Do 12/31’s and 1/1’s (Renewals) still work?

By Ken Kukral

Anyone who has worked December 31st or January 1st renewals knows they are a struggle.  You have to work the accounts like they are a December 15th account or risk struggling to get them done with underwriters out of the office and difficulty getting a hold of the insured.  So why do it?

With many clients working on a calendar year accounting basis it makes it only natural that they would want their insurance to run consistent with their accounting year.  A lot of this has to do with the premium basis being gathered on a calendar year basis. But is it the right thing to do?


  • Policy year and calendar accounting year are in alignment
  • With 12/31 accounts they may be just under the wire if reinsurance prices are about to go up 1/1 and could possibly save money till the next renewal.
  • Carriers like to finish a year off or start a year “with a bang” so you may get better pricing by having one of these two renewal dates.
  • With good planning with your underwriter you can get quotes done early and get things wrapped up long before the renewal. Nothing better than having the account “done” before the holidays and either finishing or starting the year off well.
  • If you are competing on an account, this is a chance to shine if you work the account right and get things done early. Also if the competing agent “stumbles” you can show off how you just “get the job done”.
  • It is usually more work for the insured to “move” an account so they are more likely to renew with their current agent due to year end time constraints. This helps with account retention.


  • Difficult time period to work on accounts. The last two weeks of the year are a “wildcard” and you never know what you get.  In other words, there are a lot of distractions.
  • If you are looking to budget for the next year, you may not know pricing until the last minute so it may cause last minute adjustments to already approved budgets.
  • Many carriers close out their yearly production a few days or a couple weeks early so product may not go into the year just finishing and will not be “booked” until the following year. Knowing this, carriers may not be willing to give pricing breaks because of this.
  • The insured is usually busy on their own “year-end” stuff and insurance renewals just add to that stack. If you are competing to take an account away, it limits your time with the insured to try and sell the account.
  • Year end “results” will not usually be available for another month or two. So you end up with only estimates of the premium basis instead of actual solid numbers.
  • In reality, you can calculate out the premium allocation per year and don’t need a calendar year policy to do this.
  • How would you rather spend the holidays? Working or enjoying life?

So what do you do?  Talk to your insureds or prospective insured and see what they are ultimately trying to accomplish.  Go over the pros and cons and make sure they are making an “informed choice”.  It is their decision, but you can help enlighten them to make sure they are making the best decision for their operation.  Just because they have done something a certain way in the past, doesn’t make the way they should do it in the future.  Many carriers will write a longer than 12 month policy (like a 15 or 18 month policy) which means you have a longer period to NOT have to do a renewal on it!

Just another chance to have your client step back, take a fresh look at their insurance program and do what is best for themselves going forward.  Helping them make good decisions is what it is all about.

Ken Kukral

Kenneth Kukral, CIC – VP of Special Risks – That means, call me if you need help on placing a unique, difficult, large or more complex risk.  800-937-3497 ext 2079



“Standing out in a Crowd”… what does that mean in the Insurance Business?

One happy smiling egg amongst sad angry and envious crowd of eggs isolated on white background

With the prospect of Google getting into the insurance business, I am forced to stand back and take another look at our ever changing insurance business.  Google has changed how we do business, seek out information and helped to increase the speed of transactions.  If our business doesn’t change (like so many others have) then we may get “left in the dust”.

If we act like we are all the same and our business gets “commoditized”, then Google has great prospects in our business.  If they can change how people shop and buy insurance then we may get left behind.  Most of the internet activity on insurance has been to “shop” for insurance, but the number of actual sales is lagging.  If Google can get over that hump, then they are on to something.

So if we want to succeed, then what do we need to do in order to differentiate ourselves?  How will we increase the “value” to our customers and make them realize this is not just a “price” transaction?

Let’s first look at the business model online insurance agents are using and see what “advantages” they have:

  • Speed – Many online agents have rating engines that help potential customers get an immediate online quote. So when they get their auto insurance bill and the rate just went up, they can go online and get a competing price quote immediately.
  • Lower price? Not having gone online myself to get a quote, I am being told that the pricing can be less since they take out most of the agent commission and the ultimate cost of the sale (acquisition cost) goes down.
  • Multiple Options – It is easy with automation to give multiple options so people can pick and choose what they want.
  • Efficiency of transaction – They can get a quote, bind, have the policy issued and pay for it all right there online. They can come to their computer, and 30 minutes later have a policy in hand and ID cards ready.

