of the soft market. One recent renewal had one insurer 40% below last year.

As the marketplace toughens, it will be more important than ever to have a renewal plan and to negotiate coverage and premiums with insurers.

Agents and insurers have been looking for a hard market for some time - years now. Their incomes will be going up. Workloads too. To the insurance buyers out there I say, "Make them earn it."

NonProfits-Where and Why Buy D&O

2011-07-25T18:22:00.000-07:00

Letter from someone who found me on the internet...

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

July 25, 2011

Dear Scott,

I just read your article here:

http://www2.guidestar.org/rxa/news/articles/2004/nonprofit-directors-and-officers-insurance-the-good-the-bad-and-the-ugly.aspx?articleId=839 and wonder if you might answer a few questions for me.

I am a director of a newly formed citizens' group, a non-profit corporation in the state of xx. We are not a 501c(3), although we may become one in the future. We expect to approve our Bylaws at the board meeting tomorrow, and we do have an indemnification clause...

We have been told that, although it is unlikely, there is a small risk that we will be sued, and that to be able to afford to defend ourselves in this unlikely event, we should get directors' and officers' insurance. You wrote in your article:

"Volunteer service is no defense for improper acts. Many states, however, provide immunity from prosecution if the actions arise out of voluntary service in a nonprofit. Remember that these laws are at the state level, and that they vary from state to state. State law cannot provide immunity from federal statues such as ERISA, the Americans with Disabilities Act, or Civil Rights laws."

We are in xx. How do I find out if we really need this coverage or not? Can you point me to a description of the coverage that would be most applicable in our situation? Further, do you know of insurers who perhaps specialize in our type of needs?

Thanks for your prompt response,

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

My reply...

SB,

Your indemnification clause is only as good as the assets that stand behind it. Without insurance, you are asking your directors to risk their personal assets.

Any good local commercial insurance agent can help you. Talk with your board members and supporters - find one who runs a successful business, and ask them to refer you to their insurance agent.

A local attorney can help you with the laws in your state. Personally, I cannot imagine serving on a board of directors without D&O insurance. The premiums are usually $1,000 or so for a small group. Why should so many board members risk so much for so little?

Best of luck.

Regards,

Scott

United States Longshoremen and Harbor Workers' Act - USL&H

2011-07-12T06:03:00.000-07:00

The United States Longshoremen and Harbor Workers' Act (AKA USL&H) is a federal law that provides benefits to workers who were injured in certain occupations having to do with dock workers and other maritime jobs.

Twenty years ago we worried about incidental workers on docks - florists and pizza delivery people for example - who would go onto docks or ships occasionally but whose job was not really maritime. The law then (as I recall) was changed so that the current rules exclude from coverage:

(A) individuals employed exclusively to perform office clerical, secretarial, security, or data processing work;

(B) individuals employed by a club, camp, recreational operation, restaurant, museum, or retail outlet;

(C) individuals employed by a marina and who are not engaged in construction, replacement, or expansion of such marina (except for routine maintenance);

(D) individuals who (i) are employed by suppliers, transporters, or vendors, (ii) are temporarily doing business on the premises of an employer described in paragraph (4), and (iii) are not engaged in work normally performed by employees of that employer under this Act;

(E) aquaculture workers;

(F) individuals employed to build, repair, or dismantle any recreational vessel under sixty-five feet in length;

(G) a master or member of a crew of any vessel; or

(H) any person engaged by a master to load or unload or repair any small vessel under eighteen tons net;

if individuals described in clauses (A) through (F) are subject to coverage under a State workers' compensation law.

So, based on the above, a florist delivering flowers to a dock-worker is not eligible for USL&H benefits (though they are eligible for state workers' compensation benefits).

I was recently talking with a agent who insisted that his bank clients needed USL&H coverage in case a loan officer wandered onto a dock and got hurt. As I argued, he brought up the fact that the premium was about $300 on a bank that spends over $100,000 a year on insurance.

The wind went right out of my sails.

However, should the bank even spend $300 on this? If there is never a claim, the bank spent $3,000 over ten years. If there is a claim, I hope a judge would hand an attorney his head for even trying to subvert what I think is pretty clear language (above). However, lawyers are creative and judges continue to astound.

What's the right answer?

My Military

2011-06-21T06:44:00.000-07:00

We have two sons in the service - 1 Army, 1 Navy.

Got a call today from Army Son that he is back on US soil from 11 months in the desert. The sun is brighter today. The air is crisper. My wife is smiling.

Now, back to our regular programing...

Dishonest Employees and Crime Insurance

2011-06-17T06:53:00.000-07:00

I have posted about this in the past.

Most crime policies exclude acts by an employee who is known to have committed a past dishonest act. That exclusion removes coverage when a manager knows that an employee has stolen a pencil, and then six years later is found to have stolen $200,000.

Goofy!

Here is the wording from a Travelers' crime policy I am reviewing. Much better!

This Crime Policy terminates as to any Employee:

a. as soon as the Insured's partner, any of the Insured's Management Staff Members, or any Employee with managerial or supervisory responsibility not in collusion with the Employee becomes aware of any dishonest or fraudulent employment related act involving an amount in excess of $10,000; or

b. 60 days after the Insured's partner, any of the Insured's Management Staff Members or any Employee with managerial or supervisory responsibility not in collusion with the Employee becomes aware of any dishonest or fraudulent non-employment related act; either of which acts were committed by such Employee in the Insured's service, during the term of employment by the Insured or prior to employment by the Insured, provided such dishonest or fraudulent non-employment related act involved Money, Securities, or Other Property in an amount in excess of $10,000.

Crime Insurance - No Coverage For Owners

2011-06-17T06:40:00.000-07:00

Here is an exclusion I see quite often in employee dishonesty and crime policies:

"This Crime Policy will not apply to loss resulting directly or indirectly from any fraudulent, dishonest, or criminal act committed by the Insured, the Insured's natural person partners, any LLC Member or Officer-Shareholder, whether acting alone or in collusion with others."

This means no coverage for theft by an owner.

Imagine there are five owners, and one steals. Most insureds would expect there to be coverage.

Nope!

Policy Form Number Decoding

2011-06-05T08:11:00.000-07:00

It dawned on me that the un-initiated in insurance traditions don't know the rhyme or reason to insurance policy form numbers.

A policy form listed as "CG0001 1001" means that it is a commercial general liability form - CG - the form number is 0001 and the edit date is 10/2001.

