Figuring out how much liability coverage to buy isn’t easy, but it’s very important.

General liability covers an entity for bodily injury, property damage, personal and advertising injury, and medical payments to a third party because of negligence of the insured. So, adequately selecting the appropriate limits provides defense costs and indemnification to that third party, which will properly indemnify that claimant.

“As an organization, ask yourself, ‘If my limits are not enough to cover the injury, what happens?’” says Cliff Baseler, vice president at SeibertKeck Insurance Agency. “You hope the insurance company will offer a settlement at your policy limits or you might look at out-of-pocket costs.”

Smart Business spoke with Baseler about setting limits of liability.

How can business owners know what limits of liability to purchase?

First, review the limits that your vendors and customers have on their insurance requirements. Many businesses purchase a $1 million occurrence policy with a $2 million aggregate limit for the general liability policy. From there, adding an umbrella or excess policy provides additional limits over your original policies.

The question becomes how much is enough. It’s a balancing act between purchasing exuberant limits that exceed industry expectations or leaving your company on the short side and potentially exhausting policies. If policies are exhausted, you could be covering claims yourself.
More exposed industries will need to buy higher limits, such as manufacturers that produce products with the potential to impact many people or those who face class action potential.

The challenge for many startup companies is having enough capital to cover the cost of purchasing adequate limits. As a well-established company, it is important to look at the cost-benefit of adding additional umbrella limits. In addition, when looking at job contracts, it is critical to make sure your limits match those of the subcontractor or contract requirements.

How can you use benchmarking to help discover the best liability limits?

A benchmarking report is a tool, not an exact science. It takes into account many different factors, such as location, industry size, revenue, employees, etc., to compare companies in the same industry segment. Benchmarking an organization against its respective industry can provide a range of insurance program premiums, limits and retentions commonly used in the industry.

Having this important tool should allow business leaders the piece of mind that they are adequately insuring their company at a competitive cost. Also, in the event of a claim, it can justify the limits purchased if the claim should exceed that limit.
An informal way to benchmark is by attending trade associations or other industry events, so you can ask peers for their limits of liability. Networking is a great way to understand how liability limits are affecting others, before you have to deal with it.

What do marketplace trends like severability tell business owners?

The severity loss trend — the change in size of an individual loss over a period of time — is staggering. According to Chubb, in 1973, a moderate brain damage injury award was $1.24 million; today, that same award is closer to $5 million.

Chubb reports that in 2010 the median compensatory award in Ohio was $13,000, while nationally 12 percent of all jury awards are $1 million or more. In addition, 57 percent of the total awarded damage for commercial/industrial product liability verdicts is for the plaintiff; the remaining amount is for additional costs. These costs include the rise in mass litigation, the high cost of defending product suits, the need for many experts in complex situations or additional awarded damages. This means $1 million of coverage is not always enough to cover the actual injury. The costs associated with a claim are far greater than what most people perceive as ‘enough insurance.’

There’s no easy answer to finding the right liability limit. It may seem ridiculous for a small company to buy $25 million in limits, but what if it has a large automobile fleet? In the end, the most important tool is to have a proactive relationship with your agent. An experienced client advocate will responsibly inform a client on how to properly balance its limit of liability and dollars.

Cliff Baseler is a vice president at SeibertKeck Insurance Agency. Reach him at (614) 246-7475 or cbaseler@seibertkeck.com.

Insights Business Insurance is brought to you by SeibertKeck

Published in Columbus

Health care used to be one of the more scrutinized types of insurance, but that’s no longer part of the landscape.

Under the Affordable Care Act (ACA), the only criteria that determines price for small group health insurance is date of birth, zip code and whether you smoke or not — making it one of the few insurances where risk isn’t really considered, says Pete Seminaroti, vice president of the Healthcare Division at SeibertKeck Insurance Agency.

But even in the ACA era most business owners need a competitive health plan.

“Why do employers provide benefits? Not only to retain the employees they have, but also to entice a strong candidate as a new employee. Employees look beyond wages to health benefits,” Seminaroti says. “Benefits are important to retain and hire good people, and that still overshadows the other issues.”

Smart Business spoke with Seminaroti about trends in Ohio health insurance.

Who needs to buy health insurance?

Practically everyone needs to purchase insurance, either as an individual or group. If your employer doesn’t provide coverage, you need to enroll for an individual plan.

As business owners, the ACA has changed the rules for providing coverage. If you employ two to 49 full-time equivalent employees, you aren’t required to provide insurance as a small business. If you have 50 to 99 employees, you are considered a large group and need to provide insurance by 2016. Those with 100 or more employees must provide insurance by 2015. Failure to comply will result in government penalties.

What are the biggest factors to consider when purchasing health coverage?

Obviously, pricing drives most things, when we make a purchase privately or corporately.

Another large factor is the benefits structure. More than ever business owners want to ensure their network of providers, doctors, hospitals and medical facilities is strong. The insurance options have narrowed in the small group market; before, you might have had 50 to 70 choices, and now, it’s been simplified to about a dozen.