Those sound like pretty good advantages and could make it tough to compete, so we should just give up, right?   Not so fast.  Let’s look at how we can combat these advantage and determine what advantages independent agents have:

Three of the four advantages above are also available for agents.  We can quickly get a quote with just a few pieces of information, so as long as we respond quickly, there is no real advantage from a speed standpoint.  Multiple options?  Sure we can show multiple options, but having too many options can be confusing.  We can ask a few questions up front and come to a few options that fit what they are looking for.  Much like going to a restaurant and looking over a six page menu and having difficulty deciding what to order. Wouldn’t you rather have a one or two page menu that gives you enough options and allows you to make a quicker decisions.  We can also do efficient transactions.  The technology is there and we can do very much the same thing that the online agents can do, so this advantage can be downplayed.

What about our advantages?

  • Knowledge and skill – Do customers know what they want? Know what they need?  Asking a few questions and help guiding them is worth its weight in gold.  Very few customers have an extensive knowledge of insurance and are “flying blind” when they approach internet based transactions.  The confidence you can instill when helping them to determine the coverage and terms they need will be seen as a strong advantage on the agent’s part.  One size does not fit all and they need to be consulted on what they might need or want.
  • A better claim experience – Although agents have been “removed” from many claim transactions with their carriers, they can help guide a client through the process. Helping to understand what to expect, timing and getting satisfaction can make all the difference between a happy or unhappy client.  Preparing them prior to claim (letting them know the steps they will need to take and what they are responsible for) and answering their questions will keep them coming back.  Knowing they are being “taken care of” and are not just being “processed” will build loyalty and satisfaction.  This is especially true on a large loss.  There will be “twists and turns” along the way and how you deal with them will be the difference between having a long term client or not.  Things such as working with their accountant on a business income loss will help to speed up the process and get their claim paid faster.
  • Personal touch – Here is where we can make all the difference. A thank you for their business can go a long way.  Helping them to control losses or managing risk can pay dividends and help make them be better risk.  Helping them know the gaps in their coverage and if or how those gaps can be covered or managed will help them to not be surprised when a loss does happen.  Discussing what to expect next such as a “reservation of rights letter”, which in and of itself can seem like there is nothing that is covered by their policy.  Also “just being there” when something does happen will help give them reassurance at a difficult time.
  • Ability to help them find solutions to their risk problems. – One of the disadvantages of online agents is that they are looking for things to fit nicely “inside the box”. So they become “box underwriting” companies and if it fits, great, if not, go somewhere else.  We can help by working with clients who do not fit squarely into the underwriting box.  It doesn’t make them a bad client, just different.  How we deal with them and how we help them solve their insurance problem will build significant loyalty and satisfaction.  As I said before, one size does not fit all and we can’t treat clients like that.

So, obviously, we need to find a way to stand out from the crowd.  Not be like every other agent.  Provide a higher perceived value than other agents or online agents.  So how?

  1. Know your product, know your client. Spending the time to learn about your insurance products and how they can be properly tailored to each client will give you a distinct advantage.  Knowing as much as you can about that client will help you to properly protect their assets and meet their needs.
  2. Market in a different manner and build your “brand” – If you want to be distinct, you need to be unique. Doing the “same old thing” will get you the same old results.  Don’t be afraid to fail.  Be consistent though in order to build your brand.  A great brand will pay off in the long run.
  3. If you build a specialty, become an “expert” in that area. If you choose to specialize in hospitality risks, learn everything you can about that business so you can speak their language.  You will also be able to see how their industry is changing and help them to deal with and insure their operation better.
  4. Build a team behind you. When clients have multiple points of contact with your agency, they are building relationships with your whole agency.  The more they feel they have the team of XYZ Insurance Agency behind them, the more they value their coverage and agent.
  5. Continuous improvement. Look to improve every area of your operation over time so you find new ways to stand out and be “above the crowd”.

Half the battle is just realizing you need to stand out, then the next step is how to make it happen.  Keep looking around you when you do business with other firms as to WHY you deal with them.  What makes them different?  A recent example is what got me thinking, when I had to have some body work done on my car.  Figured it was just an average transaction that would come and go and be forgotten a couple weeks from now.  Wrong.  What they did do it detail my car to a point that the interior of my car looks like it just came off the showroom floor.  Every time I have stepped into my car since I got it back, I have smiled.  I even feel a little guilty I haven’t taken the time to go on and do an online review and praise them for their service.  A raving fan now?  Think I would ever consider taking my care elsewhere if I needed body work done again?  Not a chance…  Find a way to make that happen for your agency.

Ken KukralKenneth Kukral, CIC – VP of Special Risks – That means, call me if you need help on placing a unique, difficult, large or more complex risk.  800-937-3497 ext 2079

What is surplus lines insurance?


Simple answer, it is the non-standard or specialty lines section of the insurance business.  “Standard carriers” need to file their rates and forms with state insurance departments and have them approved.  Surplus lines carriers operate outside that restriction and can tailor their policies to fit the needs of a particular risk.  It is this freedom of rate and form that allow these specialty insurance carriers to provide innovated risk solutions or provide coverage to risks that be deemed “uninsurable”.