Here are some of the prefix codes most commonly used by insurers in the ISO (Insurance Service Office) system of policy forms.

HO Homeowners

BOP Business Owners

PP Private Passenger Auto

CP Commercial Property

CA Commercial Auto

DP Dwelling Property

CG Commercial General Liability

IM Inland Marine

DP Dwelling Property

CU Commercial Umbrella

CR Crime

LA Insurance Commissioner Makes Flood Announcement

2011-05-19T09:18:00.000-07:00

I got this today. Quite a helpful reminder to insurance agents...

To: All Louisiana Producers

From: Commissioner Donelon

Re: Spring Flood Update

As the spring flood has moved into Louisiana, I am asking your assistance in communicating important information regarding the National Flood Insurance Program (NFIP) to the citizens of Louisiana.

Please alert your clients with flood coverage that the NFIP may reimburse residents up to $1000 for preventative measures taken such as sandbags, supplies, and labor for property removed to safety. Insured property must be stored in a fully enclosed building and is covered for 45 consecutive days from the date it began being moved there. Residents should keep all receipts in order to receive reimbursement, and submit them to their claims adjuster. In preparation of filing a flood insurance claim, residents should have their insurance policy, inventory of their contents, all receipts, and photos of damaged items (if possible).

Please feel free to direct individuals with flood insurance questions to the NFIP at 1-866-751-3989 or other insurance questions to the Louisiana Department of Insurance (LDI) at 1-800-259-5300. Thank you for your assistance.

With best wishes and kindest personal regards, I remain

Very truly yours,
James J. Donelon
Commissioner of Insurance

Renewal Results

2011-05-14T05:30:00.000-07:00

A midwest bank came to me with concerns about their upcoming renewal. Their insurer was not enthusiastic, and their agent seemed resigned.

The bank's current insurance premiums were $88,000 for the bond, directors' and officers,' and cyber liability.

I poked and prodded the agent, who agreed to alternative quotes from another insurer. The initial renewal quote was $97,000 from the current insurer. I knew we could do better.

After negotiations, combined with gnashing of teeth and stomping about, the final quote was $65,900 with coverage far in excess of what the bank had before. The bond was increased from $2.5 million to $4 million. The D&O was increased from $2 million to $4 million. Coverage was streamlined, and the insurer was pushed to provide a three year policy. Many policy conditions were moved from benefiting the insurer to benefiting the bank.

A lackluster renewal with a higher premium was turned into a $23,000 premium reduction with exceptional insurance enhancements.

This is the work I do. I promise valuable results for all my clients.

Workers' Compensation Classifications - Using The Clerical Code

2011-05-11T13:41:00.000-07:00

Reader Question

Hi Mr. Simmonds,

I have a random question, which I'm not sure if you can answer or not. Our organization is a non profit that does pre-school, after school, and summer camp programs as well as helps out the community with a local food pantry.

We recently received our workmen comp. bill, and they now have the entire staff listed as code 8868 Daycare Provider. The broker claims the auditor used a classification that reads, "a day care operation must include clerical" and cannot be broken out seperately. Previously we had the office / clerical staff (located in a completely separate building) listed under it's own classification. From reading your material online, we (clerical / admin) should be coded as 8810. I would gather it would be the same as an organization such as the Boys & Girls Club. Am I wrong here?

My Reply:

I suggest you ask the agent for a copy of the complete definition of the classification the auditor is using - sometimes called the SCOPES definition.

That will tell you if you can use the clerical code or not. There are some codes that do not allow the standard exceptions of clerical, drivers, and sales.

Best of luck.

Agents Who Play It "Safe," Failing Their Clients

2011-04-29T13:46:00.000-07:00

A letter to the editor I just sent to an insurance publication...

I am reviewing insurance for a client. The agent's renewal review for last year includes a statement that they never recommend limits of coverage.

Really?

What exactly is your job then? Are you a clerk for the insurance companies? "Here is what we can offer. Buy what you want." It's the big-box approach to insurance service! Why exactly do people buy insurance from you?

This comes from the world of errors-and-omissions-loss-prevention, a pervasive cult that insists that everything an agent does must foil the perverse suit-happy public. Take no risks - offer no advice, is the mantra.

Horse-hockey! Insurance buyers need informed advice and counsel. The world of insurance is complicated and complex. It is the agent's job to stand up and advise the client. Why else would they need you?

While you are at it - remove the stupid message from your voicemail.

"Coverage cannot be bound or amended using a voice mail system."

Show me one case where a customer successfully sued an agent because a voicemail message included a coverage change, and I will donate $100 to the Red Cross in your name.

Pablum for the mindless insurance lemming.

Liberalization

2011-04-26T16:02:00.000-07:00

According to Ray Burnham's most excellent insurance dictionary...

"Liberalization clause - automatically broadens the coverage of all policies if a policy revision that would broaden coverage without additional premium is adopted during the policy period; is designed to prevent mass cancellations and rewrites; does not apply to new programs, e.g. the 1984 HO forms replacing the 1997 HO forms."

I do a great deal of work for banks. The insurance policies being sold now are a great deal broader that those sold even a year ago. Many banks are currently insured by three year policies for their bond's and directors' and officers' insurance. That can mean that their insurance is, in some ways, antiquated.

Nobody seems to be calling for liberalization - I think I'll start.

Buyer's Insurance Market Continues

2011-04-18T15:50:00.000-07:00

Without any hints as to whom I am speaking of (agents read this blog too - I will not mention the industries or the regions), I just received several proposals on bid projects.

The renewals are being offered at about 20% below last year's premium with significantly better coverage. The competing carriers (multiple agents) are offering quotes at 40% off of the current premium - again, with much better coverage.

The accounts I am speaking of have an average premium of over $200,000 and have not been to bid in about five years.

I say again... If you have not bid your insurance in the past three years using multiple agents and multiple insurance companies, you are probably paying too much and not getting all the coverage you can/should have.

There are reasons not to bid your insurance. That decision, however, has a cost - in coverage and in premium.

The "Not Covered" of Property Insurance

2011-04-16T06:59:00.000-07:00

Here are the events usually not covered by property insurance:

-Flood
-Earthquake
-Intentional Damage By You
-Animals and Insects

Your agent can help you with the first two.

Don't do the third.

Frequent inspections for the last.

Where Are Your New Insurance Ideas Coming From?

2011-03-29T09:07:00.000-07:00

If you have been buying your insurance from the same agent for 10 years, where are your new insurance ideas coming from?