An owner also wants to go with a quality company that processes claims efficiently, with few errors. Typically the industry has done a good job of that. When you consider how many claims are processed daily, the number that go awry is minimal.

Finding the right insurance is easier when business owners can draw from their health care adviser’s knowledge. This ensures the owner has their choice of plans with the proper coverage and good network at a price within their budget.

With limited underwriting, are prices rising more than usual? Wasn’t Ohio projected to face large increases?

Over the past couple of years, there was a lot of that going around — Ohio was projected to increase anywhere from 40 to 80 percent.

In truth, some rates have gone up significantly, while other small groups have benefited from the ACA. An increase or decrease can highly depend on your small group’s makeup. In the past, if you had a group with high utilization, you were forced to stay with the same carrier for multiple years and your rates would increase. Now, that same group cannot be penalized because risk is no longer a factor.

What other tools are available to help?

In Ohio, we have a co-op that’s starting to bid out to small groups. It’s supposed to cost 10 to 15 percent less because it has eliminated the top layers of an insurance company. The co-op is run by a board of trustees comprised of the companies that have plans with that co-op. It will be interesting to see how the first year goes. If it’s successful, more co-ops may start.

There has been more interest in certain levels of self-funding. The self-funding industry came out with new structures that don’t expose employers to as much risk. It’s also a way to avoid some of the ACA taxes.

The health care insurance environment will continue to change over the next five years, and having a knowledgeable agent will be crucial in navigating the best course of action. Currently, most businesses still need to offer health insurance, and many employees, given the choice, would prefer for their employer to pick the health plan. Working with your trusted health care adviser, you can create a plan that will work for both the company and offer solutions for the employees.

Pete Seminaroti is a vice president of the Healthcare Division at the SeibertKeck Insurance Agency. Reach him at (330) 865-6578 or pseminaroti@seibertkeck.com.

Insights Business Insurance is brought to you by SeibertKeck

Published in Akron/Canton

An effective safety program gives your company a competitive advantage over one with careless operations. Safety awareness lowers your workers’ compensation rates through premium rebates and discounts, and better rates from less frequent and less severe claims.

“I can walk into a manufacturing plant and sense whether the company has a strong focus on their operations and safety. And, nine out of 10 times, I’m correct,” says Richard B. Hite, CEO of SeibertKeck Insurance Agency.

Smart Business spoke with Hite about how safety programs and a safety culture factor into decreasing your workers’ compensation premiums.

How can you use safety to take advantage of workers’ compensation rebates and discounts?

As one of four states that don’t allow employers to buy workers’ compensation from private carriers, Ohio and its Bureau of Workers' Compensation (BWC) have a number safety programs (www.OhioBWC.com/employer/programs/safety). The three fundamental ways to get credits to your basic rates, depending on whether you have a basic or advanced safety program, are the:

  • Drug-free safety program, a premium discount of 4 to 7 percent for implementing a drug-free program that promotes occupational safety and addresses the use and misuse of alcohol and drugs in the workplace.

  • Safety council rebate program, a 2 percent rebate for active participation in a safety council, as well as another 2 percent possible based on the frequency and severity of your workers’ compensation claims.

  • Destination excellence program, up to 3 percent refunded based on industry-specific safety discounts.

Additionally, based on your company’s total losses and their severity, you get experience modification — a credit, or debit if you’ve had claims — to your base rates. The BWC also administers workplace wellness grants, which by establishing a more healthy and aware workforce can  reduce the frequency and severity of claims in the future.

Your property and casualty commercial insurance carrier is another source for safety assistance to help reduce claims. The national carriers already provide out-of-state workers’ compensation, so they have programs and information that your company may be able to take advantage of as a client.

How can you ensure employees actually follow your safety practices?

Many business owners examine their prior premiums and rates to see the total savings from BWC credits, rebates and discounts, and then share half with employees as a safety bonus. Employees know if they stay safe the employer will, for example, hand out gift cards. Also, if a department has no workers’ compensation claims for a certain quarter, the boss could buy everyone pizza.

Another incentive is posting accomplishments — the sign that says ‘We’ve had X consecutive days of no workers’ compensation losses.’ You might not think it works, but employees don’t want to be the one person to mess up, so they are more aware and take extra time.

Your safety committee should be helping with education and awareness. First, you train the trainers at monthly meetings, such as bringing in a loss control engineer or practical exercises like the proper way to lift a 100-pound object. Then, the committee members go down to the specific departments, which already should have safety resources for individual jobs.

How else can you institute a safety culture?

The written safety plan needs to be reviewed by employees, so make employees sign a statement that they read it. Post safety rules in relevant places — the BWC can provide posters. When new employees go through safety training, make sure you’re refreshing the memory of existing employees. Keep your job analyses current and match the right employees to the right tasks. An improperly trained employee who’s lifting and bending all day is an accident waiting to happen.

It’s only after you establish a strong safety culture to keep frequency and severity of claims down that you can think about the next level where you can get in a group or a retrospective rating program to earn your own rates.

Richard B. Hite is the CEO of the SeibertKeck Insurance Agency. Reach him at (330) 865-6573 or rhite@seibertkeck.com.

