Should Ohio Agents Be asking about their client’s workers compensation?

By Ken Kukral

Being a monopolistic state (no private carriers allowed to write in Ohio), most agents have completely ignored discussing workers compensation with their clients.  Is this wise?  I do not hear about any movement to take Ohio to a competitive workers compensation state, but that does not mean you should completely ignore this aspect of your clients risk profile.  Some things to think about:

 

  • Most likely you have discussed group rated workers compensation with your client and have placed them in one of these programs. Did you realize that not all group rated WC programs offer the same amount of discounts?  Have you researched other programs to see what might be best for them?
  • Did you know that high deductible programs are available within the Ohio Workers Compensation Program? If your client is looking to control losses and costs of coverage, this may be an option you want to explore.
  • Did you know that “retro” programs are available through the Ohio Bureau of Workers Compensation? A more sophisticated client may want to explore how this option can control their losses and costs over the long run.
  • If your client is over 500 employees, have you explores self-insuring for WC? (Including and excess WC policy). This is only for larger insured’s, but is a very viable option to control their WC cost for the long run.
  • Does your Ohio insured ever have employees that go outside Ohio? In the past an endorsement was offered by the OH BWC but a number of states may not be willing to accept this as “valid” coverage.  Here is a document that lists what states “recognize” this coverage:  http://www.ohiopia.com/Uploads/Documents/Advocacy/BWC_OSC_Reciporocal_Exempt_Statutes.pdf  Since March 1, 2016 you can now purchase “All other States coverage” through the OH BWC.  If they have locations in other states you would not need this, but just about every insured I know of does some traveling outside Ohio.
  • Do they have stop gap liability coverage? I am running into more accounts that do not have the coverage on their policy and have a significant coverage gap.  While exposure for intentional torts has lessened, there are still the other gaps (action over claims, compensatory damages and dual capacity claims) and clients need the coverage.
  • Does your client travel internationally on business? If so, then you should look at an international package which provides voluntary employers liability.  There are so many other lines of coverage provided in these policies that it is super cost effective and should be discussed with a client.
  • What about loss control and risk management in the workers compensation area? What difference does it make since you aren’t writing coverage in this area?   First of all if a client’s loss ratio goes up they could be dropped from their group rated WC program.  This can bring about a shocking premium increase.  Secondly, wouldn’t this help differentiate you from other agents?  If you or a trusted vendor could provide these services at a reasonable cost, wouldn’t this help tie you more to a client?  Also, isn’t WC a portion of your clients overall cost of risk (Premiums, deductible portions of losses and uncovered losses)?  It is still money going out of your clients pockets and anything you can do to help control those costs is ultimately helping your client.
  • Is your client less likely to go to another agent when they do expand outside Ohio? If you have been involved with the WC for your client, it is just natural they will contact you rather than looking for another agent in the new territory.
  • Can WC claims lead to EPLI claims? Getting an injured employee back to work is important and the risk of a separation of employment (wrongful termination) increases the longer they are out.
  • What about OSHA compliance? OSHA fines are not covered by insurance and could hurt your client’s bank account, not to mention their image and reputation.  Same with exposure to VSSR (Violation of Specific Safety Requirements) claims, which can be significant.

 

Think these issues are not important to your clients?  Think again.  Helping your client with their workers compensation exposure and coverage is of great importance to them.  Be ready and involved so that if the Ohio workers compensation market goes to a competitive market, then you are already involved and helping them out in this area.

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. Kennethkukral@intlxs.com  800-937-3497 ext 2079

Crazy Claims

By Cathy Thurber

Have you ever had a claim come through that just made you stop and stare?  You actually have to re-read the form just to make sure you read it correctly!  There have been a couple that I’ve read through the years that just made me laugh in disbelief.  Especially the claim regarding the drunk guy that fell off his friend’s balcony while he was relieving himself….he passed out during his ablutions and toppled right over the rail!