The surplus lines insurance industry also provides solutions to new and emerging exposures that may be deemed to new or too risky for standard lines carriers.  Many new coverages start in the surplus lines arena and eventually work their way to the standard carriers as they become more familiar and comfortable with the coverage and exposures.  Some examples of this would be employment practices liability and cyber liability.

Standard carriers are regulated at the state level and pay state premium taxes based on where the premium is written.  Surplus lines carriers are exempt from premium taxes and surplus lines brokers collect state surplus lines taxes in order for states to make this revenue back.  Surplus lines carriers are exempt from state guaranty funds also.  Surplus lines carriers are regulated in their home state and not by all insurance departments.

Ken KukralOn behalf of IEC University, Ken Kukral breaks down all things insurance. Stay tuned for more!

What Makes a Good Underwriter?

By Ken Kukral


A recent article in National Underwriter got me thinking:  (read the full article here)

They boiled the qualities of a successful underwriter down to 4 things, but I think they left a couple things out.  The four things they found in a successful underwriters were:

  1. Maintain underwriting discipline
  2. Think outside the box
  3. Strive for a human connection
  4. Set yourself apart

Let’s discuss these and go a bit further.

Maintaining underwriting discipline.  Does this mean that the underwriter is consistent?  They look at a risk fairly and treat the risk the same for all agents?  They don’t write business they have any business writing (soft market expansion of classes).  To me this means the underwriter shows a long term consistent approach to looking at accounts.  The underwriter gives each risk a fair shake and you know they have given it a fair shot and priced it reasonably if they can write it.  No surprises.

I think this also means “looking for a way to write an account”.  Having an open mind and learning enough about the account to determine if it meets the underwriting guidelines for the carrier.  Over the years I have encountered many an underwriter who from the outset, is looking for a way to decline the account.  All gray area is taken in a negative connotation and unless ALL the stars line up, they will never quote the account.  All you want is for them to give it a shot.

Think outside the box.  In my thirty years in the business, this is one of the hardest things to master.  Many underwriters have become “box underwriters” and unless it fits the box, they decline it.  The “exception” underwriter is a dying breed and many underwriters are in fear of “coloring outside the lines”.  Just because a risk is unusual, one of a kind or “not like the others”, doesn’t make it a bad risk.  Some of my toughest “sells” to an underwriter has been accounts, they literally couldn’t have a loss, but the underwriter wouldn’t quote the account.  Coming up with a proper classification is an “art form” and not everything “fits the box”.

This can truly mean, looking for every possible angle to write an account.  Staying in the fight and duking it out till all your questions are answered and you have a comfort level with the account.   Especially if it is not a large account and will take some “work” to get the account done.  Not every coverage is readily available and might take some creative underwriting to come up with a solution.

A couple of examples of thinking outside the box:

  • We were able to come up with a solution for a large account where if they invoked their disaster plan and the hurricane veered off and there was not direct physical loss, they would have lost $1,300,000. So we were able to negotiate with a carrier for false trigger of disaster plan coverage.
  • We were approached by an agent whose client was a plaintiff’s law firm. They had evidence and documents stored in a warehouse, awaiting trial and were looking to insure for the expected settlement or award judgement that would be “compromised” if that evidence was destroyed by a direct physical loss.  Due to the “valuation” issue, we were not able to secure this coverage, but were able to find a carrier who would insured for the amount of expenses already expended on the case that would not be able to be recouped.

Bottom line, a good excess and surplus lines broker, who has been in the business for many years, has a wealth of knowledge and can many times find “solutions” to clients risk problems, by thinking outside the box.

Strive for human connection.  Trust is earned with an underwriter and the human connection cannot be under estimated.  So many times, submissions are e-mailed in without any phone conversation (or even a narrative).  Running an account past an underwriter can pay excellent dividends.  You find out what information they want, what the chances of placing the account and what the “hot points” are in dealing with the underwriter.  By having a preliminary discussion with the underwriter you can approach a potential client and get them on the same page with the underwriter from the beginning.  This will help a client feel like they are both working towards the same end and are not on either side of the fence.  This reduces a chance for us, versus them type of scenario.

How many times have you seen where after a face to face meeting, a dinner or an agency visit with the underwriter, you all of sudden start writing more business with that carrier?  A chance occurrence?  I think not.  It is a matter of building the relationship with the underwriter, finding common ground and a human connection.  It takes time and is a building process that pays long term results.

Set yourself apart.  Stand out in the crowd.  Don’t be a faceless drone.  Be the one they want to call first.  So this might entail taking more calls, sending periodic updates on where things stand or JUST GETTING THE JOB DONE.  While just getting the job done may not seem like something that sets you apart, it is.  As an underwriter, you want to be the “go to” underwriter.  The one they call first when they get a new piece of business.  The one who gets the “last shot” on an account.