Insurance is not a one-size-fits-all proposition. It is also not a once-and-done deal.

Your operation changes. The insurance marketplace changes. Exposures that we never thought of five years ago are now costing businesses millions of dollars.

Is your insurance changing? Where are the new ideas coming from? Where are you getting new perspectives?

Repeat After Me, Coinsurance Is Bad!

2011-03-23T14:52:00.000-07:00

For the 432,234th time now, I have had an agent send me a proposal of insurance that includes coinsurance.

Insurance buyers, ask your agent if you have coinsurance on your property insurance policy. If the answer is yes, ask your agent why they have allowed your insurance company to include a penalty that might hit you when you have a loss.

For the insurance buyer, a coinsurance penalty is ALWAYS bad. It means that there is a chance that a partial loss might not be covered like you think it will be.

If you are interested in knowing how coinsurance works and how the penalty hits you, send me an email (or use the search bar to the right).

Frankly, all you need to know is that coinsurance is a penalty - penalties are never a good thing. Your agent is supposed to be helping you avoid bad things, and if you have coinsurance, YOUR AGENT IS NOT DOING HIS OR HER JOB!!!!

(Note to Insurance Geeks: Please do not send me emails lecturing me on the benefits of coinsurance. Do not tell me that it is a rating necessity that really benefits insurance buyers. Insurance buyers should buy the right amount of insurance - if they do that there should never be a coinsurance penalty. No individual insurance buyer has ever been better off at the time of a loss by having a coinsurance clause in his policy.

Insurance Matters: Used Up and Left Out

2011-03-18T08:00:00.000-07:00

My latest column for CU Management:

Your credit union undoubtedly buys directors’ and officers’ insurance to cover your board members. There is a fly in the ointment, though. What you have for insurance may not be enough. If it is enough, it may not be the right kind. If it is the right kind, it might get all used up.

First, we have to talk about indemnification, which is the act or process of securing against loss. The idea that D&O protects directors and officers is actually a bit off. Your credit union bylaws state that if a director is sued, the credit union will indemnify the board member. Your directors’ and officers’ insurance reimburses the credit union for that indemnification.

In most cases, it is really the assets of the credit union that protect a board member. The D&O policy (up to the limit of coverage) keeps the credit union from being out the cost of the lawsuit. In most cases, the D&O policy really protects the credit union.

Except when it doesn’t.

Full article...

Japan and the US Insurance Marketplace

2011-03-17T11:14:00.000-07:00

I was asked today if I thought the disaster in Japan would have an impact on the US business insurance marketplace.

Not even a noticeable ripple.

A US disaster costing several billion dollars would have an impact.

A more likely cause of a change from buyer's market to seller's market would be a dramatic increase in the demand for insurance coverage or a drop in the capacity of insurers.

Supply and demand - simple economics. Right now there is lower demand (due to the economic decline) while capacity (supply) is at unprecedented levels.

Quake and Tsunami in Japan

2011-03-17T11:03:00.000-07:00

The pictures are horrific. You cannot watch without shaking your head at the humanity.

Standard Publishing put out an email blurb today on disasters. It included the following:

"...While economic losses from the disaster will be huge, the particular nature of these events will make most of that loss uninsured. So far, estimates of insured loss range from $12 billion to $35 billion. The Japan Earthquake Reinsurance Pool (JERP) is expected to cover from $2 billion to $4 billion USD of the direct shake losses..."

I have fielded calls from several media outlets on earthquake insurance in the US.

Most of us in the US do not have earthquake insurance. Your home insurance probably excludes it. Your business insurance does too.

Earthquake is the only catastrophic cause of property loss for which most Americans are not insured. Get quotes and buy the coverage.

Also, send a check to the Red Cross while you are at your desk.

What Your Credit Union Board Wants To Know About Directors' and Officers' Insurance

2011-03-04T10:06:00.000-08:00

My newest white paper for credit unions...

Actually, this is the same white paper I announced the other day - I just customized it a bit for credit unions.

A clear explanation of directors' and officers' insurance designed specifically for credit union board members. What's covered? What's side A? Can I depend on my umbrella policy for protection? Can we buy coverage for civil money penalties? Explain claims-made.

I have included answers to the questions I get when I do seminars and presentations to board members. Thirty years of board member questions in nine pages. Free for credit union leaders and board members. Just send me an email - Scott@ScottSimmonds.com.

Oregon Workers' Compensation Report Out

2011-03-04T05:22:00.000-08:00

Every two years the OR Department of Consumer and Business Services puts out a report of the workers' compensation rates of the 50 states. It does a pretty good job of outlining where everyone is. It appears on its face to be fair.

Check out your state.

Montana has the highest rates at 163% of the median.

North Dakota has the lowest rates at 50% of the median.

My state of Maine is at number eight, down from five in 2008.

Look at Appendix 4 to see a direct comparison of the state rates for different employment classes. Class 8810, Clerical shows rates in MT at $0.75 and $0.13 in MA and DC!

The sales codes range from $1.04 to $.15.

What Your Bank Board Wants To Know About Directors' and Officers' Insurance

2011-03-03T11:00:00.000-08:00

My newest white paper for bankers...

A clear explanation of directors' and officers' insurance designed specifically for community bank board members. What's covered? What's side A? Can I depend on my umbrella policy for protection? Can we buy coverage for civil money penalties? Explain claims-made.

I have included answers to the questions I get when I do seminars and presentations to board members. Thirty years of board member questions in nine pages. Free for bankers. Just send me an email - Scott@ScottSimmonds.com.

The Simmonds' Business Insurance Index™ For March, 2011

2011-03-02T10:59:00.000-08:00

Here's my read of the current marketplace for upcoming business insurance renewals:

Renewal Premiums: -5%

Renewal Coverages: Liberal Terms

Buyer's Outlook: Long-Term: Prices Flat - Soft Market Continues

I continue to see every indication that the commercial insurance marketplace, as a whole, will continue for at least the next six months as a buyer's market.

Agents keep telling me that they are seeing firmer prices. However, when the actual renewal quotes come in, the prices continue to drop when there is competition for the account.

A recent gathering of insurance executives in Maine included a panel discussion on the future of the market. The room was filled with insurance agents and insurance company people. Many made comments about the current inadequacy of premiums and low-price foolishness. Frankly, what I heard was a complete lack of understanding about how free markets work. Supply and demand always finds a way... The current supply of insurance exceeds demand, so prices decline. Until insurers walk away from clients (decreasing supply), prices will stay at what are historically low levels.

