Consistent coverage Featured

8:00pm EDT October 26, 2008

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