This might mean staying late to get them a quote, knowing their cell number so you can get a hold of them at a moment’s notice or finding out up front what their client expects so you both don’t spin your wheels if you can’t meet the timing or pricing expectation.

So what did they leave out?

Qualifying accounts – Every underwriter can’t quote and write every account that comes in the door.  So asking a few questions up front, possibly putting out a rough indication or even declining an account if you know you can’t be competitive.  Respecting both your time and their time can be critical and will be important in the long term.  Who wouldn’t like to quote fewer accounts, but write more of them and have a higher hit ratio?

Just being responsive.  There is nothing better than a quick response.  Even if it is, hey, I received your submission and will look it over, looks like something we can do.  You would be surprised how many times, the first quote in gets the order.  Also remember a “quick no” is also good.  Allows the agent to go on to another carrier who can help them out.  This type of quick response can leave you in the number one position so you get first shot at that agent’s business.

Anything I missed?  Any other characteristics of your favorite underwriter?   Would love to hear your thought!

Ken KukralKenneth Kukral, CIC – VP of Special Risks – That means, call me if you need help on placing a unique, difficult, large or more complex risk.  800-937-3497 ext 2079

Questions to ask prospective clients

Are there questions we should be asking prospective clients that we aren’t that would help us to better understand what they want?

Are there questions we are afraid to ask prospective clients?

Are there questions we should be asking that would help us to “qualify” prospective accounts?

I have a feeling that the answer to all three of the above questions is yes.  In fact I KNOW the answer is YES!  I do a post mortem on accounts I lost, didn’t write or spent significant time on and wondered if there were questions I should have asked that would have helped me to do a better job.  Questions such as:

  • What kind of premium or rate are you expecting or the insured is expecting? While they may not know, many times they do.  I have saved a lot of time and effort by just relaying minimum premiums for certain classes of business and found out they were expecting something significantly less.  That way the agent is able to move on to the next account and not spin their wheels that they aren’t going to write.
  • Why do you want to fire your current agent? Using a word like FIRE puts a touch of reality to the situation and many times the client will tell you what is important to them that the other agent is not providing.  If they say “they aren’t sure they want to fire their current agent”, then you have your work cut out for you.  Most likely they are just price shopping and you will have to work to differentiate yourself if you are going to have a chance to write account.
  • When do you need the quote by? Simple question, but I am surprise on how few it is asked.  It is essential if you want a clue as to what your prospective client is expecting.  Isn’t selling all about meeting or exceeding expectations?  If we don’t know the clients expectations, how do we have a chance to meet them?
  • What kind of premium are you currently paying? How many times have you worked an account, didn’t write it and found out the premiums they were currently paying after the fact?   If you knew up front you might have decided to not waste your time since they already had a great deal!  If they won’t tell you, that is a signal they are price shopping.  Do they think if you know what they are currently paying you will come in just barely under it?
  • If they don’t currently have coverage, why are they looking for it now? I know a number of carriers that don’t like accounts that do NOT have current coverage.  They found when they did “look backs” on the accounts that experienced losses, that the loss ratio for accounts that did not have coverage directly before them, experienced more losses.  I think the answer to this question, tells a lot about the potential client.  If they cancelled previously for non-pay, is this potential client going to be a payment nightmare or more susceptible to losses?  Are they only looking for coverage now since someone else is requiring it?  This is not necessarily a bad thing, but is important to know.
  • If they move coverage to different carriers over the last few years, why? They are most likely driven by price, don’t have any loyalty and don’t understand the true “cost” of switching carrier often.
  • Do we ask about their website? I can’t tell you how many times I do some internet research on a prospective account and the agent is unaware of what I found.  Many underwriters do the same thing and I hate to be “caught with my pants down” and unaware of what the insured’s website says or what is available on the internet about them.
  • How did you hear about us or come to call us? Did someone suggest us to you?  This give you some information on where your business is coming from and what is working.  If they were sent to you by another client, it lets you know who you should thank!
  • What is your biggest concern or what keeps you up at night about your insurance program? Again, it helps you to better know your client and find out what their “hot buttons” are.  Besides, if you don’t ask questions like this, how will you ever know?
  • Tell me about how you got started…. People love to talk about themselves and tell “their story”.  Knowing more about their “passion” and what makes them successful will help you to protect that commercial client.
  • What is their tolerance to risk? You will most likely get a confused look when you ask this question.  Ultimately you are there to properly protect their assets and they need to know more about what risk those assets take.  This is an opportune moment to help educate your potential client and help them understand what you are looking to do.

Finally…. Ask the prospective client if there are any questions you haven’t asked that they think you should?  This lets you know where you stand and how close you are to being on the same page.  Another expectation assessment moment.  If you are having to extract information and they are not very forthcoming, it will be hard for you to do your best job for them.  If it is a “need to know” type of environment, you have not built the trust element enough and are in for a bumpy road ahead and a reduced chance to write the account.