I was perusing the internet as I sometimes do and googled ridiculous insurance claims.  Here were a few of my favorites that came up:

  • A couple vacationing in southern France filed an insurance claim for the paint on their car after it got licked off by a herd of cows.
  • While vacationing in Malaysia a couple had their clothes stolen and scattered around the jungle by a thieving band of monkeys.
  • A woman in Sri Lanka was knocked out cold by a falling coconut as she sat reading under a palm tree. Apparently this incident isn’t uncommon and apparently every year about 150 people are killed by falling coconuts.
  • A farmer in Minnesota filed a claim on his iPhone when he lost it in the rear end of a cow when he was helping with calving in the middle of the night.
  • A couple made a claim on their camera after they lost it over the side of cruise ship trying to film themselves recreating that scene in Titanic.
  • A man on vacation in Australia put in a claim on his car after a wild camel supposedly kicked in the door.

Coconuts, the unexpected killer – who knew?!?  Perhaps on your next tropical vacation you should stay away from coconut trees.  And seeing as half the claims were animal related, you may want to think twice around them, too!

cathyCathy Thurber has over 10 years’ experience in the insurance industry and likes to think she’s learned a few things along the way, one of which being to not take herself too seriously.  She would love to say she has as many cool expertise’s as her fellow blogger, Ken Kukral, but she’s just not as old as him.  Cathy is a voracious reader and a total word nerd.  Most importantly, she’s been married to her favorite person for almost twenty years and has two kids that she actually likes.  However, the dog is her favorite child and she’s been wheedling for a cat for years.  Perhaps this is the lucky year?

 

6 Reasons Freight Brokers Need Insurance

Check out our handy infographic letting you know the top 6 reasons all Freight Brokers and Freight Forwarders need insurance. Feel free to save and pass along!

freight-broker-infographic

Top 5 reasons your clients should carry product contamination/ recall coverage

Easy answer, NO!  With minimum premiums dropping as low as $1,000 you can no longer assume your client does not need or want this coverage.  The number of recalls has exploded over the last few years and the cost of a recall has increased significantly.  In fact, many companies who did not carry the coverage went out of business since they could not sustain the cost of a recall.  While most large companies do carry the coverage, they found that 55% of them experienced a recall event over the last 5 years.

Top 5 reasons your clients should carry product contamination/recall coverage:

 

  1. It happens more than you think. The current average is more than two recalls a day.  The top three organizations that can force a recall are the Consumer Product Safety Commission, National Transportation Safety Administration and the Food and Drug Administration.  All have the power to force a recall and start the battle to stay in business. With the pressure to lower costs and hopefully not reduce quality the chance for a potential claim rises.  The “human error” factor will always be there and cannot be overcome.

 

  1. Governmental Oversight is stronger. With the globalization of manufacturing and distribution the need for governmental oversight has increased.  New regulations such as the Consumer Product Safety Enforcement Act of 2008 and the Food Safety Modernization Act of 2011 have given the government expanded powers and have increased standards they manufacturers must comply with.  Civil and criminal penalties have also increased and have given the government more clout in dealing with problems.  The FDA even has more power now to regulate how food is grown, harvested and processed.

 

  1. The costs are prohibitive. When the wheels are set in motion on a recall event, the costs go up significantly. The latest statistics show that the average price of a recall is over $540,000 and going up daily.  Not only does coverage cover the costs of the recall, they can cover the gross profit, crisis management expenses and a period of recovery.  They is a long trail of failed companies who have not survived a recall event due to the cost of the recall expenses and the recovery period to rebuild their brand.

 

  1. The mistaken belief that it won’t happen to our company. No organization is immune from the risk of product recall, even if they have the best safety record, manufacturing and operational controls. One of the main reasons is human error which can never be fully eliminated.  With the costs of recalls being so high, many companies still underestimate the actual cost and impact on their operation.  Many companies have the expertise to create a great product but are not prepared to deal with a recall even and come out the other side without a damaged reputation.  While many times only one product may be contaminated, many retails will pull the whole product line and not wait to get more details in order to protect the consumers. Getting the “shelf space back” may take time and money.

