Time Flies


time flies

By Cathy Thurber

The old adage, “time flies as you get older,” sure seems to be the truth, especially around this time of year.  Why is it that in your 30s or 40s it seems the month between Thanksgiving and Christmas runs like a train barreling down the tracks?  Those two weeks prior to Christmas are gone if you happen to take a nap one day.  And yet, I hear younger children dramatically spout how Christmas takes forever to get here.  That’s okay, I remember being young and feeling that way.

If you’re my age, you remember the big magazines that would come out around Thanksgiving – especially the JCPenney Christmas catalog – and you would mark down all the toys and clothes you hoped to see under the tree.  I would write my Christmas list weeks ahead of time and then wait impatiently for the day to come.  In the 1970’s, most kids wanted Star Wars toys and figures.  The 1980’s brought forth the long lines and mothers fighting for Cabbage Patch Dolls.  The 1990’s?  Well, those were taken over by Beanie Babies and Tickle Me Elmo.

So, what are some of the big toys this year that everyone wants?  Well, if it were up to my teenage son it would just be Xbox One games.  If it were up to my daughter it would be a new Polaroid-type camera.  Yes, I’m not kidding – a digital instant camera that gives us an updated version of the “shake it like a polaroid” picture.  While I was shopping for said camera I found it quite interesting that one of the big toys this year is Star Wars figures again.  And in Target I found an entire rack of updated “retro” toys from Fisher Price, including the Music Box Player and the Chatter Phone (which has a cord and handset – kids will be stumped!).  It seems like we are going back to things that many of us 40-50 year olds remember from our youth.  Perhaps that is a way for us parents to bring back some of the nostalgia of Christmas time?  Maybe it helps us remember a time when we didn’t rush around for the entire month of December.  When we didn’t have all the deadlines or the drama surrounding these few weeks prior to Christmas day. Instead it was a time to anticipate joy and fun.  Because, I tell you, I would rather live by the sentiment that “time flies when you’re having fun,” than some adage about getting older.

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?

When is it time to “fire” a customer or just let them go? When is “enough”, enough?

Man Hand writing Goodbye with marker on transparent wipe board. Business, internet, technology concept. Stock Photo

By Ken Kukral

This question can conger up all sorts of images, but the one I am interested in is when is it time to “fire” a customer or just let them go?  Sometimes it is in your best interests to let a customer know you cannot satisfy their demands or expectations and they might be better served by going to another agent.  Although this may be an agonizing decision it can be a healthy one for your agency.

First of all, why would you want to “fire” a customer?  There can be many reasons, but some are:

  • Loss ratio – There are those customers who see the “value” in insurance IF they get back MORE than they paid in premiums. They don’t see insurance as a “catastrophic” type of backstop, but see it as a reimbursement type of contract.  I paid this much in premium and I should be able to get that much back in loss payments.
  • They do not look to improve their risk exposures and are not willing to do systematic updates to their property to prevent future losses. They see an aging roof as an opportunity to have a roof loss so they can get a new one, rather than scheduling periodic updates and scheduling of repairs or upgrades.  You can see the handwriting on the wall, knowing the next big storm is going to get them the repair they have been putting off.
  • Payment issues – You only make money if they pay their premium. If you have to follow up for payments or have cancel/rewrite issues, are you doing yourself a favor by retaining these customers.  The chronic late pay clients will be the first one pushing to maximize their loss settlement and get paid quickly.  Just when you thought direct bill would solve all the payment issues you were wrong and they still crop up.
  • Accounts that use all of your time. Ultimately you need to make money on an account.  If they take considerable “hand holding” and they do not value your time, can you afford to keep them?  Even worse, they ask for your advice and then ignore it!!  It still needs to be a cost/benefit decisions and needs to make dollars and cents sense.
  • What about accounts that refuse to deal with other members of your firm (especially customer service personnel and claims personnel) and will only deal with you? If they are your largest account, then “maybe” they are worth it.  Tough decisions but something to discuss with your office staff and your client of they aren’t “getting it”.  Even worse if they are rude or obnoxious with the others at your office.  The rest of your team will start losing respect for you if you don’t nip it in the bud and set them straight.
  • I previously mentioned the issue of clients not taking your advice. There are times that you have to stand your ground and let them know that if they chose not to take your advice, you can no longer be their agent.  If they get so “cheap” with their insurance program, that IF they were to have a loss they would have major coverage issues, then you may want to let them move on.  Those  “savings” are not worth the future hassles, lawsuits and potential for that business to not survive in the event of a major loss.