Keep in mind, you are there to learn about the account and portray them in the best possible light to the carrier to get them the best terms, most appropriate coverage and meet or exceed their expectations.  So ask away!

Ken KukralKenneth Kukral, CIC – VP of Special Risks – That means, call me if you need help on placing a unique, difficult, large or more complex risk.  800-937-3497 ext 2079

Little tricks of the trade in the surplus lines business

Group of Business People Meeting

Over my 29 years, I have learned a few things and I would like to share some of those items with you.  Take them or leave them, they may help you out too.

  • Take a little time to learn about the prospective account. I have worked on many accounts where the “story changed” two or three times before getting down to what the account really did.  It is tough when a rush item is sent in, then going back and forth with the underwriter after the “story changed” when we asked more questions.  This causes the underwriters ears to “perk up” and they feel they need to dig deeper in order to have a comfort level.
  • Sometimes coverage is available on admitted paper. Do not assume just because you are going to s surplus lines broker that they will always use non-admitted paper.
  • Find out what endorsements you will need up front. This includes waiver of subrogation, primary and non-contributory wording, additional insureds, blanket additional insureds, stop gap liability, Employee Benefit Liability and per project aggregates.  It is easier to ask for these items up front and get them included in the pricing, rather than ask for them later.  Sometimes carriers cannot offer these and if they are required, we can move on to another carrier and not waste time.  Keep in mind also that most carriers in the E&S business charge EXTRA for these endorsements.
  • Read through the terms and conditions and ask for specimen copies of endorsements if you believe the endorsement/exclusion may be an issue. That way you can inform your client where their coverage starts and ends.  There are times exclusions can be “bought back”, so it can’t hurt to ask.
  • Different carriers use different premium basis. For contractors, some rate based on payroll and other base premium on receipts.  Some other base them on the number of owners and number of employees.  So make sure you include ALL of the potential premium basis when sending in a submission.  Keep in mind to break out owner payroll, clerical and sales payroll from the rest of the payroll.  A number of classifications exclude this payroll and that can help bring the premium down.  If fact, you may even want to do a three year look back on their payroll and see if they have been over charged.  I know of one such account that when we did this, we were able to get the insured $200,000 in return premiums!  Think they were happy?
  • One more note on payrolls. If your insured is doing a hazardous operation, such as say demolition, it would behoove you to break out the payroll by classification.  So for a demolition contractor, how much payroll actually goes to the demolition classification?  Should part of the payroll go to trucking (trucking the debris away), some to backfilling or grading of land (filling in the basement), some to debris removal… etc… you get the idea.  That way the proper amount goes to the highest rated classification.
  • Certain classes of risk require supplemental applications. Contractors require a contractor’s supplemental application.  Restaurants, bars and taverns require a hospitality supplemental application.  Apartments require a habitational supplemental application.  Find a comprehensive one you can use and be consistent.
  • If you can, try to determine the proper ISO classification. This alleviates the chance the underwriter will use the wrong one.  Many E&S carriers have manuals that break out the specific ISO classification and make it within binding authority (for the MGA), submit or prohibited.  So if they pick the wrong classification, the risk may be declined.
  • Just because you are “going E&S” doesn’t mean that you can ask for the endorsements or coverage you believe the clients need. You may get a quote with more restrictive coverage, but at least you asked for more expansive coverage.  Many markets can add expanded GL or property endorsements or some of the “fringe” coverages you need.
  • Websites – Nearly ALL underwriters will check out a risks website, so you might as well too. That way you can explain any disparities between the application and the website upfront.
  • If you know prospective pricing, let us know. We can quickly tell you if the expectations are unrealistic and save both of us a lot of time.
  • Narratives are appreciated. They become “rare” anymore and a submission with a good narrative actually stands out from the crowd.
  • We like to know what happened to the account… Many times we get in a rush submission, pull out all the stops.. send out a quote.. and never hear anything again…. We like to know what happened to a risk if we didn’t write it so we can find out what we did wrong or if our markets are not competitive.

I hope sharing some of these “tricks of the trade” will help you out.  I would appreciate hearing about some of the things you found out in this business that have helped you along the way.

Ken KukralKenneth Kukral, CIC – VP of Special Risks – That means, call me if you need help on placing a unique, difficult, large or more complex risk.  800-937-3497 ext 2079

Need help figuring it out?

Composite image of young businessman standing back to camera scr

Having just spent a significant amount of time trying to resolve a coordination of coverage solution, midstream, I look back and wonder if we could have done it more efficiently.  In “plain English”, if I was given all the information upfront, could we have done a better job for the client?

An agency should never have a problem reaching out to help find a solution for a client.  You are not expected to know all the answers or know the best options or solutions for a client.  Realize your knowledge or technical expertise limitations and reach out to a broker who can help you arrive at the best solution for the client.