 

  1. Product Recall Coverage is the First line of Defense. While product liability will cover the bodily injury and property damage caused by a defective or contaminated product it will not deal with the costs of dealing with the particular crisis.  Product recall insurers will provide crisis management consulting services to deal with pre- and post- Incident basis to control the adverse impact the recall event will have on the insured’s brand and reputation.  The coverage will indemnify them for actual recall expenses, lost profits, product replacement costs, extra expenses and rehabilitation expenses.  Coverage can also include third party losses where your product is a component part in another product.

 

With product contamination/product recall coverage becoming more mainstream and affordable it may be time to discuss this coverage with them and determine if it is affordable to them.  At a $1,000 minimum premium it puts in the affordability range for most manufacturers.  Similar coverage to deal with restaurant recovery to deal with a product contamination starts at $500 and should be considered for them too.  As coverage such as this becomes more affordable we should be discussing these options with our clients who would most likely say in court that “if I had known it was so affordable, I would have purchased the coverage”.

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. Kennethkukral@intlxs.com  800-937-3497 ext 2079

How important is that missing information on the insurance application?

 

I agree that filling out applications is a pain.   With limited time to get an account quoted and written, having to do additional applications or supplemental applications puts a crimp on time.  So what are we to do?

 

A couple of thoughts or ideas:

 

  • I always assume there will be a supplemental application for most accounts. Contractors = Contractor supplemental (+ACORDS), Hospitality risks = restaurant bar and tavern supplemental (+ ACORDs). Special events = Complete special event application.  Most professional liability risks = Main form E&O app + supplemental based on type of risk (unless we are talking about engineers, accountants, lawyers or insurance agents).  I try to find a complete one that will encompass all the questions that are on carrier specific applications so I only have to get one application completed.
  • Unanswered questions – While you may think the particular question might not have any significance on the particular risk you are working on, many carriers see those as red flags. A number of carriers who have automated rating cannot skip questions and it puts them at a standstill until they get the question answered.  There are times where the answer to the question will be a deciding factor on IF the carrier can quote or if they will decline, so you sit at the precipice and don’t know which way it will go until answered.  There are carriers whose rating system allows you to mark the answer “unknown” and make it a “subject to” item.  This leaves you a long list of subject to items and the answers to these questions can change pricing or make the risk a decline.
  • Don’t know the answer? – Research it. There is so much information available on line now that 75-80% of the information is available if you just look for it.  Don’t know the protection class for a city?  Google it.  What construction is the building?   Bring up an image online and figure it out. Lots of available information in public property records.  By the way, you might want to Google the name of the business and see what comes up.    Many times lawsuits will show, bankruptcy or collection proceedings, etc. and wouldn’t you want to know about it before your underwriter does the same thing and asks you about it?
  • Know the rating factors. A recent application I received, didn’t list the protection class.  Think that affects the rating?  SURE!  Kind of like handing a set of keys to someone to test drive a car and one of the four wheels of off.  For a contractor account, this might include listing payroll, gross receipts, and number of employees and cost of subcontracted risk.  There is a wide range of premium basis that carriers now use and you should provide them all.
  • Completeness allows your underwriter (carrier or wholesale broker) to do their best and most efficient work. I can tell you my favorite agents to work with because of how meticulous they are on applications and how few a times I ever have to go back to them for additional information.  They allow me to do my best work.
  • Do you know what is “material” on an application? By this I mean, if something is left off an application, an account is quoted and written and the missing information later becomes and “issue” on a claim do you want to deal with the carrier’s allegation that this was a “material misrepresentation” and they are going for policy voidance?  I have seen it happen and it is something to lose sleep over.  I am amazed how many applications do not have the loss history or don’t have the box marked “no losses” checked.  Think prior losses on an account are important to the underwriter?  I know many times a prospect may not have their loss runs on hand and you are just trying to get a quote. How about asking them about losses, let them know that the carrier will most likely need verification of prior loss history (you can show them how to get loss runs) and if they ssay “no losses”, why not get them to sign a “no known loss statement”?  This shows a carrier that the prospect is willing to attest to the loss history and gives them more confidence.
  • Perspective – why not take more of a view that you might have to produce your “work product” (applications and underwriting information such as a narrative) in court. If you look at providing just enough information to get a “ballpark” estimate of premium are you doing a service for your prospect? The account has only been quoted and NOT underwritten.  Kind of like a doctor just asking you if you feel well today and not doing a physical exam.  Doing a consistent and complete job will make you look much better for that one time things don’t happen the way you wanted and you end up in court.
  • Top of the stack. Wouldn’t it be nice to be the one whose submission is moved to the top of the stack and handles promptly? 