 

Website: To keep up with the latest insurance news and how your company could be impacted, sign up to receive our newsletter at www.seibertkeck.com.

 

Insights Business Insurance is brought to you by SeibertKeck

 

Published in Akron/Canton

Having a driver training or fleet safety program is likely something your insurance company already has on its radar. Companies with five or more vehicles and a history of claims could be required to complete the insurance company’s fleet seminar or safe driving training.

But even if your company has a good driving record, some type of driver safety class and/or additional training benefits your business directly, as well as the insurance company.

“It does have an impact on your rates, only because if you do implement a fleet training seminar, each year or every other year, you will start to see an improvement in your rates because it’s less likely that you’re going to have an accident,” says Todd Winter, executive vice president at SeibertKeck.

Smart Business spoke with Winter about the importance of driver training and steps to consider taking that could help you maintain a motor vehicle safety program in your workplace.

What’s the first step to driver safety for business owners?

Business auto happens to be one of the bigger exposures to a business because, if there’s an accident, depending on injuries, it can be a pretty significant. So first, you want to start with employee drivers who have a good driving record.

If job candidates are applying for a position that requires them to drive, you can require a check of their motor vehicle report to make sure they are acceptable. Insurance carriers can provide you with what they recommend to be acceptable. Of course, if their record were clear, that person would be a good choice.

What are some conditions that affect auto rates or how much training employees need?

A number of things affect the underwriting, such as the radius of operation — a long distance radius of 200 or more miles could mean a higher rate. Other considerations can depend on the size and weight of the vehicles.

Often companies don’t have a choice with what kind or how much training employees need. Many insurance companies provide it through their loss control department at no cost. A loss control engineer may require drivers to attend a two- to three-hour class and take a test, or just listen to a seminar.

What, then, can employers do to create and maintain a motor vehicle safety program in the workplace?

Having formalized vehicle maintenance and a safe driving program of some kind are must-have risk management tools. However, some employers may feel reluctant to institute them because of the amount of time to set them up in their office. The idea is that improving driver training and fleet safety programs only can help your company, as the business auto exposure is lowered.

Some best practices that could help are:

  • Safety policy statement indicating that the company has established a fleet safety policy to emphasize a commitment to the safety of its employee drivers and the general public.

  • Seat belt use to reduce the severity of injuries.

  • Restrictions on personal vehicles for employees using a personal auto for company use.

  • Driver selection and qualification, including application for employment, reference checks, motor vehicle report investigations and an annual review of driving records.

  • Vehicle inspection and maintenance.

  • Post notices and signs in your building and in the yard reminding drivers to be safe and maintain their vehicle.

  • Driver training annually, either online or conducted by a loss control engineer.

  • Accident reporting and recordkeeping.

Keep up with the latest insurance news and how your company could be impacted by signing up for SeibertKeck's newsletter.

 

Todd Winter is executive vice president at SeibertKeck. Reach him at (330) 865-6572 or twinter@seibertkeck.com.

Insights Business Insurance is brought to you by SeibertKeck

Published in Akron/Canton

’Twas the night before Christmas and Santa was in doubt. He read his insurance policy and wondered what was left out? He sees his agent but once a year, and his policy and coverages are not so clear …

“We are all busy — sometimes too busy — especially around the holidays, and many business owners put off looking at their insurance,” says Andrew Rowles, vice president at SeibertKeck Insurance Agency. “It is far from the most important item in their mind.”

As the holidays approach, Smart Business spoke with Rowles about insuring one of the most familiar companies we all know — Santa Claus, CEO of the North Pole.

How does Santa know if he should purchase a liability insurance policy?

Santa is liable for the products he makes, along with potential property damage from coming down your chimney. To cover this exposure, Santa, just like every other company, should purchase a comprehensive general liability policy. Reviewing this with your agent to determine the appropriate limit specific to your risk management plan is key to defending against losses. Keep in mind, there are exclusions in a liability form that can limit coverage. For example, your policy excludes coverage for ‘your work’ in a typical CGL form.

How does Santa properly insure the North Pole operations facility?

Similar to many of today’s large corporations, there are many complexities to an insurance policy. Here is a quick overview of how Santa might cover his facilities.

  • North Pole — Since no one owns the location, he must have a tenant betterments and improvements policy to cover the buildout of the workshop.

  • Toys — Since Santa ships only by air freight, he should purchase business personal property off premise or, depending on the contract, an ocean cargo policy to cover the inventory when in transit.

  • Elves’ tools — Santa should have employees’ tools coverage under the property form for the extra small equipment his workers bring to the workshop. One reason this is important to review is many policies limit the amount provided for theft under the property form unless a specific limit is provided.

  • Reindeer insurance — These are expensive livestock that Santa should insure against mortality, loss of use and major medical. So don’t worry about that hole in your roof, if Rudolph breaks a leg; Santa has it covered.

  • The sleigh — This should be on an inland marine form. Like forklifts that your company sends to multiple locations, Santa uses this valuable equipment all over the world.

