Risk & Business

Image via Wikipedia Based upon an article in www.insurancenewsnet.com it seems that between what individual states have done to bring down workers compensation premiums and the current recession , insurance companies are being forced to be more selective when writing coverage.  Due to the consistent decline in premiums many companies are being even choosier by geographic region and by classification.  Many states seem to have forgotten that insurance companies are in the business to make a buck and if the profit motive is constantly being whittled away then many insurance companies will have no choice but to pull back in order to protect themselves and their financial position.  Of course this will mean more business heading to the various state funds but these funds are heading for trouble themselves due to their constant rate reductions.  Sounds like a recipe for a heck of a mess.

In Philadelphia , a man shot his cousin in a fake robbery in order to split workmans compensation benefits. The insurance company paid the injured cousin $250,000 in a lump sum disability settlement which the two split. A friend of the shooter tipped police and when the jig was up they both confessed. Talk about a desparate act! The word is they split the proceeds 50/50. I think the guy who took the bullet got the raw end of the deal. Until next time be careful out there.  K

After you have Identified and analyzed risk then you have to control risk. There are a few options to look at when deciding how to control risk in your business . You can avoid risk by making the necessary changes in your business to stop a particular exposure. You can reduce risk by changing an operation or procedure or by separating risk and duplicating processes to reduce risk. These are only a few of the steps a business owner can take to get a handle on controlling the risk in their business. In the next post I will discuss financing risk, which is how to pay for retaining risk or the benefits of transfering risk to an insurance company. Until next time be careful out there and know your risks.  K

A recent report showed that State work comp funds are insuring 25% of the work comp market . This high percentage is a disturbing sign that indicates the standard insurance marketplace is loosing its appetite for work comp. With the increasing costs of medical care and the rate decrease mandates from many States, insurance companies are staying out of the comp market because they can't make money. How this will play out for business owners is hard to tell. It is nice to have low premiums now but a loss of standard market options only bodes unfavorably for business owners in the long run. Stay tuned !   K

It is a proven fact that businesses that focus on loss control, safety and risk management pay a lot less in business insurance premiums. When compared to thier respective peer groups , these businesses can pay 20-30% less in business insurance costs. However with the lingering recession , many business owners over the last few years have cut spending money on safety and risk management programs, only to see their loss histories deteriorate. Though most business owners have yet to see their rates go up because of the soft, highly competitive insurance market, the true costs will come home to roost when the insurance market starts to "harden" rates next year. If you have cut your safety programs, put them back in place. It might be real hard to find the money, but you will be glad you did when the commercial insurance market changes and "punishes" businesses with poor loss histories. Until next time remember if you know your risk and can measure it then you can c...

Image by Szilveszter Farkas via Flickr Not exactly exciting reading, to be sure, but I thought it might be useful to review the standard headings in an insurance contract that identify the specific types of general liability (gl) exposures. There are four standard areas of commonly referred to gl exposures - Premises and Operations - the premises liability arises out of injury and damage caused by conditions that exist in and around an insured 's premises and the operations liability refers to liability for injury or damage caused directly by the insured's business operations while those operations are taking place; Products and Completed Operations - refers to injury caused by an insured's product, either made or sold by them and completed operations refers to work that has been finished or completed, given to the client and put to it's intended use; Contractual Liability - this exposure involves the insured's agreement in a contract to take onto itsel...

Image by Jake Wasdin via Flickr Due to the upheaval in the economy these past few months many business owners are taking steps to save money where they can. It might be a good idea to take a critical look at your current insurance coverage. While, obviously, your insurance is a vital and important part of your business, there may be some areas where you can cut back for now until the economy turns around. One area to consider might be your current vehicle coverage. Do you have multiple vehicles? If so, would it make sense to take some off the road for awhile? Also, keep a closer eye on your payrolls, as they can affect both your workers compensation and general liability premiums. You can always request a mid term decrease in payrolls and sales from your insurance company . Just be prepared to provide proof. Remember though, since you are looking for ways to save on your insurance premium, others that you do business with, subcontractors , other vendors, are doing the sam...

Image by ClevelandSGS via Flickr Based upon anecdotal evidence seen by those of us in the agency workforce, and upon articles such as the recent one in PR-inside.com, it seems that the insurance industry may finally be nearing the end of the nearly 2 years of steady pricing decreases. The article states that " In the first half of 2008 insurer profits declined 57 percent, the industry posted its worst first-half year underwriting performance since 2002, investment returns declined by 18 percent and net written premiums for the industry as a whole were stagnant. Catastrophe losses were double the average of the past decade, " reports Lockton . The article also pointed out that " The repercussions from the big hurricane losses and the meltdown in the financial markets are just beginning to be felt in the property insurance market. Insurance buyers should prepare themselves for a period of uncertainty and volatility in the property insurance market, " says Jim Rube...