With the difficulties many businesses are confronted with in
this economy, business owners know it’s going to take some adjusting,
planning and tightening of the proverbial belt. But one thing they shouldn’t
have to accept is an insurance company
that can’t pay a claim. In order to maintain focus and flexibility to get through
these uncertain times, business owners
should not have to worry about the reliability of their insurance providers.
“In the insurance industry and as a
whole what we’re seeing is a time of
uncertainty due to the current financial
climate. Oftentimes, uncertainty creates
panic in business owners while other
times it creates a sense that it’s time to
buckle down and focus on core competencies,” says Calvin Cass, account manager with The Graham Company.
Here, Smart Business learned more
from Cass about the effects of the financial crisis on the insurance industry and
some ways that businesses can ride out
some of the challenges they’re facing.
Is the economy affecting businesses’ ability to get insurance?
Not exactly. The commercial insurance
marketplace is very favorable to policy-holders with excellent loss experience.
Based on the type of business, individual
loss experience and exposures, many
business owners are actually able to
broaden coverages at reduced costs.
Many business owners are most concerned about meeting payroll obligations, maintaining current contracts and
developing a strong pipeline for continued growth. Insurance tends to be the
last thing on their minds. Although the
insurance marketplace continues to be
very favorable, business owners should
not simply accept the cheapest price.
Owners should ensure that policies are
customized to their type of business and
insurance companies have the ability to
pay claims.
Is there an effect on how insurers provide
coverage?
When marketing insurance coverage, it
is critical to first understand the risk
associated with the insured. The last
thing brokers want is to place their
insured with an insurance company that
limits coverage and is unable to pay
claims. Many people point to the recent
developments in the commercial insurance marketplace as a reason to be concerned. Owners should focus on the
insurance company’s ability to pay
claims and provide the specific coverages required for their operations.
If an insurance company is unable or
unwilling to provide the requested coverages, then owners should seek options
from other carriers.
Is there a difference in the way brokers provide coverage for insureds?
Brokers must advocate on the
insureds’ behalf. This requires brokers to look carefully at the carrier’s ability to
pay claims and provide broad coverages.
Ultimately business owners want to
know that, in the event of a claim, the
insurance company will be able to meet
its obligations to pay the claim quickly.
At the Graham Company, our policy is
to only recommend carriers with A- rating or better as provided by A.M. Best. So
by our standards, the insurance marketplace is limited; however, the coverages
afforded to the insureds must be broad
enough to protect their operations.
How do you see businesses reacting to this
financial climate?
There are peaks and valleys in every
business. In times of robust growth,
owners reinvest into the operation and
oftentimes make other strategic investments. While in times of financial uncertainty, owners focus more on meeting
payroll, maintaining revenue and developing a strong pipeline for when the
market turns.
We are in uncharted territory. There
are businesses in the survival mode
while others are positioning themselves
to take advantage of the opportunities
that undoubtedly will be available once
we break through this current financial
climate. While many companies are positioning themselves to take advantage of
the opportunities created by the current
financial climate, flexibility in the short
term will be required in these uncertain
times.
CALVIN CASS is an account manager with The Graham Company. Reach him at (215) 701-5220 or [email protected].