  • Workshop interruption — Santa works year-round to get ready for Christmas. Losing the workshop for just one day could make a difference between Dec. 25 and Dec. 26. Business interruption insurance would ensure that Santa has adequate cash on hand to make sure he meets his obligations, continues to employ the elves and could set up a temporary facility at the South Pole.

Why does Santa need directors and officers insurance?

We all know about how Santa determines who is ‘naughty’ and ‘nice.’ Business leaders make business decisions every day that could impact others, just like Santa does. Directors and officers liability coverage pays for defense in a lawsuit. If purchased on a duty to defend basis, the insurance company will supply expert counsel for a suit not resulting from bodily injury or property damage. Just wondering what list your insurance agent would be on?

Now that the world is in cyberspace, how does that impact Santa?

It’s true kids can now email their letters to Santa. Most insurance policies do not cover blogs, emails or electronic messages of any kind under liable and slander. Cyber liability coverage would protect Santa from any electronic communications by him, or his elves, that might be the subject of a suit, breach of security or business interruption.

What if the reindeer sued because of who Santa promoted to lead the sleigh?

Employment practices liability insurance (EPLI) is often a missed coverage in a risk management program. EPLI was developed to protect the employer from losses not covered by directors and officers or general liability. This form applies to discrimination, wrongful termination, failure to promote, sexual harassment, wage and hour, and whistle-blowers claims. This protects Santa and Mrs. Claus, as well as elves that supervise others working at the North Pole.

What if Santa uses the 401(k) contributions to upgrade the sleigh?

Under the Employee Retirement Income Security Act (ERISA), all 401(k) plans must be insured up to 10 percent of the plans’ assets for theft. So if Santa misappropriates funds, the elves’ retirement fund is OK. This is purchased under an ERISA bond or endorsing the crime policy.

How can Santa be ready for what the workshop is like after Christmas day?

All year, Santa’s helpers were busy working late hours. This can cause unwanted tension in the workplace and irritable elves could finally lash out. As an employer, you can purchase protection against the expenses that result from incidences of workplace violence. These can include the cost to hire independent security consultants, public relations experts, business interruption expenses and payment of death benefits.

Unfortunately, the ideal insurance policy is not gift wrapped and waiting for you under the tree. Business leaders need to invest their time meeting with an agent committed to helping you manage your risks to develop the right risk management plan and coverage to protect your company.

But I heard him exclaim, ere he drove out of sight, Happy Holidays to all, all my coverages are right …

Andrew Rowles is a vice president at SeibertKeck Insurance Agency. Reach him at (330) 865-6587 or arowles@seibertkeck.com.

Insights Business Insurance is brought to you by SeibertKeck Insurance Agency

Published in Akron/Canton

’Twas the night before Christmas and Santa was in doubt. He read his insurance policy and wondered what was left out? He sees his agent but once a year, and his policy and coverages are not so clear …

“We are all busy — sometimes too busy — especially around the holidays, and many business owners put off looking at their insurance,” says Marc McTeague, president at Best Hoovler McTeague Insurance Services, a member of the SeibertKeck Group. “It is far from the most important item in their mind.”

As the holidays approach, Smart Business spoke with McTeague about a look at insuring one of the most familiar companies we all know — Santa Claus, CEO of the North Pole.

How does Santa know if he should purchase a liability insurance policy?

Santa is liable for the products he makes, along with potential property damage from coming down your chimney. To cover this exposure, Santa should purchase a comprehensive general liability policy. Reviewing this with your agent to determine the appropriate limit specific to your risk management plan is key to defending against losses. Keep in mind, there are exclusions that can limit coverage. For example, your policy excludes coverage for ‘your work’ in a typical CGL form.

How does Santa properly insure the North Pole operations facility?

Similar to many of today’s large corporations, there are many complexities to an insurance policy. Here is a quick overview of how Santa might cover his facilities.

  • North Pole — Since no one owns the location, he must have a tenant betterments and improvements policy to cover the build-out of the workshop.

  • Toys — Since Santa ships only by air freight, he should purchase business personal property off premise or, depending on the contract, an ocean cargo policy to cover the inventory when in transit.

  • Elves’ tools — Santa should have employees’ tools coverage under the property form for the extra small equipment his workers bring to the workshop. Many policies limit the amount provided for theft under the property form unless a specific limit is provided.

  • Reindeer insurance — These are expensive livestock that Santa should insure against mortality, loss of use and major medical. So don’t worry about that hole in your roof, if Rudolph breaks a leg; Santa has it covered.

  • The sleigh — This should be on an inland marine form. Like forklifts that your company sends to multiple locations, Santa uses this valuable equipment all over the world.

  • Workshop interruption — Santa works year-round to get ready for Christmas. Losing just one day could make a difference between Dec. 25 and Dec. 26. Business interruption insurance would ensure that Santa has adequate cash on hand to met his obligations, continues to employ the elves and could set up a temporary facility at the South Pole.

Why does Santa need directors and officers insurance?

