New Blog Look

Yep, a new look here.  Cleaner, neater, with a pretty picture of me.

Same great insurance information.  Perhaps more often.

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Redundancy and Fail-Safes

How many systems failed in the BP Gulf of Mexico oil spill?

How many different things went wrong, all at the same time.

Can the same thing happen in your business?  Sure it can.

Can the same thing happen to you in your personal life?  Sure it can.

Shouldn't we be thinking about the fail-safe on the fail-safe?

I've been backing my computer up for fifteen years.  The other day I bought a backup drive for my backup drive.

My computer data is my business. Why would I not spend another $120, just in case?

What systems in your business need fail-safes?  Then put another fail-safe on top of that.

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Why Your Underwriter Is Important

The underwriter is the employee at your insurance company who decides how much coverage to provide and what premium to charge you.

Between 20 and 30 percent of your business insurance premium is in his control - coverage decisions too.

Insurers use a rating system that uses statistical data about your operation and sets a base premium.  From there, the underwriter adds debits or credits, impacting your costs.

An underwriter's opinion of your business, your risks, and your character can have a dramatic impact on what you pay and what coverage your insurance company offers you.

The underwriter's judgement is formed from information provided by your agent: past losses, reports from adjusters, reports from loss control inspections, and outside information.  Underwriters will review your website and Google your company, too.

You can impact your premiums by cultivating a relationship with your underwriter.  Work with your agent to coordinate a "PR" campaign, keeping your underwriter up to date on your operations and plans.

Invite the underwriter to visit your operation, if feasible.  Perhaps do a short video introduction to your operation, or a video tour.  At the least, your agent should provide pictures and a written overview of your operation.

Consider sharing your business plan or an executive summary.

The more comfortable your underwriter is with your business, the better coverage and premium they will offer.

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Hurricane Preparedness Week

From May 23 to May 29th, it's Hurricane Preparedness Week.

Go to http://www.nhc.noaa.gov

From June through November it's hurricane season on the Atlantic coast.  This advice is true, though, for all parts of the US.

Do you have a disaster plan?

Start simple.  How would you communicate with your employees in an emergency?  Do you have a list of employees, phone numbers, email addresses, mobile phones?  Why not?

You can start simply with a Google Docs form.  Here is a sample.

Build your own form and have employees visit the site.  Each inputs their name, phone numbers, and other contact info.  They build the list for you.  Set up a new form every year so you are sure to be up to date.

Communications is vital to any disaster plan.  Set up a website where employees can go for info on emergencies.  Build a phone tree where employees call other employees to provide info.  Use Twitter or Facebook.  There are proprietary communications systems too.

Some companies set up a phone hotline that employees can call for updates.  Some use automated phone dialer systems to get info to employees.

With so many options there is, frankly no excuse for a lack of a communications plan.

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Definitions - Bumbershoot Policy

Bumbershoot Policy - A liability insurance policy, similar to an umbrella liability policy, for marine risks.  Think boatyards and ship yards.  The policy is excess over primary policies, providing additional limits of protection.  Coverage may include protection and indemnity (P&I), Longshoremen and Harbor Workers Act protection.

I have always thought this was as close to humorous as insurance gets - bumbershoot is "British" for umbrella.

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Client Comments

My focus is always providing value to my clients.  Here's a note I got from a client that needed help quickly.

Scott –

WOW!  Thank you for helping our safety management consulting firm navigate the unclear course of purchasing errors and omissions insurance.  We had put off the decision to buy E&O insurance for years, not understanding how to get the coverage we needed – or even knowing what we really needed to cover the kind of work we do.  I ‘found’ you one day searching on the internet.  After reading an article you had written and seeing that your credentials are second to none  and the service you provide so unique, I knew I had to call you.

You gave me great information, straightforward answers, and assurance that we were getting what we needed as you guided us through the process of searching for and selecting an insurance agent.  Your prompt attention to every phone call and email was so appreciated.  You talked to us in plain terms, not insurance lingo and then negotiated with our selected carrier.  I liked the fact that once the policy was presented, you reviewed it to make sure we got what we asked for.  What really impressed me was the fact that you saved us a significant amount of money compared to quotes we had received over the years.  I feel like I made money working with you!  Your service is such a valuable one for busy business owners who need a trusted independent insurance expert – I would recommend you to anyone who wants to make sure they are making the right investment in their risk management portfolio.

Thank you!

Deb

Deb Potter, PhD

President, Potter and Associates International

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Horrible Phone Call

The other day I got a horrible phone call.  

One of my clients is in the middle of a messy claim on their home insurance policy.

My work for this client has been on his company.  I had offered to review his personal insurance.  He never took me up on that offer.  Now he is having a problem.

I never want to get a call like this again.

While 99.9% of my work is business insurance, I do have expertise in personal insurance.  If you are a client, please let me review your personal insurance policies.

Here is my offer:

-Scan and email me you personal auto, home, umbrella, boat, motorcycle, and/or snowmobile policies.  Fax them if its easier. 

-All I need are the "declarations" pages.  The pages that describe you, your stuff, and your insurance.  I do not need the policy contract forms - I probably have those.