So what are you to do?

  1. Be straight forward with your clients. Be willing to “walk” if they cannot make responsible decisions based on your advice.  You are looking to put together an insurance program that best fits their needs and not accepting your recommendations can seriously jeopardize their coverage.
  2. Simplify the issue/coverage/decision/problem and walk them through the pitfalls. They need to know that you know what you are doing, what the consequences are of their decisions and how they could inadequately be protecting their assets.
  3. Have a system for addressing problem accounts and putting them on the path to “recovery” if that is even possible. There will be those “unethical” clients along the way and remember you are judged by the company you keep.

The accounts you lose sleep over….  Might be the ones….

The account you tend to shake your head as you hang up the phone with… might the ones….

Sometimes it is “addition by subtraction”…..

I am not saying just go out there and start firing your customers…. Just ask the question, is this a client I should be firing?  Do something about it….  Get them on track or move on….  Your time is too valuable!

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

Property Coverage Forms: Commercial vs Personal — What Difference Does it Make?

commercial vs personal insurance

 By Ken Kukral

A very popular question is raised when an agent explores the possibility of moving their real estate investor clients to our exclusive commercial lines investor program.  Since a majority of agents are proficient at either personal lines (forms) or commercial lines (forms), they wonder what differences they should inform their clients of when making this switch.

A couple things to keep in mind:

  • Most dwelling fire policies are written on either the DP-1 or DP-3 form so I will concentrate on those two forms from the personal lines side.
  • We have the availability of Basic (CP-1010), Broad (CP-1020) and Special (CP-1030) forms and a majority of these will be issued on Special form so I will concentrate on that on the commercial side.

We find that a vast number of the accounts we see from a new business standpoint are written on individual dwelling fire policies.  Many of these individual policies are written on a DP-1 Form.  This creates a “tracking” nightmare as an investor continues to buy additional properties since they end up with multiple expiration dates they need to keep track of.  Miss one, and you may have an uncovered loss on one of their properties.  Our program is able to write these on a monthly reporting form with one single expiration date.  The higher number of properties lends itself to be scheduled on a commercial lines fire policy for ease of administration.

Advantages of the commercial lines form over a personal lines form (Keep in mind that some carriers may use their own form and not ISO forms so the differences “may” or “may not” apply):

  • Higher liability limits are usually available more on a commercial lines form than a personal lines form (DP-1 or DP-3)
  • Higher property limits are also usually more available over a personal lines form. Most carriers limit their exposures on dwelling fire forms (both from a minimum and maximum basis).
  • Personal and advertising injury is included on a commercial lines form where may times a personal lines carrier for multiple properties will exclude it.
  • Personal lines programs are limited to 4 family dwellings and we are able to write up to 6 family dwellings inside this program.
  • As mentioned above, the administrative workload is reduced by scheduling all the properties on one policy, with a single expiration date.
  • Business income coverage does not reduce the dwelling limit and is written as a separate limit. This can be a significant advantage on a loss that takes a significant amount of time to adjust.
  • Separate limits for adjacent structures does not reduce the dwelling limit.
  • Simplicity to add or remove properties or change occupancy. This prevents cancel/rewrite situations.
  • Many personal lines carriers will not write LLC’s or Corps on a personal lines form. The wording of personal lines form is geared towards an individual and not towards more sophisticated real estate investors.
  • The DP-1 (basic form) is normally written on an ACV basis, where we have the availability of offering coverage on an ACV, RC or agreed amount basis
  • The DP-3 (Special form) is normally written on a RC or ACV basis, where we offer both of those options AND an agreed amount option
  • Depending on coverage form, you may incur coinsurance penalties on some personal lines policies whereas our program gives the option of waiving coinsurance penalties.
  • Special form on a commercial basis has some broader perils than what the personal lines form offers.

Some of what you lose when you move from a personal lines policy to a commercial policy:

  • Ease of escrow billing with lenders since each policy stands on its own.
  • Automatic coverage percentages for items such as adjacent structures and rental income
  • Specific term policies for vacant dwellings
  • Total property limit may not be aggregated
  • Overall familiarity of personal lines producers with the use of personal lines forms.