We all know about how Santa determines who is ‘naughty’ and ‘nice.’ Business leaders make business decisions every day that could impact others just like Santa does. Directors and officers liability coverage pays for defense in a lawsuit. If purchased on a duty to defend basis, the insurance company will supply expert counsel for a suit not resulting from bodily injury or property damage. Just wondering what list your insurance agent would be on?

Now that the world is in cyberspace, how does that impact Santa?

It’s true kids can now email their letters to Santa. Most insurance policies do not cover blogs, emails or electronic messages of any kind under liable and slander. Cyber liability coverage would protect Santa from any electronic communications by him, or his elves, that might be the subject of a suit, breach of security or business interruption.

What if the reindeer sued because of who Santa promoted to lead the sleigh?

Employment practices liability insurance (EPLI) is often a missed coverage in a risk management program. EPLI was developed to protect the employer from losses not covered by directors and officers or general liability. This form applies to discrimination, wrongful termination, failure to promote, sexual harassment, wage and hour, and whistle-blowers claims. This protects Santa and Mrs. Claus, as well as elves that supervise others working at the North Pole.

What if Santa uses the 401(k) contributions to upgrade the sleigh?

Under the Employee Retirement Income Security Act (ERISA), all 401(k) plans must be insured up to 10 percent of the plans’ assets for theft. So if Santa misappropriates funds, the elves’ retirement fund is OK. This is purchased under an ERISA bond or endorsing the crime policy.

How can Santa be ready for what the workshop is like after Christmas day?

All year Santa’s helpers were busy working late hours. This can cause unwanted tension in the workplace and irritable elves could finally lash out. As an employer, you can purchase protection against the expenses that result from incidences of workplace violence. These can include the cost to hire independent security consultants, public relations experts, business interruption expenses and payment of death benefits.

Unfortunately, the ideal insurance policy is not gift wrapped and waiting for you under the tree. Business leaders need to invest their time meeting with an agent committed to helping you manage your risks to develop the right risk management plan and coverage to protect your company. But I heard him exclaim, ere he drove out of sight, Happy Holidays to all, all my coverages are right …

Marc McTeague is president of Best Hoovler McTeague Insurance Services, a member of the SeibertKeck Group. Reach him at (614) 246-RISK or mmcteague@bhmins.com.

Insights Business Insurance is brought to you by SeibertKeck Insurance Agency

Published in Columbus

The insurance market is always cycling between hard and soft. As it continues to firm, employers will have fewer low-price options.

Expect your broker to communicate with you regarding what’s coming up, with respect to firming prices, says Craig Hassinger, president of SeibertKeck. In this type of environment — even if it’s not a typical market turn — employers have to take the initiative.

“Business owners need to proactively work to eliminate risk by putting in place policies and procedures that need to be formally written down and followed,” he says.

Smart Business spoke with Hassinger about how employers can react to the hardening market and future premium increases.

What’s the difference between a soft and hard insurance market?

In a soft market, insurance companies are looking to gain market share and grow, as they take on more risk at lower prices. This is good for the insured to a point because there are a lot of options. However, it’s called a cycle for a reason, and that soft market tends to quickly change — and competitive insurance options dry up.  As insurance companies have taken on more underpriced risk, they start to get bad results, which eats away at their surplus and they start to pull back. This turn is usually predicated after a catastrophe such as the 9/11 terrorist attack.

What are the conditions of the current market?

Rather than just one catastrophe, the turn that’s beginning now is more because of a series of weather events such as tornados in Tuscaloosa and Joplin, flooding in Thailand, the earthquake in Japan and Colorado wildfires. These property-driven stresses on the market have hurt insurers and pricing is starting to firm.

In the past, the insurance market turned on a dime from soft to hard — all rates across the board. In this market, you’re seeing some price increases, but not for all insurance types. Property and workers’ compensation premiums have gone up, while liability and vehicle rates have stayed pretty even. This is not a classic market turn yet, but brokers keep hearing the word ‘yet.’ Insurance companies’ base portfolios are not making a whole lot, so they will eventually have to make up the difference with larger premium increases or covering less risk. However, this year — so far — has been a fairly friendly weather catastrophe year, keeping the turn slow.

For the insured that have high loss ratios, insurance companies are hitting those businesses hard with premium increases or non-renewing their policies. In these cases, it could be hard to find replacement insurance. However, the best of the best are still being treated well — the businesses that have low loss ratios.

Have some industries been hit harder because of the unevenness of the market turn?

Yes. If, for example, you’re a property manager who manages apartment buildings or commercial office buildings, you’re probably going to be hit harder. Other industries that rely more on liability and vehicle insurance may not see as much change. Regardless of the industry, make sure your loss control program is up to date and follow any risk management recommendations from your insurance company or broker. You also may need to increase deductibles or further spread your risk.

How can you combat the harder market?

Business owners need to do what’s necessary to become the best of the best. Put policies and procedures in place to mitigate your risk and decrease losses. For example, employers can utilize systems like Fleet Watch, which monitors drivers and vehicle usage by keeping track of factors like driver’s speed to give business owners real fleet data. Employers can drill down, find risks and eliminate them to keep rates down.