 

I go back to one of the most valuable lessons I learned from my predecessor, take care of the details.  We are non-lawyers selling contracts.  We sell future promises of a carrier to pay losses in return for a small premium.  He said the details can come back and haunt you.  This was never truer than when you have an uncovered loss.  One in particular that I remember was alarming until I laid out the file and saw that we were perfectly documented.  Once we responded to the situation and showed the documentation, the situation went away because the attorney KNEW it was a dead end.  This allows you to sit back in your chair and breathe, knowing you took care of the details and did it right!

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. Kennethkukral@intlxs.com  800-937-3497 ext 2079

The Top 3 Reasons You Should Be Insured On St. Patrick’s Day

Though St. Paddy’s Day came and went quickly, there’s always time to be prepared for next year! Did you or your insureds run  into any of the below incidents this past week?

Las week we celebrated one of my favorite holidays– St. Patrick’s Day!  While I’m Irish every day, it’s always fun to celebrate my “Irishness” with a special day.  There’s nothing like eating corned beef, drinking something green, and dancing to a lively Irish jig.  Plus, I got to wear my “Kiss Me, I’m Irish” shirt!

There are, however, a few reasons you and your insured need to be insured on this green holiday.  Without further ado….a drum roll and some bagpipe music, please!

  1. Someone over-indulges while at your bar. Yes, we know this is a foregone conclusion.  However, while you may be smart enough to have liquor insurance on your location, let’s think about that individual.  There’s always the DUI to consider – which, hopefully they get pulled over before they do any damage.  Your car insurance company certainly won’t like you –if you’re not dropped then expect an aggressive increase in premium!  And what if they are smart enough to leave their keys and walk home?  Then to top that off they start dancing and singing Irish tunes while stopping traffic.  Well, that’s when they’re arrested for public drunkenness.  I’m not sure that any insurance will help them at this point.
  2. Assault and battery. Listen, just because we’re all enjoying ourselves while we get our Irish on doesn’t mean that you can start acting like a complete idiot.  I know some of you will want to!  But please, I ask you to refrain from making fun of short, red-headed people.  We are not leprechauns.  We do not have a pot of gold hidden somewhere.  What we are is Irish – and that means we have a temper.  So, be prepared to be taken down at the knees and then pray that we’ll stop there.   I’m also hoping that the bar we’re in has A&B coverage because they’ll probably need it after I get through with you.
  3. Green food problems. I know….everything is green on St. Patrick’s Day, even the Chicago River!  But what if your corned beef and cabbage turns into something toxic in a patron’s stomach?  Those potatoes shouldn’t have been green, either.  Well, get out that property and casualty insurance, because you’re going to need it!  File the claim, inform the health department if it’s more than one customer, and make sure everyone on staff has already taken their food-handling course.

cathyCathy Thurber has over 10 years’ experience in the insurance industry and likes to think she’s learned a few things along the way, one of which being to not take herself too seriously.  She would love to say she has as many cool expertise’s as her fellow blogger, Ken Kukral, but she’s just not as old as him.  Cathy is a voracious reader and a total word nerd.  Most importantly, she’s been married to her favorite person for almost twenty years and has two kids that she actually likes.  However, the dog is her favorite child and she’s been wheedling for a cat for years.  Perhaps this is the lucky year?

Should I be offering my clients professional liability or cyber liability?

In a perfect world, we know the answer is yes.  We should offer them every coverage available in order to cover our potential E&O exposure, but that is not reality.  So what should you do?