The other part of supply and demand is that suppliers always want high prices, and buyers always want low prices. Push and pull makes it all work.

Testimonial!

2011-02-28T11:00:00.000-08:00

"Our board was experiencing serious concerns about the percentage of the organization's budget allocated to insurance costs. After some online research, we found Scott Simmonds--and what a great find he has been! Thanks to Scott's efforts, insurance costs have been reduced dramatically, and coverage improved. He worked extremely well with the board and our current agent--we were completely satisfied and would definitely use Scott's services again--and recommend him to anyone in a similar situation."

Billie Bailey
Executive Director
Grout Museum District
Waterloo, Iowa

Insurance Matters: Property Insurance Issues Part 2

2011-02-16T15:38:00.000-08:00

My February column for CU Management...

More property insurance issues for credit unions - See the column here.

Flood insurance

Earthquake coverage

Computers

FDIC and Professional Liability Lawsuits

2011-02-10T13:48:00.000-08:00

I do a lot of work with banks. I subscribe to FDIC news notices.

This one (2/10/2011) made my blood run cold... Something about the tone... Obviously I knew that FDIC goes after bank directors. However!

Professional Liability Lawsuits

As receiver for a failed financial institution, the FDIC may sue professionals who played a role in the failure of the institution in order to maximize recoveries. These individuals can include officers and directors, attorneys, accountants, appraisers, brokers, or others. Professional liability claims also include direct claims against insurance carriers such as fidelity bond carriers and title insurance companies.

The FDIC follows the policies adopted by the FDIC Board in 1992, Statement Concerning the Responsibilities of Bank Directors and Officers, which can be found at http://www.fdic.gov/regulations/laws/rules/5000-3300.html#fdic5000statementct, and require Board approval before actions are brought against directors and officers.

Professional liability suits are only pursued if they are both meritorious and cost-effective. Before seeking recoveries from professionals, the FDIC conducts a thorough investigation into the causes of the failure. Most investigations are completed within 18 months from the time the institution is closed. Prior to filing the claim, staff will attempt to settle with the responsible parties. If a settlement cannot be reached, however, a complaint will be filed, typically in federal court.

FULL NEWS RELEASE HERE

Nonprofit Directors and Officers Insurance - Article

2011-02-08T07:12:00.000-08:00

Many nonprofits wonder if directors’ and officers’ liability insurance is a must-have, just like bylaws or a conflict-of-interest policy, especially as even the smallest organization will have to pay upward of $1,200 per year for it.

Directors’ and officers’ liability insurance—known as D&O insurance—is protection against a breach of duty by the directors and officers. D&O pays for what the policy calls wrongful acts: "Any actual or alleged act or omission, error, misstatement, misleading statement, neglect or breach of duty by an insured person in the discharge of his/her duties."

Read my full article here at www.MassNonprofit.org.

Testimonial!

2011-02-07T12:41:00.000-08:00

I have the greatest clients!

"Scott Simmonds was a valuable resource when we went out to bid on the district’s insurance policies. Having never been involved in the insurance bid process, I was pleased with the knowledge and insight that Scott brought to the table and his ability to bring us up to speed as to how the process of insurance bidding is carried out. During the selection process, he gave us ongoing advice and was able to help us bottom line the choice that would best serve the district, balancing both the financial considerations and the need to maintain a successful working relationship with an insurance carrier."

Sue Lambert, Director of Business & Finance
MSAD#49, Fairfield, ME

Employed Lawyers E&O

2011-02-02T10:19:00.000-08:00

Attorneys in private practice buy errors and omissions insurance. Such is coverage for suits brought by clients for malpractice.

When attorney goes to work for a private firm the need for errors and omissions insurance drops to almost zero - an employer can not sue an employee for malpractice.

I said almost zero.

Employed lawyers sometimes continue to handle small matters for friends and family. They may help employees with wills or other small legal matters. The lawyer is exposed to a lawsuit if those "off-the books" issues result in a lawsuit.

Employed attorneys should realize that most employers do not buy coverage for them for malpractice.

There is an insurance policy designed for this situation - called Employed Lawyer E&O.

Talk with your insurance advisor about employed lawyer errors and omissions for more info.

Personal Umbrella Liability and Board Service

2011-01-31T15:01:00.000-08:00

I am often questioned by a board of directors member who is concerned with their personal liability for their service on the board.

I hear it from board members of non-profit boards and the boards of corporations, alike.

The question goes like this:

"I have a personal umbrella policy that covers me for my actions on this board. Why do we need directors and officers liability?"

A variant is...

"Should I buy a personal umbrella policy in case the directors' and officers' insurance is inadequate?

First, a personal umbrella policy is designed to expand your personal liability insurance and your auto liability insurance by adding $1,000,000 (or more) of coverage.

If you have a $500,000 personal auto policy plus a $1,000,000 personal umbrella policy, you have a total of $1,500,000 of liability coverage for an auto accident.

Your home insurance policy provides personal liability. A $1,000,000 umbrella policy adds $1,000,000 of coverage above the basic policy.

Both the auto policy and the personal liability insurance on your home insurance pays for bodily injury and property damage. The umbrella policy also pays for bodily injury and property damage. The lawsuit must come from somebody being injured or property being damaged.

Directors' and officers' insurance is purchased to protect board members from lawsuits involving poor decisions:

-an employee sues for wrongful termination.

-an employee sues for harassment.

-a community member sues a non-profit for failure to deliver services.

-a stockholder of a for-profit company sues the directors for poor management that results in loss of investment.

D&O insurance excludes bodily injury and property damage - organizations buy general liability insurance for the exposure of bodily injury and property damage.

So, Mr. Board member, you might need a personal umbrella insurance policy. However, it will not protect you from the same things that directors and officers insurance will cover.

OSHA Log Posting

2011-01-26T06:37:00.000-08:00

Reminder!

OSHA 300A Summary logs must be posted February 1.

They must be up today and left up until April 30

Everything you'd want to know about OSHA - http://www.osha.gov/.

Ordinance or Law Coverage

2011-01-24T07:54:00.000-08:00

Sometimes I wake up at night thinking about articles for this blog. I'm surprised that this subject has not been included here yet!

After a loss to your building you may find that local laws and building ordinances increase the cost of reconstruction. Perhaps you will have to add a sprinkler system or add handicap access.

