Risk & Business

I have been in this industry for over 25 years. I continue to scratch my head on how the rate cycles of soft and hard markets continue to be part of this business. However I find myself confused. For the last 5 years the industry has been in a soft market and rates have fallen. This has been good for my clients, especially during this tough recession. 2009 and 2010 should have been the years that the insurance companies would have started to slightly raise rates to cover the growing number of losses that are developing. Rates however are continuing to fall. I am warning my clients to get ready for the knee jerk reaction of rising rates that the industry is most likley going to do. Instead of a discipline approach to proper rates to cover losses, I will most likely be trying to explain to my clients why rates went up 25% overnight.  This is the one of the most frustrating  things that I deal with as an agent/broker. Oh well...

This week,  hearings are being held in Pa on proposed legislation that would allow sole proprietors and partnerships to buy work comp insurance for themselves. This has been a real problem for agents and brokers and for sole proprietors that need to work with firms that have strong risk management guidelines. Most other states allow sole proprietors to buy coverage on themselves. It only makes sense to allow this to happen. As long as the insurance industry will sell comp policies to these individuals then if passed, the new law will be of great benefit for all. Lets keep our fingers crossed. Until next time be careful outh there and know your risks.  K

Not only dealing with ones own personal safety, radiation leaks,  like what is happening in Japan, has to be a risk managers nightmare. We are really in unknown waters here when it comes to radiation spread. Every business in the world needs to be on alert. The world is connected. First you have the natural weather patterns and jet stream that can carry radiation all over the world. You also have an international food supply chain that is interconnected to Japan and the far east. There is also products that get shipped around the world and subsequent parts of products that may come in contact with Japan's radiation. The world is dependent on Japanese products which are right in the center of the nuclear disaster. I am not sure how the risk professionals will handle this but as it plays out I will blog about what is going on out there. Until next time be careful and know your risks.  K

It has been fairly consistent over my insurance career that the CGL policy will cover faulty work done by a named insureds subcontractor. This exception to the faulty work exclusion has stood up in claims that I have experienced over the years. However this may be changing. A recent PA. case had the courts denying coverage from faulty work of a sub. There is also a lot of talk amoung State jurisdications to follow suit on this subject. The CGL policy language is very clear on this as "damage to your work" exclusion does not pertain to work performed on your behalf by a subcontractor. So why is it changing?  I am not sure but I do know this will be problematic for agents ans brokers if this trend continues. Insureds who use subcontractors could always be assured by their agents that if the sub screwed up then the insurance co. would pay. This may not be the case in the very near future. Until next time be careful out there and know your risks. K

The purpose of risk managment is to mitigate risks to protect assets. In the world of hollyood, risk protocols for minimizing asset losses are needed. I don't want to sound flip about this but hollywood stars are like businesses. They need risk managers to help them protect their entities. Just look at Sheen, Lohan, and now Gottfried (AFLAC voice of the duck), where is their risk managment. Their agents and publishers all are trained in promotion and selling, but not in risk. This shows as the end results currently place a few of these hollywood stars on paths of asset loss and business loss. Boy risk management is definitely needed in hollywood. Until next time be careful out there and know your risks. K

The tragedy in Japan is going to have a worldwide effect on insurance availability in the near future. Reinsurance companies that serve the world and the US will most likely have to raise rates to make up for the payments of claims that will be experienced in Japan. The insurance industry has been on the edge of profitability the last 6-7 years do to the soft market sparked by competition. With very little room, the reinsurance companies will have to raise rates. The estimated claims for the earthquake could top 50 billion or more. The impact will definitely be felt. Thank goodness for the insurance industry as it will help Japan rebuild. Until next time be careful out there and know your risks. K

Insurance investigators busted 17 people including a doctor in one of the biggest fraudulent PIP claim ring ever in the State. The total insurance fraud is in millions of dollars. Apparently the ring was very organized and deep. How far it went is still being discovered. It is concerning to me just how pervasive insurance fraud may be through out the country. My hats off to the Fla law enforcement. Way to go !!  Until next time be careful out there and know your risks.  K

It happens every day in the agent broker world. A client has signed a contract that requires terms and condition changes that the contract holder would like to see reflected on the certificate of insurance. The client tells the agent that he must provide the updated cert in order to get paid. The agent tells the client that he cannot make the changes because of a littany of reasons. Now you have a dilemma. This has become a universal problem for agents. Some States have enacted laws that prohibit changes to certificates of insurance. However most states have yet to address it. ACCORD, the entity that produces the certificates has made it clear that no changes should be made to their 2010 edition. So how are agents & brokers going to help their clients who continually get themselves into these contractual situations? The first remedy is education. Agents must educate their clients and make them aware of the problems surrounding certificates. The other thought would be to get rid of ...

With a few suggested modifications, the States may be running the Federal Health care program with their own spin. Each State may be able to make their own modifications on delivery and service of the Federal backed insurance plan. This is a compromise the Obama team and Congress is allowing in order to reduce the friction that the health plan has brought up over the last few years. We will see how this materializes over the next few months.  Until next time be careful out there and know your risks. K