The Fear Blog

By Cathy Thurber

The other night my husband and I were relaxing on the couch when all of a sudden it sounded like a herd of elephants were stampeding upstairs.  It got quiet then the booming of running feet happened two more times.  We heard our daughter adamantly talking to….someone?  Before we could get up and check it out, down the stairs she comes and dramatically exclaims, “Sorry about the noise, guys!  I was almost just killed by a spider – but I got him!”  My daughter has a definite case of arachnophobia.  Here is an idea of how she reacts to spiders:

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Fear of spiders is definitely a common phobia.  I have what I call the “3 S-Fears”: Snakes, Spiders, and Sharks.  I’m not alone, though, as spiders and snakes are two of the top biggest fears.  According to www.fearof.net, they are the #1 and #2 phobias in the world.  There’s also fear of heights (acrophobia), fear of small spaces (claustrophobia), and fear of open or crowded spaces (agoraphobia).  But, what about those not so common fears?  Fears that we rarely hear about?  Try these on for size:

  • The fear of balloons: globophobia
  • The fear of love: philophobia
  • The fear of buttons: koumpounophobia
  • The fear of bananas: bananaphobia
  • The fear of cotton balls: sidonglobophobia
  • The fear of snow: chionophobia
  • The fear of opinions: allodoxaphobia
  • The fear of beautiful women: venustraphobia
  • The fear of work: ergophobia
  • The fear of belly buttons: omphalophobia
  • The fear of chickens: alektorophobia
  • The fear of knees: genuphobia
  • The fear of losing cell phone contact: nomophobia
  • The fear of people in traditional Dutch costumes: dutchphobia
  • The fear of zombies: kinemortophobia

 

Did any of your fears end up on that list?  I hope not!  Although I wonder if anyone will try calling off sick because of ergophobia….

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?

 

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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

 

 

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

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

What is surplus lines insurance?

asktheexpert

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

checklist

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