Employers should use data provided by their broker to reach the right decisions, such as asking whether raising deductibles or stop loss limits will be economically smart strategy or just make your underwriter feel better.

A good broker will help analyze everything from your current vendor/client contracts to previous losses. You might see risks that you didn’t know about. For instance, there could be a better way to create a contract so you push the risk out to a subcontractor.

Communicate with your broker on a regular basis. Brokers typically have a stewardship meeting well before the renewal to go over each of your policies and formulate a strategy for the renewal. If your renewal includes diminished coverage or added exclusions, then it may simply be a matter of pushback. You and your broker might tell your insurance company that if this is to be done, then something will be needed in return, while being prepared to look elsewhere. A proactive broker will handle these negotiations for you.

What about using self-insurance in this type of market?

You’ve got to analyze the situation thoroughly. There’s always going to be self-retention that makes sense, but it’s important to figure out where. For any self-insured program it’s a matter of rolling the dice, and your company has to have information to put the odds in your favor.

Combatting this market cycle is about consistent loss control and having a strong business model. Too many businesses fly by the seat their pants when it comes to preventing losses. A little dose of long-term thinking combined with a professional insurance broker goes a long way in helping you navigate through the hard and soft market cycles.

Craig Hassinger is president of SeibertKeck. Reach him at (330) 865-6237 or chassinger@seibertkeck.com.

Insights Business Insurance is brought to you by SeibertKeck Insurance Agency

Published in Akron/Canton

The insurance market is always cycling between hard and soft. As it continues to firm, employers will have fewer low-price options.

Expect your broker to communicate with you regarding what’s coming up, with respect to firming prices, says Marc McTeague, president of Best Hoovler McTeague Insurance Services, a member of the SeibertKeck Group. In this type of environment — even if it’s not a typical market turn — employers have to take the initiative.

“Business owners need to proactively work to eliminate risk by putting in place policies and procedures that need to be formally written down and followed,” he says.

Smart Business spoke with McTeague about how employers can react to the hardening market and future premium increases.

What’s the difference between a soft and hard insurance market?

In a soft market, insurance companies are looking to gain market share and grow, as they take on more risk at lower prices. This is good for the insured to a point because there are a lot of options. However, it’s called a cycle for a reason, and that soft market tends to quickly change — and competitive insurance options dry up.  As insurance companies have taken on more underpriced risk, they start to get bad results, which eats away at their surplus and they start to pull back. This turn is usually predicated after a catastrophe such as the 9/11 terrorist attack.

What are the conditions of the current market?

Rather than just one catastrophe, the turn that’s beginning now is more because of a series of weather events such as tornados in Tuscaloosa and Joplin, flooding in Thailand, the earthquake in Japan and Colorado wildfires. These property-driven stresses on the market have hurt insurers and pricing is starting to firm.

In the past, the insurance market turned on a dime from soft to hard — all rates across the board. In this market, you’re seeing some price increases, but not for all insurance types. Property and workers’ compensation premiums have gone up, while liability and vehicle rates have stayed pretty even. This is not a classic market turn yet, but brokers keep hearing the word ‘yet.’ Insurance companies’ base portfolios are not making a whole lot, so they will eventually have to make up the difference with larger premium increases or covering less risk. However, this year — so far — has been a fairly friendly weather catastrophe year, keeping the turn slow.

For the insured that have high loss ratios, insurance companies are hitting those businesses hard with premium increases or non-renewing their policies. In these cases, it could be hard to find replacement insurance. However, the best of the best are still being treated well — the businesses that have low loss ratios.

Have some industries been hit harder because of the unevenness of the market turn?

Yes. If, for example, you’re a property manager who manages apartment buildings or commercial office buildings, you’re probably going to be hit harder. Other industries that rely more on liability and vehicle insurance may not see as much change. Regardless of the industry, make sure your loss control program is up to date and follow any risk management recommendations from your insurance company or broker. You also may need to increase deductibles or further spread your risk.

How can you combat the harder market?

Business owners need to do what’s necessary to become the best of the best. Put policies and procedures in place to mitigate your risk and decrease losses. For example, employers can utilize systems like Fleet Watch, which monitors drivers and vehicle usage by keeping track of factors like driver’s speed to give business owners real fleet data. Employers can drill down, find risks and eliminate them to keep rates down.

Employers should use data provided by their broker to reach the right decisions, such as asking whether raising deductibles or stop loss limits will be economically smart strategy or just make your underwriter feel better.

A good broker will help analyze everything from your current vendor/client contracts to previous losses. You might see risks that you didn’t know about. For instance, there could be a better way to create a contract so you push the risk out to a subcontractor.

Communicate with your broker on a regular basis. Brokers typically have a stewardship meeting well before the renewal to go over each of your policies and formulate a strategy for the renewal. If your renewal includes diminished coverage or added exclusions, then it may simply be a matter of pushback. You and your broker might tell your insurance company that if this is to be done, then something will be needed in return, while being prepared to look elsewhere. A proactive broker will handle these negotiations for you.

What about using self-insurance in this type of market?