Do I have you confused yet?  Let me try to explain and give you a couple of examples.  Here are a couple of recent situations that came across my desk:

  • Agent calls to place general liability coverage for a “crime scene clean up” contractor. In going over the account, they were mainly interested in JUST getting general liability coverage.  I was able to convince them that a more comprehensive solution would be a better fit.  By going to the environmental market (who feels much more comfortable with this type of risk than a contractors general liability market who would be a bit more queasy) I was able to secure general liability, products & completed operations, pollution liability, professional liability, blanket additional insured, blanket waiver of subrogation, primary & non-contributory wording, stop gap and EBL for about the same price as just the general liability with another carrier.  It will make the account much tougher to lose since many agents will not be able to better or replicate the program to take it away.
  • Agent calls to place a barge that has been permanently moored and converted to an office. In was able to get a copy of their current insurance program and show the significant holes in their current insurance program.  I was then able to come up with a more properly written solution that covered their exposures.  Had I not been able to get significant underwriting information and a copy of their existing program, I might have been doomed to continue with the same issues or problems with their current insurance program.  Sometimes it is like pulling teeth to get the information but it helps us to do a better job in the end.
  • Agent has us help with the aviation portion of an account without providing us with the full details of the overall insurance program they put in place. Upon pressing deeper, I found that there was duplication in coverage and I am in the process of coordinating coverage to help reduce the customer’s insurance premiums.

So what am I asking for?  I am asking for a shot at helping  to provide a solution instead of just “filling an order” for a piece of the program.  Wholesale brokers see such a wide variety of accounts, build an expertise and knowledge base and many times can provide innovative solutions to your customer’s insurance issues.  This is where getting on the phone to discuss and account makes sense.  Just sending an e-mail doesn’t cut it and leaves a lot to be desired.  I get on the phone with my underwriters and have these types of discussions so I can get an idea of how favorable they are to the particular account and what innovative type of solutions they may have.

You can also take the perspective of looking to improve on the prospects current insurance program.  How can you address the client’s exposures better than the current agent?  This might involve adding broadening endorsements, removing exclusions or offering higher limits.  A wholesale broker may have some ideas that could help you accomplish this.  Remember, we are here to write business and I am assuming that is your ultimate goals so we are both headed in the same direction.

Ken KukralKenneth Kukral, CIC – VP of Special Risks – That means, call me if you need help on placing a unique, difficult, large or more complex risk.  800-937-3497 ext 2079

Are we preparing our clients for an audit?


Over the years I have been involved with many policy audit situations and I wonder how well we really prepare our clients for an audit.  Understanding that most Workers’ Compensation and General Liability policies are written on a “deposit premium” basis, do our clients realize that?

Having once collected a $1,000,000 audit on a $60,000 account, I realized early that audits had to be handled properly, each and every time.  I think if we better prepare our clients, the audit process will go even smoother.  Ultimately we want the client to be happy and have their expectations met and don’t want any surprises.

Some things I learned along the way:

  • Read your carrier contracts. Over the years I have read over a 100 brokerage and carrier contracts.  MOST of them address audits and how they will be handled.  They set the procedures and timelines that you have to follow or you could become liable for the audit premium of your clients!  I don’t know about you, but there are less than a handful of clients that I would GUARANTEE that the audit premium was collectible and I would pay it whether or not I was paid.  But I can’t tell you how many times the brokerage or carrier contract said I was responsible for collection of the audit premium, even if it was uncollectible from the client!  This literally the first thing I look for in a contract!
  • Procedures for handling of audits for each of your markets needs to be spelled out and followed to a T. In fact I recommend that a specific management person be in control of this procedure and be responsible for tracking audits.  Ultimately if the procedures are not followed, the owners may be the ones on the hook for the audit premium if it becomes uncollectable.
  • Audit premiums are “extremely” collectible. By this I mean that when an insured is taken to court to collect, the carrier is almost always successful in getting a judgment in their favor (collecting the judgment is a separate matter if the insured has gone out of business).  So it is worth the effort to try and help the carrier collect the audit since you will make commission on the premium if you are successful.  Once collected, it goes towards your “earned premium” with the carrier immediately and can help improve your loss ratio with them.
  • It is worth understanding how the premium basis is computed. Just because payroll may be the general liability premium basis, all payrolls should not be included.  For many classes, executive and clerical payroll (sometimes sales payroll) is excluded.  I have been able to get significant return premiums for clients from past carriers by pointing this out.  It helps to solidify a relationship with that client when you help get them money back by pointing this out.  In fact an “old timer” once told me that with any new client, you should do a three year look back (the normal timetable in policies of how far back a carrier or client can go on audits) at how their premium basis was computed and detect if there have been any prior mistakes.  There are a number of other excluded payroll rules (like how to count over time) and you should make yourself aware of them.
  • One carrier we represented used an “audit letter” (The letter explained the premium basis, showing what premium basis they used and showed how the rate times the premium basis resulted in the deposit premium). They found that if they took a little extra time up front to educate the client, their audit collectability went up significantly.  It also provided a document they could use in court that would show the insured understood the audit provision of the policy, that if their premium basis increased during the policy that they would be responsible for additional premium and that they signed off on this.
  • Stay in contact with your clients during the policy term. If you notice you are issuing a significant number of bonds or certificates for clients on new business they were awarded, ask the question on how this will affect their premium basis.  Make sure they are setting aside funds during these times so they aren’t left scrambling at audit payment time.
  • Make sure clients understand the term “minimum and deposit”. Simply put this means they can only have an additional premium audit and never a return premium audit.  Trying to get a carrier to soften a minimum and deposit endorsement or waive it after conclusion of a policy is nearly impossible.  If they learn early on that they didn’t get a number of contracts they were expecting and the premium basis will be significantly reduced, get a hold of the carrier at that time and see if they are willing to make adjustments.  They might be willing to drop the minimum & deposit percentage to help out.  It can’t hurt to ask.