Well, there is not really a way to make your client’s insurance program “airtight”, so you should discuss the GAPS in their program and ask if they want to explore an option to fill them.  Does this mean getting more applications filled out and submitting for quotes? Thank goodness, no.  Otherwise, we might do a lot more “practice quoting” than we need to.  So what should be your plan of action?

  1. You might want to come up with the top 10 insurance gaps or shortfalls in most small business insurance programs. I would put, lack of cyber insurance (network security and privacy) on that list, and depending on what type of service they provide, professional liability insurance.  Of course add higher crime limits, business interruption insurance and insufficient property limits to that list.  Keep in mind this list will evolve over time and you need to stay up to date on changes going on in the industry.
  2. Learn the markets available to you for some of these coverages and get an idea on the minimum premiums for these coverages. Cyber liability can start at $260 a year and professional liability can start as low as $750.  I think your clients may have a much higher expectation of what these coverages cost and by opening their eyes you will them to move forward with taking a serious look at potentially filling these coverage gaps.
  3. Lean more about these coverage options, especially cyber liability. Many agents are not “techies” and do not have a comfort level getting into deep discussions about this coverage.  I took a 9 hour online course to give myself the “building blocks” I needed so that anything I learned would help deepen my knowledge of this type of coverage.  There have been a large number of trade journal articles on this subject in the last few months and they will help to build a comfort level too.
  4. By looking at carrier claim examples and industry loss scenarios, you can have material to discuss with your client.  Most clients do not think it can “ever happen to them” and have not played through loss scenarios, how they would react, how long they might be out of business or how they would recover.
  5. Quick indications. There are a number of markets who have online platforms that allow you to get a quick indication with a minimum amount of information.  You may not be able to get a firm quote, but you will have something more in depth to discuss with your client.
  6. Explore tools out there that help clients realize their actual exposure. There are even some testing services that will help clients realize how “open” they actually are to claims.  There are also tools that can show the actual costs associated with a data breach and how much it would cost them based on how many records where breached.
  7. Purchase it for your own agency. It is always easier to go in with confidence if you believe in the product and carry it in your own agency.  You may be surprised on how little it costs.
  8. Don’t rely on “throw in” coverages that are in many carriers’ enhancement endorsements. A $25,000 limit will be woefully inadequate in the event of a loss.
  9. Ask more questions. Like how much data do they have on their phone, on their laptop or on jump drives?  Do they collect “personally identifiable information”?  Are they subject to specific regulatory or privacy requirements such as HIPAA or red flag rules?
  10. Start to think that these coverages should be an essential part of the client’s complete insurance program and not just an “optional coverage”. Just stating things in this manner may get your clients to start thinking more like you do and head the advice you are giving them.

 

You have to start somewhere.  You may surprise at how easy this coverage is to sell and how much clients really want and need the coverage.  One of my favorite TV shows now is CSI Cyber.  It alerts me to new and evolving exposures out there and how much the world is connected.  It surprised me that people would want to hack or destroy data but it is just a part of life any more.  Learn a little bit more about these evolving exposures every day and you will build confidence in suggesting this coverage to your clients and properly protecting them.

A list we compiled of all the professional liability exposures out there can be found at:  http://www.intlxs.com/intlxs/assets/pdfs/errors-and-omissions.pdf  Over 400 classifications!

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. Kennethkukral@intlxs.com  800-937-3497 ext 2079

Our 7 step process in creating an insurance program

Ever wonder how an insurance program is built? Here’s our seven step process!

Insurance Infoshare

Ever wondered how we do it? Check out the infographic below… it’s as easy as 1,2,3 … (4,6,5,7!)

Our seven steps in building an insurance program from the ground up Our seven steps in building an insurance program from the ground up

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Not enough limits? Time to reassess what crime limits my customers need.

limits

Agents will many times be asked, what limits should my business carry?  This is one of those “loaded” questions and you risk an E&O exposure if you answer directly.  You can always come back with the response, “What limits do you feel comfortable carrying?”, but this won’t really help.  Other answers:

  • Many similar businesses such as your own, carry $X,XXX,XXX limits.
  • I recommend carrying a minimum of $X,XXX,XXX limits.
  • Since we are trying to protect your assets, let’s look at the amount of assets we are trying to protect.