-I will review the policies and get back to you with my comments and thoughts.  We can talk about my concerns.  You can talk with your agent and then we can talk again, if you like.

-I will not charge you (or your company) anything for this review.  I do not want to ever get another call like this again!

Please take me up on this.  If not for you, for me.

PS - If you are not a client, I'm still glad to help.  My fee for personal insurance policy reviews is $250 (personal auto, home, umbrella, boat, motorcycle, and/or snowmobile policies).  Email me your policies and go to my fee page.

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Health Insurance - New Rules - Adult Kids

An excellent article in yesterday's USA Today on adding adult children to your health insurance policy.

http://www.usatoday.com/money/perfi/columnist/block/2010-05-18-yourmoney18_ST_N.htm

Well done Sandra Block.

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Policy Renewals - The In-Between Years

I'm currently working on about a dozen insurance bid projects.  When we finish each, we will have a new problem:  What will the premium be next year?

No matter how good a job I do this year, next year is a mystery.

Sometimes I can get the insurance company to agree on a consistent pricing structure - if the bid was submitted using 22% credits, the renewal will be issued using next year's rates and premium basis, with a 22% credit.

Few underwriters are agreeing to that now.

Most insurance advisors suggest bidding only every three years or so.  However, that leaves insurance buyers at the mercy of next year's underwriter.

What if this year Podunk Mutual is very competitive, and next year a new underwriter decides to double the premium?  Add to that the "tradition" of delivering renewal quotes four days before the policy expiration, and we find ourselves with an uncomfortable squeezing sensation in some rather tender areas.

Here's a solution...

Insist that your current insurer delivers the renewal quotes to you 60 days before the policy expires.  With quote in hand, you can decide what to do.

If your insurer provides you with a renewal similar to last year's policy, you probably will decide to stay with what you have (modifying the coverage to meet your current needs), and everyone is happy.

A steep increase or change in policy terms might trigger another round of alternate quotes.

Getting quotes 60 days ahead of time gives you some options.

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Beware of Load Limits!

If you own a backhoe, front-end loader, crane, or other mobile equipment, this post is for you.

Your insurance policy covering your equipement probably has an exclusion for damage that is caused by a load in excess of the capacity of the machine.

If your crane is rated for x and you lift x+, any damage to the crane may be excluded.

Some policies exclude damage to booms.

Talk with your insurance advisor.

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What's A Mutual Insurance Company?

The insurance world is made up of two types of insurers - ownership wise.

Stock insurers are owned by stockholders.  They are corporations like Google, Starbucks, and Exxon are corporations.  Shares of the company are bought and sold on stock exchanges.  The company can raise capital by selling more shares.

A mutual insurance company is owned by the policyholders.  Profits are distributed to the "owners" by the payment of dividends.

The owners of a stock insurer are interested in the appreciation of the value of their stock.  They want to make money.

Mutuals usually have a history of like-minded business people who band together to manage some risk.  The original objective was to provide some form of "mutual" aid.

In the current insurance marketplace I do not see that stock insurer or mutual insurer makes much difference to the insurance buyer.  There are some great, old mutual insurers who serve their clients well.  There are also some dubs.

Same with stock companies.

Select your insurer on the basis of the quality of the coverage provided, the relationship your agent has with the insurer, the financial strength of the insurer, and the way the insurer approaches service.

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Find A Great Insurance Agent

The most common question I get from small businesses is, "How do I find the right insurance agent?"  The question often comes from very small insurance buyers and non-profits.

-Sometimes the question comes from new businesses.
-Sometimes from growing companies.
-Sometimes from insurance buyers sick of crappy service.

Over the ten years that I have been an insurance consultant, I have built a network of hundreds of insurance agents around the country.

I now have a system that will allow insurance buyers access to that network so they can find the right insurance agent.

Go to www.FindAGreatInsuranceAgent.com.

A reminder, I never accept fees from the insurance agents that I work with for my clients.

Insurance buyers, if you are looking for the right agent, try my new service.

No-Risk Guarantee: If I cannot provide you with suitable agents for you to interview and consider, I return your fee.

Agents, interested in registering for my network? Go here -  www.ScottSimmonds.com/insurance-agent-finder/agent.php.  No cost and no obligation.

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The Simmonds Business Insurance Index™ - May

The buyer's market continues in the property and casualty insurance marketplace.

The Simmonds Business Insurance Index™
May, 2010

Renewal Premiums: -10%
Renewal Coverages: Liberal Terms
Buyer's Outlook: Long-Term: Prices Flat


The Simmonds Business Insurance Index™was built to give insurance buyers a way to judge upcoming insurance renewals.  While different industries and regions experience different risk profiles, this index is designed to give a broad market view.


Comments for May:

I keep reading of continued insurer capacity and improving insurer profits.

The renewals I am aware of are still quite aggressive. Buyers continue to experience falling prices.

The last few months I thought prices would start to rise. Now I'm thinking, not this year.

If your renewal is 6 months out or more budget for a 5% increase and push your agent and carriers. I don't think you will be unpleasantly surprised.

I am also starting to read more about the pain the agent community is feeling due to the long, "soft" market. Declining premiums mean declining revenues for agents.

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