Too many times audits come as a total surprise to a client.  It makes for a wedge between the agent and the client that many times results in the loss of the account.  It doesn’t have to be that way if we prepare them up front and make the client understand how their insurance works.  Pay as you go workers compensation has eliminated the need for audits and has taken the guessing game out of projecting premium basis.  This may be something worth exploring in the future.

Hopefully, some of these tips may help and take away some of the angst and frustrations with audits in the future.  Happy collecting!

Ken KukralWith over 25 years of experience in the insurance industry, Ken Kukral has developed expertise in: Complex and larger accounts, Casualty Insurance, Property Insurance, Inland Marine Insurance, Professional Liability Insurance, Directors & Officers Liability Insurance, Employment Practices Liability Insurance, Products Liability Insurance, Product recall Insurance, Insurance Program Development, Surplus Lines Regulation, Coverage Analysis, Difficult Insurance Placements, Excess and Umbrella Insurance, Carrier Contract Acquisition, Unique or “one of a kind” insurance solutions, Association Leadership and Association Management, Insurance Sales and Marketing. For questions about this topic, or to have an exposure looked at, contact Ken directly at

The art of “pre-qualifying” an account

Checklist on whiteboard with businessman hand drawing win-win an

Over the years one of the most important thing I have learned is you CAN’T quote every account that comes in the door.  As much as you would like to you just can’t.  The logic that you have to quote an account in order to write it is flawed.  If things worked this way, your hit ratio would be down in the low single digits.

So what do I mean by pre-qualifying an account?  Ultimately I mean getting enough information about the account and the prospects expectations in order to determine the odds of quoting and writing the account.  Since we don’t make money quoting, just writing an account, we would love to work on fewer accounts and write more of them.  Sounds easy, right? It doesn’t seem to work out that way.

A couple of years ago we took a look at our “hit ratio” (the number accounts we logged into our system and the number we ended up writing).  When we compared one year against the following year we found a significant jump in our “hit ratio”.  So much so that we tilted our head (like a dog would when it hears a high pitched sound) and wondered what happened.  In discussing this we found out that we spent more time qualifying an account UP FRONT to determine if we had a significant opportunity to write the account.  If we didn’t feel we had a decent chance to write it, we relayed that information on to the producer and DIDN’T log the account in (to our agency management system).  (By relaying information to the producer I meant we either declined the account, gave them a “ballpark indication” or let them know what minimum premiums we might be up against)  If the producer didn’t think we were going to be competitive or wanted to go back to the prospect to run the potential premium range by them, we stored the submission and went on to the next one.  When our industry (E&S) usually has hit ratios of 5% to 15%, getting a hit ratio over 20% was HUGE!

Some hints for pre-qualifying accounts:

  • Don’t be afraid to ask the prospect if you are the first agent to be working on getting them a quote. It is OK if they have another agent working on it, especially if they haven’t heard back from that agent in a long time.  That opens the door to “look great” in their eyes if you can get something quickly.  Ask who, since it may let you know what markets have already been approached.
  • Ask them if they have a premium range they are expecting. I just worked on a quote that came in originally at $5,000 and a second quote came in at $2,500.  I was sure we would write it!  I failed to ask up front what premium they were expecting and found out after I quoted it that they expected it to come in under $1,000.  Had I known that I would have come back to them that my best potential quote would START at $2,500 and would have not spent the time working that particular account.
  • Find out current carrier and premium. Some prospects may be reluctant to give you this information and just ask you to come in with “your best numbers”.  At this point you have to ask if the account is worth spending your time.  A prospect who does not want to give you this information does not yet “trust” you enough or you have not yet built enough of a relationship with them.  This type of transaction hinges on pure price.  Those are the type of customers that will also leave you on price.  Also they don’t value your time since it will take you time to put together a competitive quote and your chances or writing it is low.  Many times we ask this question and are told a “standard market” is on the account and they are NOT non-renewing. (just an FYI… the very first question I look at on an ACORD application is the one asking if they are being non-renewed.  Second question is the expiring carrier).  If the current carrier is willing to renew, then we ask why you are coming to the E&S market with the submission.  We do very few “standard market” accounts and would have to have a good reason to try and work an account that is and have any chance of writing it.
  • Learn minimum premiums for certain coverage lines. By this I mean many products liability markets start at $5,000 minimum premium.  So if the insured has only $25,000 in expected sales first year, can they afford a $5,000 premium?  Many times the sticker shock will sent the prospect moving on and you can spend your time working accounts you actually have a chance to write.
  • Find out how quickly they need a quote. I have accounts that I worked on and turned around a fabulous quote, only to find out they needed one within 24 hours and I lost my chance to write it.  Not to say something cannot be quoted quickly, but you need to know that up front so you can make the decision if you are going to drop what you are doing and pull out all the stops to get them something.
  • Last of all if they currently have a quote (or renewal quote) ask them why they want to move their business to your agency. Their answer will be a great determining factor on how serious they are and will help you to pre-qualify the account.

The “holy grail” is to work fewer accounts and write them all (or a higher percentage of them).  The only way you ever stand a chance of making that happen is to pre-qualify accounts that come in the door so you work fewer of them and write more of them.  New producers will tend to work EVERY account they happen across and they need to be trained to be more discerning and work on only the ones they stand a chance of writing.  The quicker they learn this the more successful they will be.  This is a great New Years’ Resolution to make and keep in 2015.  I know I am working on this one daily and after 29 years in the business still have a lot to learn.

Ken KukralWith over 25 years of experience in the insurance industry, Ken Kukral has developed expertise in: Complex and larger accounts, Casualty Insurance, Property Insurance, Inland Marine Insurance, Professional Liability Insurance, Directors & Officers Liability Insurance, Employment Practices Liability Insurance, Products Liability Insurance, Product recall Insurance, Insurance Program Development, Surplus Lines Regulation, Coverage Analysis, Difficult Insurance Placements, Excess and Umbrella Insurance, Carrier Contract Acquisition, Unique or “one of a kind” insurance solutions, Association Leadership and Association Management, Insurance Sales and Marketing. For questions about this topic, or to have an exposure looked at, contact Ken directly at

8.5 reasons why land banks need insurance

Land Banks and Insurance

By Ken Kukral

With every downturn in the economy lurks another opportunity. Land banks are non profit organizations that help service communities through rehabbing of the cities. Land banks are springing up throughout the country at an outstanding rate and cannot be ignored as a viable source of improving our declining cities.

This emerging area has created unique insurance challenges that should be addressed by a specialist.  Redevelopment companies are giving back to communities but without the proper insurance they will not survive the long term battles of sustainability. Here’s 8.5 reasons why land banks need insurance:

  1. They have exposures for general liability, property and builders risk.
  1. Properties can be in many states of being, vacant, owner occupied, tenant occupied, under-going renovations, be a vacant lot or scheduled for demolition. (All of these can be addressed)
  1. Valuation may be a concern since writing these at replacement cost would present a significant “moral hazard”
  1. Municipalities are looking to land banks to provide solutions to housing condition problems and having a vacant, unsecured or damaged dwelling around present’s opportunities for crime, higher liability hazards, “eyesores” in the community and brings down values of surrounding homes. (By having insurance these can be dealt with quicker and more systematically)
  1. “Funding” for damaged homes does not become an issue. If a loss happens it can be immediately adjusted and repaired with insurance proceeds.
  1. Land banks need to be on secure legal footing. By having the proper insurance they can be around for a long time to come, providing solutions to the housing problems in that area.
  1. Housing is an “asset” of the community. The amount of property tax is many times dependent on the value of the homes and if homes are damaged or torn down the amount of property taxes is reduced.
  1. Insurance helps to bring homes up to code. In the event of a loss many times the insurance carrier must have the damage repaired meeting the updated building codes that are now in place.  More compliance with building codes makes for safer homes and reduced loss exposures.

8.5 Because insurance is affordable! Having proper coverage ensures the long term viability of the organization which ensures the long term vitality of our communities

Ken KukralWith over 25 years of experience in the insurance industry, Ken Kukral has developed expertise in the non for profit and land bank area. As land banks have expanded over the country, Mr. Kukral has pioneered coverages that meet the needs of land banks and provide the necessary coverage to meet government demands. For questions about this unique coverage, or to have an exposure looked at, contact Ken directly at