This begs the question, which is better?  The politically correct answer… it depends….  Each situation needs to be looked at individually and see what best fits the client.  If the client has a handful or fewer properties, or is not a very sophisticated real estate investor, they may have more of a comfort level with personal lines policies.  A more sophisticated buyer with many properties is in need of a more tailored program with less administrative hassles and would do better moving to a commercial lines form.  Some other things to consider:

  • Do they just want to insure the properties for what they have invested? (in other words, do they not want the constraints of coinsurance)
  • Do they need more flexibility? (Buying properties and renovating them so they may be vacant, increasing in value during renovations or maybe being “flipped” and sold once the renovation is done.)
  • Are they not interested in some of the “bells and whistles” offered under a personal lines form? Do they just want liability coverage, property coverage to cover their investment and rents coverage to continue their income if they have a loss?  If so, the commercial lines policy may give them what they really want.

So what should you tell your client?

  1. We are not comparing “apples to apples”
  2. You are looking to assess their situation and provide the best program you can based on your needs and expectation
  3. You are looking to provide them with a tailored solution to address their risk in the most simplified and straight forward basis.
  4. With the pricing slowly increasing in the habitational sector, you want to provide them with a stable program while maintaining significant flexibility.

Bottom line, help provide your client with an insurance solution that helps them reduce administrative headaches and provides them with the coverage they are looking for.

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 Much Commercial Property Insurance Do I Need?

ACBI Insurance

The whole idea behind insurance is protection. When you buy property insurance for a building, the goal is to have enough coverage so that your insurance claim will put you in roughly the same economic position you were – or as close to it as possible – before disaster struck.

The Three Property Valuation Methods

From an insurance perspective, there are three basic methods for valuing and assigning coverage limits to a commercial property: fair market value (FMV), actual cash value (ACV) and replacement cost. It’s important to understand that these numbers can be very different from each other – and sometimes radically so. The three approaches are not interchangeable at all. It’s very important to understand the type of insurance coverage you own and how claim settlement figures are arrived at.

Fair Market Value

The concept of fair market value is familiar to most of us. A property’s FMV…

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Bar, Tavern, Nightclub, and Lounge Insurance can Save Your Business from Financial Ruin – VA, MD, DC

Reposted from the WSI Blog, about the importance of proper coverage for bars, taverns and nightclubs…

WSI Blog

If you own and manage a bar, tavern, nightclub or a lounge, it is imperative that you ensure that you have the correct and comprehensive insurance in place. You own and manage an exiting business, however, they are subject to specific risks and legal exposures that you should prepare for. Without the right level of coverage, what you have invested can be put in much trouble and your business can suffer insolvency in worst case scenarios. Bar, tavern, nightclub, and lounge insurance in VA, MD, DC could save your business from financial breakdown under certain circumstances. This insurance policy can be customized such that you gain full protection against legal threats and repercussions that can be too expensive and too difficult for you to deal with alone. You may not see instantly the advantage of having a bar, tavern, nightclub, and lounge insurance making it less gratifying for you to…

View original post 19 more words

Never fear, Underdog is here!


By Ken Kukral

By the time you read this post, we will know who won the NCAA College Football National Championship.  My hope is that it is Ohio State (the underdog), but either way I hope it is a great game.  I am sure I am going to need to catch up on some sleep when it is over.

As we start to implement our plans for 2015, business, personal and other areas of our life, there will be times when we are the “underdog”.  There is nothing wrong with being considered the underdog, but it might be wise to know by “how much”.  Much like how a team prepares when they are a 3 point underdog versus how they prepare when they are a 35 point underdog, it will be different.  A team at a significant disadvantage needs to have a near perfect game if they are to win and need to get momentum in their favor.

So when you go after an account, how well do you prepare your strategy to go after it?  Do you go in and just get quotes and hope you win the account?  Did you do some research and find out what it might take to have them fire their current agent and bring you on?  When you are the underdog (Not the incumbent), how are you going to stack the deck in your favor?  What are you going to do for the client that the current agent has not?

My hope is that you will pick a few targets and concentrate on them.  You can’t write them all and spreading yourself thin will not improve your chances.  You may even want to take yourself “off the list” when the potential client calls if you do not have a clear signal that your chances (better relationship with the potential client, mishaps by the current agent that have opened the door a little wider, or changes in their operation that you can focus and capitalize on) have improved enough to have a better than average chance to write the account.  Be realistic and make sure you are not wasting your time.

Work on your “playbook”.  By this I mean gain knowledge in areas where you can go in as an expert or well informed agent.  This could be areas such as Cyber Liability, Product Contamination or International exposures.  These are three hot areas that have had significant activity over the past couple years and could potentially put your prospect out of business.  Not that they are trick plays but they are growing areas of concern for many prospects and who better than you to come to the rescue and discuss these risks?