Ordinance or law coverage provides additional insurance to pay for the higher cost of reconstruction due to building codes, laws, or regulations.

The coverage actually has three parts:

Coverage A - Loss to the Undamaged Portion of the Building: Coverage is provided for the value of that part of the building that is undamaged but that must be demolished by order of a governmental authority due to a building code.

Coverage B - Demolition Cost to the Undamaged Portion of the Building: Pays the cost of demolishing and removing the undamaged portion of the building.

Coverage C - Increased Cost of Construction: Pays the increased cost of construction due to law or building codes.

Check with your insurance agent to see what limits you have for this coverage. If your building is over ten years old I would be surprised if there are not at least some building codes you would be affected by.

Insurance Matters: Property Insurance Issues Part 1

2011-01-19T23:15:00.000-08:00

My January column for CU Management:

You’d think that the coverage on your credit union’s buildings and business property would be pretty straightforward. It’s a place I see plenty of problems, though.

This and the next few installments of this column will focus on credit union property insurance, where I’ll pose the issues as questions you can put to your agent.

Do we have replacement cost coverage?

There are two ways most insurance policies value property:

1) Replacement cost is the cost to buy the lost item new. It’s the cost to rebuild the building with current cost of materials and the current cost of labor. It’s the cost to buy a new computer that is stolen.

2) Actual cash value is usually defined as replacement cost minus depreciation. It also can be thought of as the market value of an item. ACV is always less than replacement cost.

Whole Article Here

Diary of a Bank Insurance Review

2011-01-17T05:15:00.000-08:00

Well over 75% of the calls I get are from bankers who want a review of their bank's insurance coverage.

The process is straightforward. Send me your policies and other information. I review it, ask some questions, and report the issues I find.

Once I get the info I need, I can finish a review and have your bank moving towards improved insurance coverage within 15 days.

Here is a timeline from one of my recent projects:

Day 1 - CFO of ABC Bank emails me. He is interested in a review of his bank’s insurance. We discuss his bank’s situation, current insurance, and his objectives. The call takes less than twenty minutes. Later that night I email a proposal that outlines the project's objectives, accountabilities, and fee.

Day 5 - The CFO gets back to me, asking to move forward. He signs the proposal and cuts me a check for my fee. I email him a letter to send to his agent requesting information for the project - summary of insurance, loss runs, and the like.

Day 8 - I receive a box of the bank’s insurance policies, sent by the CFO. I start my review of coverage. (Note, more and more banks are scanning their policies and emailing them. This speeds up the review process.)

Day 10 - I receive information from the bank’s current insurance agent. As I have the info I need, I call the CFO and we set a date for the review conference call.

Day 15 - I email the CFO a copy of my findings to be used in our phone call later in the day. At the appointed time we review the issues and I provide my recommendations. The CEO, CFO, and SVP of the bank are on the call. We set action plans and accountabilities for each issue. We set a date for the next conference call to review progress.

To start the process just send me an email at Scott@ScottSimmonds.com or call me at 207-284-0085. After a short conversation, I will send you a proposal, bank references, and everything you need to make the decision to go forward.

Once I complete a review of your bank's insurance, you will have a better understanding of your insurance. You'll know the coverage you have, and the coverage you don't have. You'll have specific recommendations on how to improve your coverage, and tactics to broaden your insurance protection.

It all starts with a phone call or an email.

Phone: 207-284-0085

Email: Scott@ScottSimmonds.com

State Claim Guidelines

2011-01-15T18:50:00.000-08:00

Claims Magazine has compiled a list of state specific claims laws. Learn what your state requires your insurance company to do.

Go Here

Loss Control - Water, Hot Spots, Insects and Pests

2011-01-07T07:54:00.000-08:00

I'm catching up on my reading... November issue of Best Review (AM Best Company) - article by Scott Spencer on the hidden problems that can lurk in buildings - problems that become evident over time, but by then it is way too late.

(Unfortunately the article is available to subscribers only. Bad on you AM Best!)

Spencer discusses electrical problems, water intrusion and infestation.

Hot spots in the electrical system develop as insulation deteriorates, nails penetrate electrical boxes, and screws loosen-up. Eventually there is a fire or a short.

Water intrusion comes from slow plumbing leaks and small roof leaks. Over time decay sets in and, perhaps mold.

Infestation can be from insects or rodents.

These are not issues I had spent much time thinking on. I should. You should too.

I'm calling a pest control company today and have asked my insurance agent if my insurance company offers risk control services for electrical and plumbing issues.

Does Your Dog Bite?

2011-01-05T15:00:00.000-08:00

In 2003 there were 17,000 dog bite claims submitted to insurers at an average cost of $19,000.

In 2009 claims were 16,600 at an average cost of almost $25,000.

Dog bites account for 1/3 of all homeowner insurance liability claims.

State Farm paid out over $90,000,000 in claims in 2009.

(From Best's Review Nov, 2010)

Can we say this another way? One third of the cost of personal liability insurance is due to dog bite claims. Is it really fair to charge everyone for the cost of these claims?

Why not a no-dog discount or a big-dog surcharge?

2011 In ObamaCare

2011-01-05T08:17:00.000-08:00

Here's a listing and commentary from Forbes on what's happening in ObamaCare this year.

Policy Renewal Decision Process

2011-01-03T06:07:00.000-08:00

A few weeks ago I started playing around with a graphical representation of the policy expiration decision. I started with renew or bid as the options.

This weekend I had the "head-slapper" revelation - renew, bid, or broker selection.

Here is the latest version - subject to change as my thinking evolves. Comments encouraged.

I'm working on a paper that will explain in detail my thoughts on the process. More soon.

The Simmonds' Business Insurance Index™ For January, 2011

2011-01-02T13:28:00.000-08:00

Here's my read of the current marketplace for upcoming business insurance renewals:

Renewal Premiums: -5%

Renewal Coverages: Liberal Terms

Buyer's Outlook: Long-Term: Prices Flat - Soft Market Continues

There is no change in sight for a move from the current insurance buyer's market. We have supply and demand to thank. Simple as that. The capital / capacity in the insurance business continues to exceed demand. The soft economy and investors have created an environment where there is too much insurance chasing the policies being purchased. Supply outstrips demand - prices drop. As an enticement to policy buyers, insurers continue to offer broad terms and coverage.

Yea for the insurance buyer!

I continue to see insureds who are saving 40% in bid situations where the insured has not bid their coverage in over 5 years - it happened three times in December. My 5% reduction in the index is an average for accounts that have been into the marketplace in the recent past.