You’ve got to analyze the situation thoroughly. There’s always going to be self-retention that makes sense, but it’s important to figure out where. For any self-insured program it’s a matter of rolling the dice, and your company has to have information to put the odds in your favor.

Combatting this market cycle is about consistent loss control and having a strong business model. Too many businesses fly by the seat their pants when it comes to preventing losses. A little dose of long-term thinking combined with a professional insurance broker goes a long way in helping you navigate through the hard and soft market cycles.

Marc McTeague is president of Best Hoovler McTeague Insurance Services, a member of the SeibertKeck Group. Reach him at (614) 246-RISK or mmcteague@bhmins.com.

Insights Business Insurance is brought to you by SeibertKeck Insurance Agency

Published in Columbus

An employee is critically hurt in a taxicab accident while on business in China. He had to be stabilized at the scene, flown to the coast and then to Hong Kong. Two operations and two months later, he is sent back to the U.S. on a private charter plane with two nurses and a doctor. The repatriation trip alone costs $140,000, which he would have had to pay had he not had foreign insurance.

Richard B. Hite, CEO of SeibertKeck Insurance Agency, says domestic U.S. policies only cover incidents occurring in the U.S., Canada, Puerto Rico or any U.S. possession.

“A standard domestic insurance policy doesn’t insure against foreign business exposure in general,” he says. “As long as your company has goods, services or people going overseas, you’re going to need foreign

insurance.”

Smart Business spoke with Hite about how to get the most out of your foreign package coverage.

What are the characteristics of international insurance?

There are a number of scenarios where foreign insurance is necessary. For example, a salesperson at an international conference demonstrating a product causes bodily injury or property damage. Maybe you’re exporting products and have a product failure — a propane tank explodes and kills 20 people. If sued, your domestic policy does not respond to lawsuits outside of the U.S. and Canada.

Under a foreign package policy, there are five types of coverage. They are:

  • General liability — Covers public liability, including product liability.

  • Property coverage — Protection for laptop computers, sales samples, personal property at trade shows, etc.

  • Foreign voluntary workers’ compensation — Provides employees workers’ compensation and covers medical costs and loss of earnings as if the employee was hurt in Ohio or whatever the state of domicile. With 24/7 coverage, it also provides medical assistance services and repatriation expenses to get an employee to the U.S., including immediate family traveling with him or her or allowing family to fly to the foreign location where the employee is being treated.

  • Accidental death and dismemberment (AD&D) coverage.

  • Automobile liability — When an employee rents a car, there is certain compulsory insurance coverage in that country, but this provides excess liability.

Other types of foreign insurance exposure include kidnap and ransom, business interruption, crime and ocean cargo for when you’re responsible for your export shipment of goods in a container until it arrives.

How has foreign insurance changed to better serve small and mid-sized businesses?

With globalization and international trade agreements, even a small company could be distributing products abroad, but many small and mid-sized businesses don’t realize the protection needed. Insurance companies have different coverage levels, but usually a minimum premium with all five basic types of coverage runs an affordable $1,500 to $2,500 per year.

How do you decide which coverage and options or limits to buy?

Analyze the exposure — what employees, goods or services are doing and where they are going. Public liability and foreign workers’ compensation are necessary, but property and automobile depend on the circumstances. Property could be worth it if you have sales samples or laptop computers going abroad, but your employee might not be driving anywhere. Additionally, the AD&D for many mid-sized business is already an international 24/7 policy, so there could be a duplication of coverage. The insurance company takes a census of the number of people, where they are going and for how long, and then creates different rates for different risks.

Many policies exclude countries not aligned with U.S. foreign policy, such as Syria, Iraq, Iran and now, Mexico. To get around it, underwriters want to know the finite trip details. For example, Monterrey, Mexico, is a medium risk, while Mexico City is very hazardous and has become its own cottage industry considering the high incidence of kidnap and ransom occurring there. In general, the insurance company writes a blanket policy for all countries, excluding certain ones, and then underwrites exceptions on a per-trip basis.

What’s the difference between buying international insurance in the U.S. or local insurance in the foreign country?

If you write a policy in the U.S., called a nonadmitted basis, most countries accept it. However, some foreign countries require a domicile insurance company and a broker to write the policy as a form of protectionism. Therefore, big companies — Travelers, Chartis and Chubb — have foreign divisions writing policies, called an admitted basis. You might need a combination of nonadmitted and admitted insurance to ensure the proper coverage.

It’s almost always advantageous to buy U.S. coverage rather than admitted coverage in the country itself. U.S. coverage provides compulsory insurance on a broader basis and uses a U.S. company and adjuster, with the cost not necessarily more expensive.

What steps should employers take if something happens to an employee or property abroad?

The planning should be part of your disaster preparedness program. Insurance companies have emergency response teams globally who speak the local languages. As part of the service, you reach out to these key contact people if there’s a problem. They also know what steps to take to get the best medical care. For example, in Shanghai, China, hospitals won’t operate unless they know they will be

compensated.

Additionally, the insurance company will set up a website to be checked throughout the trip. It gives tips on how to travel, how to dress, what areas to avoid, and a security and weather report. It helps employees blend in and act accordingly, which also prevents them from becoming a target.