Check out your past results.  Why didn’t you get the account in the past?  Has that situation changed?  If not, how can you “win” this year?  If it is “all about price” then you may have a tough chance getting the account.  The insured will usually give the incumbent agent last shot so good my not be good enough.

As I get older, I realize that doing the same thing over and over and expecting different results is the definition of insanity.  The trick is to determine what I need to do differently in 2015 in order to increase my odds of writing new business.  Some ideas of what to do differently:

  • Build a specialty. Be it the type of account or a specialty in a particular line of coverage.  With the activity increasing in the energy sector, I am looking to increase my knowledge and expertise in that area and hope to be viewed as an expert in that class of business.
  • Learn more about a specific account. The better I can understand that account, the better I can service and meet the expectations of that account.
  • Ask more questions up front to determine what my “odds” are and find out just how much an underdog I really am. This will affect my willingness to work an account that I have little or no chance of writing.
  • Use my “team” better. Much like how a quarterback cannot win a game solely on his own efforts, neither can I.  We have a strong team of seasoned veterans who can do a great job and I need to work hand in hand with them.
  • Learn from my losses. If I cannot look at where I have failed, it will be tough to improve.
  • Take a fresh outlook and be open to change. I may need to think outside the box if I am going to win more new business.  Old habits die hard but change must happen in order to improve.
  • Have fun doing what I love. Even after 29 years in this business it is still fun.

I hope that 2015 will be the year you break out of how you currently do things and have a spectacular year.  Knowing you are the underdog, you will have to work smarter and more focused.  Aim high and make it a great year.  Happy New Year!

How does a monthly reporting form policy work?

By Ken Kukral

3D Pie Chart On Sheet

With the industry standard being a 1 year policy in the insurance business, agents are not used to monthly reporting form policies.  The hope is that once an account is placed, they can put the policy to bed and not have to touch the file until they start to work on the r­­enewal.  There is the belief that every time you touch a file, “you lose money”.  So why ever do a monthly reporting form policy, right?

Not so fast.  There are certain situations that are best served by a monthly reporting form policy.  Some examples are:

  •  A schedule of properties that fluctuates (properties are added and deleted on a regular basis)
  • Contractors Builders Risk policies, where they are working on a number of projects and the values can fluctuate or increase over time.
  • Floor plan monthly reporting form – Where values will fluctuate from month to month and they only want to pay for actual values

There are other uses for monthly reporting forms and they are mainly used where a risk will fluctuate over time.  It would become a nightmare adding and deleting locations and accounting for debits and credits would be a book keepers horror story.  Some of the advantages are:

  •  Administrative – The insured can make numerous additions and deletions and just file one report at the end of the month. Within the underwriting guidelines the adding of properties becomes effective immediately upon closing on the property.  No longer do you have to push to get a binder for the closing, it’s covered.
  • Accounting – You know the monthly charge for each property, the rate is set up front and you don’t have to worry about cancellations credits. This makes premium allocation to each property a snap and helps the investors to properly know their “cash positive” situation on a monthly basis.
  • Cash Flow – You “pay as you go” and only pay for the coverage you need each month. You are not fronting unearned premium like you do on a normal insurance policy.
  • Matches account evolution. So if the property value increases each month as renovations occur, you can up the values accordingly.  If nothing changes in a given month, they would bill off of the last month reported and assume the values and locations are exactly the same.

So reporting form policies are the “bomb”?  Not so quick… they do take some getting used to.  The insured will usually have to put up a 1 or 2 month premium deposit (escrow), that they will get back.  You have to complete the initial schedule rather than individual applications.  This may take a little extra time but is well worth it.    Next, you need to train your clients and your staff on how to administer them.  You need to finish each month and without fail request the monthly report, usually 3 to 5 days after the end of the month.  Reports are normally due the 10th of the month with the broker or carrier.  So once you get this routine down, things will flow properly.  Since the schedule will usually be self “computing”, you just need to have the insured include a check for the amount due with the schedule.  This alleviates the accounting collection issues that can arise with other types of policies.

Take a little extra time to go through the reporting procedures so that when it comes time to report it will flow smoothly.  One of our programs at our office is run this way and once the client gets used to it, then it flows smoothly.  We find that clients love this type of policy and wondered how they did without it!

Keep this in mind when trying to determine what type of program would be best for your client and their situation.   It is not always what is best for the agency and you need to keep that in mind.  It is not that difficult, just different.