I repeat...

--Bid your insurance every 3 years

--Work to make your business an exceptional risk

--Be sure you have a great insurance agent

--Negotiate your renewals for better pricing and better coverage

Go HERE for my comments from past months.

Insurance Matters: Claims-Made Policies

2010-12-28T06:19:00.000-08:00

From my monthly column for CU Management, the basics of claims made policies...

Your credit union directors’ and officers’ insurance is unlike most other liability insurance policies.

“Normal” casualty insurance policies (general liability, automobile, workers' compensation) pay for events that occur during the policy period. These are called “occurrence policies.” For example, an auto insurance policy will pay for an accident that occurs while the policy is in force. You could cancel your auto insurance the day after the accident and still be covered.

Full Article Here

Testimonial

2010-12-27T14:18:00.000-08:00

More nice comments from a great client...

"I have been thoroughly impressed with Scott's knowledge and understanding of the Insurance industry. Working with a consultant of Scott's caliber certainly makes my job as CEO a lot easier, as it is nearly impossible to stay on top of all the changes in the industry. Knowing that we have the proper type and amount of insurance protection is very comforting. Scott has been very easy to work with and extremely responsive to all my questions and concerns."

Matt Kaubris, CEO

Oxford Federal Credit Union

Mexico, ME

Honesty, Ethics, and Openness

2010-12-21T15:38:00.000-08:00

I talk with about 5 insurance agents every day in my work for clients. There are some agents I have known for 20 years. Others, I'm talking to for the first time.

Today I spoke with three agents whom I had never met. I did not know them and they did not know me. Two of the three were not convinced that I was not some kind of shadow agent looking to take their business away. I tried to assure all that I never accept fees or commissions from agents or insurers in my work for insurance buyers. I have no ties to any agents. I will not invest in a stock of an insurance company (though, full disclosure, I do own some investments through mutual funds that have small stakes in an insurer or two.)

Several years ago I owned stock in a large bank. The bank bought an insurance agent. I sold the stock.

Agents try to buy me lunch. I politely refuse. Agents send me sporting event tickets. I return them. Several times I have received gifts from agents. They are returned or, if perishable, donated to my local fire department.

The UPS guy knows to check with me this time of year when a gift box comes as I have refused several deliveries.

I'm not trying to put myself out as some paragon of virtue. Frankly, having firm rules of conduct make things easier for me. I know what is right and what my clients expect of me.

Also, frankly, I have wondered on more than one occasion if an agent isn't testing me by sending a modest gift. I picture the sender waiting with baited breath to report any indiscretion to my client. Try me and you will be disappointed.

Some say that true character is what you do when nobody is looking. I just assume that ethical lapses will always come to light.

Carbon Monoxide

2010-12-21T08:28:00.000-08:00

A friend had a scare with carbon monoxide. Her daughter lives a few doors down the street with her husband and little children. The CO monitor went off last night. By the time she got the kids out and the fire department arrived the CO levels were lethal. What a very different morning today would have been.

You need a CO monitor on every level of your house. Check the batteries on the monitors you do have.

Earthquake Excluded & Other Stuff Is Too

2010-12-15T15:03:00.000-08:00

Almost all property insurance policies exclude earthquake. Coverage is available almost everywhere in the US - either through standard or specialty insurers.

What is not commonly discussed is that the earthquake exclusion is broader than just earthquakes.

The following are excluded in the same breath:

landslide,

mudflow,

sinkhole,

mine subsidence

land shock waves before, during or after a volcanic eruption,

and any other earth movement including shifting, rising, or sinking.

These exclusions are in commercial policies and in personal insurance policies.

Class dismissed.

Home Deck Safety

2010-12-15T11:59:00.000-08:00

Inspect the support system for your back-yard deck at least once a year. Make sure the frame of your deck is lag-bolted and not just nailed where it is attached to your home.

WSJ - Tis The Season to Be Stupid

2010-12-14T10:39:00.000-08:00

I got a short mention in yesterday's Wall Street Journal...

I'm always amazed when I find non-profit boards of directors without directors' and officers' insurance.

Testimonial!

2010-12-13T10:24:00.000-08:00

"Scott's knowledge and expertise of the insurance industry are unmatched. With his professional input, we were able to consolidate our insurance needs and identify any gaps in coverage that we had. He was always available to answer our questions, help review our policies and provide feedback on our insurance coverage. We could not have developed a successful insurance program without his invaluable advice."

Renea Hohenfeldt
Bell Management
Joplin, MO

To Bid or To Renew, Your Insurance, That is the Question - Version 2

2010-12-11T10:22:00.000-08:00

Here is version 2. I added a box and arrows showing the idea of a broker of record letter. My thinking evolves as I write the white paper that will explain my graphic.

Chinese Drywall A Casualty Loss According to IRS

2010-12-10T09:02:00.000-08:00

The insurance press has been filled with info on the Chinese Drywall saga over the past year or so.

The IRS has released a ruling that allows for a casualty loss on your taxes for certain expenses.

See the IRS announcement.

The Center for Disease Control has information on the health affects of the Chinese drywall...

See The CDC drywall info site.

Testimonial!

2010-12-10T04:10:00.000-08:00

"Hiring Scott to review the Bank's Insurance Policy quotes has proven to be a very good decision for the Bank. Scott is knowledgeable, thorough, and understood what we were trying to accomplish thru the evaluation process. Scott accomplished this on short notice and gave us his recommendation with detailed exhalations between the different proposals. On top of this he ended up negotiating a significant decrease in our premium."

Roger Metheny, EVP/CFO
Clear Mountain Bank
Bruceton Mills, WV

Lost Laptop = $1,000,000 Reward

2010-12-08T20:41:00.000-08:00

Hip-hop artist Ryan Leslie is really wants his stolen laptop back. He is offering a $1 million reward for its return.

Read more here.

Of course he wants his laptop - but he really wants his data-files. Too bad he didn't spend $100 on a backup system and another $50 for a service like Lojack for Laptops.

Backup all your computers. Protect your laptops with tracking software.

To Bid or To Renew, Your Insurance, That is the Question

2010-12-08T06:24:00.000-08:00

I've been playing around with a graphical representation of the decision a business must make to bid or renew their insurance.

Here is the latest. A white paper is in the works.

(Click on the image for a larger view.)