Richard B. Hite is the CEO of SeibertKeck Insurance Agency. Reach him at (330) 865-6573 or rhite@seibertkeck.com.

Insights Business Insurance is brought to you by SeibertKeck Insurance Agency

Published in Akron/Canton
Sunday, 30 September 2012 20:00

How to cover your overseas business exposures

An employee is critically hurt in a taxicab accident while on business in China. He had to be stabilized at the scene, flown to the coast and then to Hong Kong. Two operations and two months later, he is sent back to the U.S. on a private charter plane with two nurses and a doctor. The repatriation trip alone costs $140,000, which he would have had to pay had he not had foreign insurance.

Cliff Baseler, vice president at Best Hoovler Insurance Services Inc., a SeibertKeck company, says domestic U.S. policies only cover incidents occurring in the U.S., Canada, Puerto Rico or any U.S. possession.

“A standard domestic insurance policy doesn’t insure against foreign business exposure in general,” he says. “As long as your company has goods, services or people going overseas, you’re going to need foreign insurance.”

Smart Business spoke with Baseler about how to get the most out of your foreign package coverage.

What are the characteristics of international insurance?

There are a number of scenarios where foreign insurance is necessary. For example, a salesperson at an international conference demonstrating a product causes bodily injury or property damage. Maybe you’re exporting products and have a product failure — a propane tank explodes and kills 20 people. If sued, your domestic policy does not respond to lawsuits outside of the U.S. and Canada.

Under a foreign package policy, there are five types of coverage. They are:

  • General liability — Covers public liability, including product liability.

  • Property coverage — Protection for laptop computers, sales samples, personal property at trade shows, etc.

  • Foreign voluntary workers’ compensation — Provides employees workers’ compensation and covers medical costs and loss of earnings as if the employee was hurt in his or her state of domicile. With 24/7 coverage, it also provides medical assistance services and repatriation expenses to get an employee to the U.S., including immediate family traveling with him or her or getting family to the foreign location where the employee is being treated.

  • Accidental death and dismemberment (AD&D) coverage.

  • Automobile liability — When an employee rents a car, there is certain compulsory insurance coverage in that country, but this provides excess liability.

Other types of foreign insurance exposure include kidnap and ransom, business interruption, crime and ocean cargo for when you’re responsible for your export shipment of goods in a container until it arrives.

How has foreign insurance changed to better serve small and mid-sized businesses?

With globalization and international trade agreements, even a small company could be distributing products abroad, but many small and mid-sized businesses don’t realize the protection needed. Insurance companies have different coverage levels, but usually a minimum premium with all five basic types of coverage runs an affordable $1,500 to $2,500 per year.

How do you decide which coverage and options or limits to buy?

Analyze the exposure — what employees, goods or services are doing and where they are going. Public liability and foreign workers’ compensation are necessary, but property and automobile depend on the circumstances. Property could be worth it if you have sales samples or laptop computers going abroad, but your employee might not be driving anywhere. Additionally, the AD&D for many mid-sized business is already an international 24/7 policy, so there could be a duplication of coverage. The insurance company takes a census of the number of people, where they are going and for how long, and then creates different rates for different risks.

Many policies exclude countries not aligned with U.S. foreign policy, such as Syria, Iraq, Iran and now, Mexico. To get around it, underwriters want to know the finite trip details. For example, Monterrey, Mexico, is a medium risk, while Mexico City is very hazardous and has become its own cottage industry considering the high incidence of kidnap and ransom occurring there. In general, the insurance company writes a blanket policy for all countries, excluding certain ones, and then underwrites exceptions on a per-trip basis.

What’s the difference between buying international insurance in the U.S. or local insurance in the foreign country?

If you write a policy in the U.S., called a non-admitted basis, most countries accept it. However, some foreign countries require a domicile insurance company and a broker to write the policy as a form of protectionism. Therefore, big companies — Travelers, Chartis and Chubb — have foreign divisions writing policies, called an admitted basis. You might need a combination of nonadmitted and admitted insurance to ensure the proper coverage.

It’s almost always advantageous to buy U.S. coverage rather than admitted coverage in the country itself. U.S. coverage provides compulsory insurance on a broader basis and uses a U.S. company and adjuster, with the cost not necessarily more expensive.

What steps should employers take if something happens to an employee or property abroad?

The planning should be part of your disaster preparedness program. Insurance companies have emergency response teams globally who speak the local languages. As part of the service, you reach out to these key contact people if there’s a problem. They also know what steps to take to get the best medical care. For example, in Shanghai, China, hospitals won’t operate unless they’re sure they will be paid.

Additionally, the insurance company will set up a website to be checked on the trip. It gives tips on how to travel and dress, where to avoid, and a security and weather report. It helps employees blend in, which also prevents them from becoming a target.

Cliff Baseler is vice president at Best Hoovler Insurance Services Inc., a SeibertKeck company. Reach him at (614) 246-7475 or cbaseler@bhmins.com.

Insights Business Insurance is brought to you by SeibertKeck Insurance Agency

Published in Columbus
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