Whatever answer you give, always offer quotes for limits above that so they can see what they cost and they can potentially accept those higher limits.

Where I see the most shortsightedness in terms of both coverage and limits is with crime insurance.  Many times the limits offered under a BOP are not sufficient and the agent fails to offer higher limits.  I believe crime insurance is the most “undersold” coverage that agents handle.  Many clients do not believe they are ever going to have a loss and therefor do not request higher limits than they are offered.

Let me give you some examples of some recent losses to exhibit the point I am trying to make:

  • $3,300,000 embezzled from a school district
  • $728,143 stolen from a trucking company
  • $2,900,000 embezzled by a caregiver of a blind patient
  • $350,500 embezzled from an electrical contractor
  • $20,000,000 embezzled by a credit union CFO
  • $510,000 embezzled by CEO of mental health agency
  • $500,000 embezzled from insurance agency over 10 year period and discovered when the sale of the agency revealed the loss (they only had $10,000 limits under their BOP)
  • $410,000 embezzled by church administrator
  • $5,000,000 embezzled by bank assistant branch manager
  • $8,000,000 embezzled from an industrial processing firm

You can see where I am going with this.  Losses have grown and the thought process behind offering higher limits has not.   We look at general liability limits and property valuation limits and barely give a thought to proper crime insurance limits.  Keep in mind that for every embezzlement news story you hear, there are 5 or 10 that you DO NOT hear about.  Think about it….  Do you want your customers to know that one of your “trusted” employees embezzled from you?   Will they think you don’t have “good controls” in your business and are poorly running it?  If it was a large amount taken over a period of time, would they think you don’t know what is going on in your operation?  Many times in family operations they don’t want this information to get out for fear of hurting the rest of the family or ruining their reputation.

Some statistics for you:

  • 80% of workplace crime is committed by employees
  • One in four employees has either witnessed or committed workplace fraud or abuse
  • One in four employees committing fraud against their employer has been with the company for more than 10 years.
  • Only one in three of those witnessing a workplace crime bothers to report it.
  • The average organization loses 6% of its total annual revenue to fraud and abuse committed by its own employees.

So what should you do?

  1. First, learn more about crime insurance. I have run across very few agents who had an in-depth knowledge of crime insurance and would be able to subsequently explain to a client what they needed to properly cover their operation.  I found one online that would be a good starting point:   http://www.independentagent.com/Education/Webinars/SiteAssets/Pages/live-webinars/2014%20Crime%20Webinar%20Handout.pdf
  2. Get familiar with the new ISO endorsements that just came out that pick up some of the cyber crime exposures. It is amazing at how much has changed recently and this gives you a good reason to discuss this area with your clients including discussing cyber liability coverage.
  3. Get familiar with your carriers forms since many of them may not use ISO endorsements and their forms may differ from ISO.
  4. Get familiar with the type of losses happening out there and have claims examples ready to show your clients so they can see just how prevalent it is and “it can happen to them”.
  5. Look at monoline crime coverage if your carrier can not offer higher limits or cannot offer the comprehensive crime forms available in the market. If you are going to use more than one carrier, make sure the coverage is coordinated between the carriers.
  6. Always, always, always quote higher limits. This avoids them saying in court in an E&O trial that if they had known it only would cost a little bit more, they would have bought more coverage.

I truly believe this is a coverage area that can “come back and bite you”.  It is viewed more as a fringe coverage and not as essential coverage.  I think you have to view it as a required coverage and then push for sufficient limits.  A uncovered crime loss can put a company out of business!

 

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. Kennethkukral@intlxs.com  800-937-3497 ext 2079

 

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?

Pros:

  • 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.

Cons:

  • 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. Kennethkukral@intlxs.com  800-937-3497 ext 2079