The Simmonds' Business Insurance Index™ For December, 2010

2010-12-05T14:34:00.000-08:00

Here's my read of the current marketplace for upcoming business insurance renewals:

Renewal Premiums: -5%

Renewal Coverages: Liberal Terms

Buyer's Outlook: Long-Term: Prices Flat

The insurance market "experts" seem to have given up on the marketplace "hardening" any time soon. There have been several articles in the past few weeks predicting that the market will not change in 2011.

The November 15th edition of National Underwriter touts on its cover that the soft market is the new normal.

That may be good news for insurance buyers. I'm not convinced.

The older I get, the more I realize that when the mass of "experts" are saying that something is going to happen, the opposite is most often true.

In the past month I have handled about 15 renewals. Several increased in premium by 2%. Several dropped by 30%. Most dropped by about 10%.

Those that dropped the most had not been out to bid for several years. They were also the best accounts - highly desirable to the underwriters.

I repeat...

--Bid your insurance every 3 years

--Work to make your business an exceptional risk

--Be sure you have a great insurance agent

--Negotiate your renewals for better pricing and better coverage

Go HERE for my comments from past months.

The Standard is That There is No Standard In Professional Liability

2010-12-02T05:44:00.000-08:00

There are no standard policies in professional liability insurance. Every insurer will have their own definitions, exclusions, limitations, and expansions.

Review your policies carefully.

Thanksgiving Fires

2010-11-19T16:29:00.000-08:00

From the Insurance Journal...

"For most Americans, Thanksgiving Day invokes memories of safe and warm family gatherings featuring hot turkey dinners. But for some 2,000 families a year, and for firefighters across the country, the memories are not so happy.

There are an estimated 2,000 fires in residential buildings in the United States each Thanksgiving Day. That's more than double the number on a typical day."

Read more: http://www.insurancejournal.com/news/national/2010/11/19/115027.htm#ixzz15mHyLHDn

Veterans Day

2010-11-11T06:26:00.000-08:00

I grew up knowing my dad was in the Korean War.

When I got married I knew my wife's father was in WW2. (Both wives actually)

Ten years ago one of our sons joined the Navy.

A year ago another son joined the military - Army this time.

With two sons deployed I now have a new appreciation for those who serve.

Thank you to those who served and those who are now serving.

Are You Covered For The Anguish Of Mental Anguish?

2010-11-09T19:06:00.000-08:00

The general liability policy insuring agreement states, "We will pay those sums that the insured becomes legally obligated to pay as damages because of 'bodily injury' or 'property damage' to which this insurance applies."

Are lawsuits brought for mental anguish covered by general liability insurance? Sometimes yes. Sometimes no.

The policy says that "bodily injury" means bodily injury, sickness, or disease sustained by a person, including death resulting from any of these at any time. My own keen sense of the language tells me that when you define a word as that word, you are already in trouble.

To further explain, I think the policy wants someone to bleed, or at the least be physically injured, in order for coverage to apply.

Some state courts have said that the above definition is ambiguous (imagine!) and that bodily injury does include mental injury and anguish. I find that ambiguous and try to get my clients' insurance companies to spell it out. Fortunately, many do.

Many insurers provide general liability broadening endorsements that specifically bring in coverage for metal injury. Some insurers have specific endorsements that can help clarify matters.

Many umbrella liability insurance policies provide coverage that is more broad than the underlying general liability insurance policies. Some policies specifically bring in mental anguish.

Example of an umbrella bodily injury definition: "Bodily Injury" means bodily injury, sickness, disease, disability, shock, mental anguish, mental injury and humiliation, including resulting death.

The only problem in relying on your umbrella to provide the first layer of coverage is that there may be a self insured retention (deductible) when there is no underlying coverage. Also be aware of sneaky endorsements that make the umbrella "follow-form" to the primary coverage - meaning the lesser coverage provided by the general liability insurance may rule.

Of course, the solution to the above is to retain an insurance consultant. Then you don't have to worry about any of these issues.

New York Man's Faked Store Fall Caught on Tape

2010-11-05T11:05:00.000-07:00

Authorities say a central New York convenience store's surveillance cameras caught a man purposely pouring soda on the floor and then faking a fall so he could file an insurance claim against the business.

Full Story Here

Pet Insurance - Claims Experience

2010-11-04T14:34:00.000-07:00

This past June I bought pet insurance on our puppy. The premium was $172.44 ($1,000 deductible, 80% copay, no coverage for preventative care). The insurer is PurinaCare - Central States Indemnity Co. of Omaha.

In September we discovered that the dog has liver problems. We worked with our vet and Tufts Veterinary School. She had an operation. Total cost: $3,000.

Also in September Chloe decided to tangle with a porcupine. Total cost: $1,500.

On October 9 I faxed the claim forms and bills to PurinaCare.

On October 20 I received a letter from PurinaCare asking for me to contact the vets and have info sent. I had the info from one vet and faxed it that day. My other vet sent info the next day.

Today, November 4, I got a check from PurinaCare for $2,800 (the $4,500, less deductible and copay).

I am very pleased with how this worked out. PurinaCare was professional and prompt. Turning the claim payment around in less than a month is quite reasonable.

The only way this would have been better is if it didn't happen at all.

Bravo PurinaCare.

The Simmonds Business Insurance Index™ - November 2010

2010-11-03T07:05:00.000-07:00

Notes for For Insurance Buyers - November, 2010

Here's my read of the current marketplace for upcoming business insurance renewals:

Renewal Premiums: -5%

Renewal Coverages: Liberal Terms

Buyer's Outlook: Long-Term: Prices Flat

No change from October. No change in the index and no change in my advice.

I see no change in the current insurance marketplace and no signs of prices firming up. With no competition for your account, you will see your premiums stay about the same. With competition on the renewal, you will see reductions and improvements in coverage.

At the end of the renewal, negotiations continue to push for coverage enhancements. Ask the underwriter to throw in earthquake coverage or the elimination of an exclusion.

Here are some of the things I am asking for:

--Earthquake

--Flood

--Defense costs outside the limit of liability on professional liability

--Lower deductibles

--Expansion of debris removal limits

--Per location aggregates on general liability

--Wage/hour claim defense costs on employment practices liability

--Removal or limitation of the known dishonest act exclusion on crime insurance

--Per loss deductible to combine property insurance and inland marine deductibles

--Employees as insured on auto policy

--Cybercrime

Testimonial!

2010-10-28T20:24:00.000-07:00

"BPC Corporation is a multibank holding company with the Bank of Putnam County being family owned for 109 years. Scott’s professional expertise has been a valuable addition to our organization. His knowledge and ability to explain the coverage in a “common sense” approach has enhanced our understanding of the insurance we currently have and identified additional areas of coverage available. Scott has always been very responsive, objective, and unbiased in his answer of various questions. We look forward to a long term working relationship."

Gary Medley, CFO
BPC Corporation
Cookeville, TN

Employee Theft

2010-10-28T06:42:00.000-07:00

Morey Stettner does a nice job overviewing the issues of employee theft and employee dishonesty in his article at www.chiefexecutive.net

It Will Never Happen To Your Business

2010-10-27T16:39:00.000-07:00

Every 5 minutes a business in the US has a fire. 300 each day. Some are little fires. Some are devastating fires.

Thousands of businesses are impacted by windstorms, water damage, lightning strikes, floods, and vandalism every year. Let's say 100 each day.

That is one business hit by catastrophe every 3.5 minutes, every day, all year long. That's almost 150,000 businesses every year.

Then there are the lawsuits. The US Department of Justice estimates that there were about 27,000 civil trials in state courts in 2005. US district courts see about 49,000 trials each year. That's 76,000 civil trials in the US. Let's assume that half of them are against a business. We are talking about 38,000 lawsuits.

In all, 188,000 businesses face catastrophe each year. That's more than 500 business catastrophes every single day.

Now, how about that business insurance review?

Why Get An Insurance Review?

2010-10-22T09:17:00.000-07:00

I was asked the other day why an unbiased insurance review was important.

I replied, "How would a $100,000 uninsured loss look on your financial statements?"

Work Comp Insurance Rate Rankings By State

2010-10-21T13:12:00.000-07:00

Each year Oregon surveys the workers' compensation insurance rates of the states and ranks them.

This year's ranking just came out.

Help For Bankers Who Buy Insurance For Their Banks

2010-10-21T08:15:00.000-07:00

Here is the point I make with bank clients that seems to help the most with understanding bank insurance issues:

For insurance coverage of theft and fraud, look to your bond. Employee theft, robbery, ATM theft, computer hackers...

For coverage for allegations of negligence, go to your directors and officers, general liability, auto liability, e-banking liability, and umbrella.

Work Comp Hints and Tips

2010-10-20T19:48:00.000-07:00

I was recently interviewed by the trade magazine, Hardwood Floors on workers compensation issues.

Get the article here.

Snippet:

“Many business owners aim for an x-mod of 1.0, a figure which indicates your claims are no higher

or lower than the average,” Simmonds says. “To me, though, that’s like getting a ‘C’ grade in school.”

Monthly Insurance Column for Credit Union Insurance Buyers

2010-10-20T19:47:00.000-07:00

www.CUManagement.org posted the first of my monthly columns on credit union insurance issues - Insurance Matters.

Third Thursday of ever month I'll post a different credit union insurance piece. Comments and questions welcome.

This Month's Topic: Employment practices liability insurance tips and traps

We Get Letters... Non-Profit Liability Insurance

2010-10-20T05:40:00.000-07:00

The Email:

Scott,

I am the volunteer executive director of the xxxx Football Boosters, a non-profit group that raises funds for the xxxx High School Football team in a part of Los Angeles.

We have a grant pending. They've requested proof of liability insurance. We don't have it. We'd like to get it. You were recommended through Guide Star as the expert.

Your quotes or recommendations would be appreciated.

Thanks!

David

My Reply:

I'm glad you contacted me.

I don't sell insurance but can point you.

First, check with the school to see if you are a part of the school and therefore covered by the school's insurance.

Short of that...

Find an insurance agent who is involved in your group. If not direct involvement, find an agent who works with a business owner who is engaged in the group.

The idea is for an agent to want to do more than just sell you a small policy.

I hope this helps.

Scott Simmonds, CPCU, ARM, CMC

Insurance Assurance Consulting

Steps To Cut Business Insurance Outlays

2010-10-15T19:00:00.000-07:00

Several weeks ago I was tracked down by Morey Stettner, a writer for Investors Business Daily. We talked about business insurance and policy renewal strategies.

See the full article here.

Testimonial - Nice Words

2010-10-13T14:56:00.000-07:00

Note sent to me by a long-time client today...

By the way, I know you don't hear me say it nearly often enough, so I'll seize this moment and opportunity.

You do terrific work and we truly appreciate all that you have done to counsel and assist us over these past years.

The discussions you have helped us have around our insurances has elevated our level of thinking and awareness, and we couldnt have achieved that without you.

You have become a true business partner and I look forward to our continued work together.

Besides all of that, you're a great guy and you're easy to talk to and learn from and spend time with.

So, Thanks for all you bring, and all you do to make us as knowledgeable and savvy and cost-effective and proactive as you do.

Best Regards,
Denise M. Vachon
Executive Director
The Park Danforth
Portland, Maine

Scott's Rules of Insurance - Rule 5 - To Get Great Rates You Must Be Attractive To Insurers

2010-10-12T13:15:00.000-07:00

Getting good rates, in part, depends on you. Put your best face forward to your insurance company (current and potential). Show them you are a quality risk by having policies and procedures in place to control losses and manage claims.

Ask your agent what issues are worrisome to insurers? Find out what you can do to minimize those concerns.

Creeps Creeping into Your Business

2010-10-11T04:00:00.000-07:00

A client just called in the midst of a dilemma.

Ten years ago an employee sexually harassed another employee. He was reprimanded and the harassed employee did not want further action taken. Last year he did it again and was dismissed.

Now he has put out a request that his former employer hire him as a contractor.

Why would you want someone like this working in your business? Why do you want to be known (even to a small population) as the place that hires the creeps.

Bad behavior has consequences. Everyone deserves a second chance. However, how many times do you let the same dog bite you?

The Part of Your Insurance Premium You Control

2010-10-07T23:12:00.000-07:00

The insurance underwriter is the person at the insurance company that prices your policy. As with all humans (mostly) underwriters judge books by their covers. Underwriters can increase your insurance premium by 25% and they can decrease your premiums by 25%.

The following are important in the underwriter's impression of your business. Providing information about the positives and curtailing the negatives will get you more competitive premiums and better insurance coverage.

Always put your best foot forward.

Your Housekeeping

Your Management Procedures

Your Claims Management

Your Inspection Results

Looking For Trouble

Strong Leadership

Your Industry Leadership

Your Good Press

Your Impressive presence

Comprehensive information provided